DES MOINES — For Rep. Louie Zumbach, windshield time isn’t only the weekly commute from his rural Coggon farm to Des Moines during the legislative session, but also time in the cab of his combine.
“I kind of dreamed it up in the combine,” the freshman Republican said about his plan to fund some of Iowans’ priorities while providing some tax relief.
He’s suggesting a 1-cent increase in the statewide sales tax — now effectively 6 cents — with the proceeds going toward mental health services and the Iowa Water and Land Legacy.
“I think it’s a travesty where mental health has gone to in Iowa,” he said. “I wanted to find a way to better fund it.”
From there, he started thinking about how to fund the conservation trust. Iowa voters approved it in 2010 without any funds. But the constitutional amendment called for directing three-eighths of a cent of the next state sales tax increase to outdoor recreation and water quality improvements.
Zumbach concedes that there’s probably more support for his idea from the public than from fellow legislators because to some, it sounds like a tax hike.
But not to Rep. Clel Baudler, R-Greenfield, who called it the “best idea I have heard yet” for fixing state budget issues “while making sure our taxpayers are not negatively affected.”
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“It’s extremely important that we take the pressure off the property tax payers,” he said. “To put it on the backs of the property tax payers over and over and over again is wrong.”
Rep. Dave Jacoby of Coralville, the ranking Democrat on Ways and Means, called Zumbach’s ideas “intriguing,” but said calling it property tax relief is questionable.
“We pass a number of bills in the realm of property tax relief, but my property taxes haven’t gone down,” Jacoby said.
Here’s how Zumbach’s plan would work:
A penny sales tax increase would raise about $480 million annually. The first $180 million would go to the land trust. Another $180 million would fund mental health services, including about $30 million for children’s mental health.
Those services now are funded with about $84 million in county property taxes and $66 million from the state general fund. So shifting the funding source to the sales tax would provide both income tax and property tax relief.
Ideas abound on spending the other $120 million, from shoring up other budget priorities to providing further relief from other taxes.
“Some of that money could be used to soften what some people see as the regressive nature of the sales tax,” Zumbach said.
He doesn’t plan to introduce his idea as a stand-alone bill, but hopes it will be incorporated into a tax-cut plan being put together by the House Ways and Means Committee.
Ways and Means Chairman Guy Vander Linden has good news and bad news for supporters of the idea.
“It’s going to happen — someday,” the Oskaloosa Republican said.
But not this year.
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His concern is keeping Iowa’s sales tax in line with neighboring states. In some places in Iowa, the sales tax rate already is higher because voters approved a local option.
“It’s getting us too far ahead of the game. Someday 8 percent may look good — when Illinois is at 15 percent,” he said.
Illinois’ state sales tax rate is 6.25 percent now.
But Vander Linden is not seeking reelection, and will not be around in the future to decide.
“It’s not the year for Guy Vander Linden. It won’t ever be the year for Guy Vander Linden,” said Vander Linden.
It’s not just the tax hike hurdle that Democrats would have to get over before supporting a sales tax increase, Jacoby said. House Democrats support funding mental health, but “distrust” Republicans’ commitment to the conservation trust.
“It’s not clear which agencies or organizations they’ll channel the money through — the Department of Natural Resources? Ag? The Farm Bureau?” he said.
Zumbach agrees with Jacoby that “the devil is in the details and all the details haven’t been worked out.” However, he remains optimistic that whether his idea is adopted this year or not, it’s worth pursuing.
“I think that at the end of the day, if people give me time to explain it, they will come around,” Zumbach said. “Most people, after it sits with them a little bit, come back and say, ‘That ain’t too bad of an idea.’”
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