Iowa Senate Democrats ask: How much tax relief is too much?

Senate Democrats are interested in tax relief, but have reservations about the quarter billion of tax cuts Republicans have proposed – with more to come.

Meanwhile, House Speaker Kraig Paulsen said Thursday he's encouraged by discussions with Senate Democrats on House File 45, which includes the Taxpayer Relief Fund.

“There are some ideas they are amenable to,” he said, including downsizing the state vehicle fleet.

Republicans have proposed $251 million in tax relief in fiscal 2012. That number includes $41 million to cover the school budget guarantee for 277 school districts with declining enrollment. Without it, property taxpayers in those districts would take a hit, Paulsen said. Republicans also are looking for ways to soften the impact on property taxpayers from underfunding schools last year and holding allowable growth to 0 percent.

“At a time when we'll have $900 million in bank by end of year, looking at responsible tax cuts is certainly something we're open to,” Senate Majority Leader Mike Gronstal, D-Council Bluffs, said.

However, he's concerned that Republicans are putting tax relief ahead of everything else,

“We're willing to look at those kinds of tax cuts that will put Iowans back to work,” he said. But, “taken as a whole, (Republicans') budget is a disaster for half of a million kids in K-12, 100,000 kids at community college” as well as those at the regents universities where a 5 percent tuition hike has been proposed.

That's “incredibly unwise,” he said.

In addition to the school budget guarantee and a 20 percent across the board income tax cut that would provide $204 million in relief next year, House Republicans have proposed a property-tax relief plan that would have the state pick up 100 percent of the cost of K-12 school aid. That would shift about $400 million to $550 million in costs from property taxpayers to the state general fund.

Legislative Republicans and Gov. Terry Branstad have called for a commercial property tax relief plan, too. Branstad has proposed a cut in corporate income taxes to make the state more attractive to economic growth and job creation.

Even though Democrats agree commercial property taxes are too high, all that tax relief makes Gronstal wonder how much revenue the state can afford to lose.

Then Republican budget “basically says we are going to squander the opportunities for the next generation of kids in the state, in terms of education,” he said. “Taken as taken as a whole we're going to push that aside and say the most import thing is to make sure corporations have lower taxes.”

Paulsen said it will take a “broad-based” tax relief approach to spur job creation and economic activity.

“We continue to believe there are great opportunities in state government to find reductions in spending,” he said. “We believe we need all of these great ideas on the table. If Gov. Branstad is serious about 200,000 new jobs in five years - and I think he is, then I think this is also part of the recipe.”