Republicans argue both sides of budget-cutting plan

In orderly and civil fashion, Iowans descended on the “People's House” to urge lawmakers to tax and spend more wisely and more efficiently.

For some, that meant endorsing House File 45, a House Republican proposal to cut nearly $505 million in state spending over the next three years and set aside $327 million for taxpayer relief. The House is scheduled to debate the bill today.

Ed Wallace of Iowa Taxpayers Association conceded that speaking in support of the tax relief fund put him in the minority among the 94 people who signed up to speak at the public hearing in the Iowa House chambers.

“I understand that the headlines may read something about preschool, a little bit about smoking cessation programs and a whole lot about transportation issues, but in the final analysis, there's no question Iowans are craving tax relief,” Wallace said. Tax relief, he added, will help create an environment that will encourage businesses to invest, grow and add jobs.

But cutting the state budget by $505 million is a “real job-killer,” countered Iowa Federation of Labor President Ken Sagar.

“If you dig deeper, you'll find that when the funding goes away, so do the jobs, not to mention the services that Iowa families depend on,” Sagar said. “We should be investing in rebuilding schools, bridges, roads, clean energy systems, creating good jobs, not eliminating them.”

AFSCME President Danny Homan sounded a similar theme, pointing out that making cuts does not mean Iowans will see a reduction in the need for services. He urged the Legislature to reject the “short-sighted cuts and unneeded tax cuts.”

However, the combination of tax relief and spending cuts is the first step to closing a $700 million budget gap, House Speaker Kraig Paulsen, R-Marion, said during the hearing.

As he listened to speakers discussing the pros and cons of HF 45, Paulsen said that changing the way the state does business was one of the messages voters sent in November when they put Republicans in control of the House and governor's office.

“Whether it's this public hearing or in general, what I'm hearing is ‘Yes, you guys need to do this but please leave us alone.'” Paulsen said.

Rep. Tyler Olson of Cedar Rapids, the ranking Democrat on the House Appropriations Committee, agreed voters told lawmakers to prioritize spending, “but cutting four-year-old preschool is the wrong priority.”

“It's a false choice to say we either have to cut preschool or balance the budget,” Olson said. Democrats will offer alternatives during debate on the bill.

Many of the speakers agreed with Olson that eliminating funding for preschool, as well as proposed cuts to area education agencies and the core curriculum, are the wrong choices.

Chris Bern, president of the 33,000-member Iowa State Education Association, said research shows children who attend quality preschool typically enter kindergarten with increased cognitive abilities, increased literacy and mathematics skills, and tend to get along better with others than children who did not attend preschool.

Many middle class parents will be forced to choose day-care, which usually cost less than preschool, “at the expense of quality preschool in their child's formative learning years,” Bern said.

Some speakers argued spending cuts are not necessary at all. Members of Iowa Citizens for Community Improvement called for adopting combined corporate reporting to make out-of-state corporations pay their fair share of taxes while making local Iowa businesses more competitive.

It's a matter of tax fairness, Rosemary Persaud of Iowa City said in written testimony.

“Small businesses like Prairie Lights Books in Iowa City where I work don't have income tax loopholes and we're managing. So can Alcoa,” she said.

There were concerns other than education. Tisleen Singh, an admissions counselor at Drake University, spoke against withholding funds for developing passenger rail service to Chicago. The availability of passenger rail service would make attending Drake – as well as working and living in Iowa after graduation – more appealing.

“We can keep young professionals in Iowa, but it's not easy,” she said. “Having that accessibility makes it more attractive.”

Rebecca Neades of the Iowa City Chamber of Commerce told lawmakers passenger rail would benefit the University of Iowa, which attracts about 6,000 students from Illinois each year as well as 60,000 alumni who return for sports, cultural activities or other events. Likewise, the university's hospital and clinics draw patients from western Illinois.

Neades also noted that Iowa's freight rail system would benefit from increased reliability, efficiency and safety if the state invests in passenger rail.

Gary Streit of Cedar Rapids representing the American Cancer Society spoke against cuts to smoking cessation programs. Cancer is the leading cause of death in Iowa, he said. More than 4,400 Iowans die of smoking-related illnesses each year and approximately 500 die from motor vehicle accidents.

“Why should eliminating deaths from tobacco be any less of a priority than eliminating deaths from traffic accidents? Streit asked.

“The evidence is “irrefutable that the tobacco control programs in Iowa, even though they are only funded at less than one-fourth of the levels recommended by the Centers for Disease Control, work,” he said.

State government has been “intrusive and spending more than it's taking in,” Dave Van Ahn of Heartland Investment in Urbandale said. HF 45 would be an “excellent first step to align ongoing revenues with spending.”

However, Victor Elias of the Child and Family Policy Center said state government has not been out of control. Overall, the state's spending and taxes on business are well below the average among other states, he said.

“Forced reductions in Iowa spending and investment will have serious impacts on Iowa's ability to provide essential services that are necessary for Iowa's future growth and prosperity,” Elias said.

The reality of Iowa state government over the past 20 year has been smaller government, lower taxes overall and competitive taxes on business, according to Peter Fisher of the Iowa Fiscal Partnership. In the early 1990s, in the percent of personal income that went to pay state and local taxes – 11.5 percent, according to Fisher. By 2008, the tax burden had fallen to 10.4 percent and Iowa now ranks 26

^th

, he said.