Iowa House approves $311 million in state revenue cuts

The Iowa House approved a proposal Tuesday to slash $311 million in state tax revenue over three years, with supporters calling it the latest needed step to deal with a state bureaucracy that has grown too big and expensive.

Backers of the complex package blame much of the state's budget trouble on programs supported by Democrats in recent years.

"We're doing it because of gaps we have from the continued use of one-time dollars for ongoing expenses," said Rep. Nick Wagner, R-Marion, among the plan's main supporters.

Opponents said they were willing to accept some cuts in state tax collections, but criticized the approved plan as being too large. They said most tax cuts included in the package would benefit businesses, including some that aren't based in Iowa.

"We have to be very, very cautious about making a decision like that," warned Rep. Todd Taylor, D-Cedar Rapids. "I've got some concern about it."

Charles Bruner, a former lawmaker who works for the liberal think tank the Child and Family Policy Center, warned against the measure. He said that of the $311 million in revenue the state would lose under the plan, $214.3 million would come through a much more generous treatment of corporate depreciation expenses, something he argued largely favors big businesses.

But the House approved the measure on a 64-34 vote and sent it to the Senate, which earlier approved a smaller, $256 million plan.

In the Senate, where Democrats have a slim majority, lawmakers increased the earned income tax credit in a move they said would benefit mainly the working poor. But that element was stripped in the House version.

The measure approved Tuesday would take about $103 million from the current year's budget, and $179.4 million in revenue from next year's budget. The third year would see revenue loss of $28.4 million.

The measure is only the latest proposal on taxes to begin moving through the legislature. The House earlier approved a 20 percent across the board income tax cut. Gov. Terry Branstad is pushing lawmakers to approve up to a 40 percent cut in commercial property taxes.

Wagner said he and other Republicans are willing to look at all of those proposals. The GOP seized control of the House by a 60-40 margin in November, and Wagner said Republicans would use that edge to push their fiscal conservative agenda.

He rejected the notion that the state couldn't afford the tax cuts.

"It's not a cost to state government," Wagner said. "That's the people's money, not the state's money."

Though the bulk of the measure dealt solely with spending, majority Republicans used the measure as a vehicle for pushing some other priorities.

Under provisions included in the measure, any state budget surplus would be used for tax cuts. Another provision requires state workers to pay at least $100 a month toward the cost of their health care. A separate provision bans the Department of Natural Resources from any new land purchases, and cuts $3 million form that agency's centerpiece environmental program.