Branstad, Republicans agree on commercial tax cut plan

DES MOINES - Gov. Terry Branstad and Republican leaders in the House have agreed on a plan to reduce commercial property taxes, limit the growth of local government and slow the projected increase in the taxable value of residential and agricultural properties.

The bill, House Study Bill 519, likely will be debated by the full House next week.

House Ways and Means Committee Chairman Tom Sands, a Wapello Republican, said Wednesday the deal would lower commercial property taxes by 40 percent over eight years and provide $240 million to offset cuts to local government budgets.

It also would limit taxable valuation increases for residential and agricultural properties, tie the growth of local government spending to the rate of inflation, and increase the state's share of K-12 spending, which is aimed at reducing local property taxes.

Branstad spokesman Tim Albrecht confirmed the agreement.

Democrats, though, said the plan doesn't address their concerns. They've pushed for a $200 million tax cut aimed at small businesses.

“It seems like it's the same old plan,” said Senate Ways and Means Committee Chairman Joe Bolkcom, an Iowa City Democrat.

Bolkcom said the agreement would result in a residential property tax increase and would send millions of dollars in tax cuts to out-of-state corporations. It also doesn't address concerns from local governments, Bolkcom said, who believes the cuts will threaten basic city services.

Sands said Wednesday that Democrats should like a part of the plan that implements property tax cuts for small businesses over five years instead of eight.

“We've heard their concerns about doing more for small businesses and that's why we have the accelerated small business portion in there,” Sands said.

But Rep. Dave Jacoby of Coralville, the top Democrat on the House Ways and Means Committee, said the plan's distrust of local governments will hurt cities' ability to grow.

“I think this is a job-killing bill, because it ties local governments' hands,” Jacoby said.

James Lynch of The Gazette Des Moines Bureau contributed to this report.