Iowa’s state budget belts tightly cinched, leaders say

ALTOONA - A snug state budget makes tax policy reform or tax cuts unlikely during the upcoming legislative session, leaders from both political parties said Friday during a forum with the state's largest tax policy advocacy group.

At the Iowa Taxpayers Association's annual legislative leadership forum, held Friday at Prairie Meadows in Altoona, Democratic and Republican leaders said there is not sufficient state revenue to support new tax breaks or policy changes that would remove money from the budget pie.

'Obviously, when you're working on tight budget margins, the opportunity for tax reform becomes increasingly difficult,” said Rep. Chris Hagenow, R-Windsor Heights, the new House majority leader.

Democratic Senate President Pam Jochum was even more blunt: 'I don't see this session producing any tax policy changes. In terms of any big, new policy changes in taxes … I truly do not see any of that happening.”

The state is projected to collect $175 million more in tax revenue in the next fiscal year that what it expects to spend in the current fiscal year. And expected spending increases - on Medicaid, commercial property tax relief and a teacher leadership program - are expected to eat up all of that new revenue.

With the idea of tax policy changes effectively quashed, much of the legislative forum's discussion shifted to the state's transition to private management of the Medicaid program.

Gov. Terry Branstad followed the legislative leaders and gave an impassioned response to a question from a taxpayer association member about why the state doesn't delay implementation of the Medicaid switch to allow concerns to be addressed.

'It's not a rush. We announced it a year ago, and we're following the same path as other states,” Branstad said. 'The fact is this has been a very thorough, very thoughtful approach. …

'You can listen to the fear-mongers all you want, but the truth of the matter is we are doing the right thing for the right reasons.”