Branstad hopeful for property tax reform accord in 2012 session

JOHNSTON – Gov. Terry Branstad said Friday he is hopeful legislation to reform the state's property tax system can pass during a 2012 session that he hopes is focused on creating jobs and improving Iowa's business climate.

The governor said he is looking to modify a property tax relief package in hopes of addressing objections raised by local elected officials. However, he declined to tell reporters after a taping of Iowa Public Television's “Iowa Press” show what proposed changes he envisions to make his approach more palatable to city and county governments.

“We intend to come with a plan that I think will improve on what we recommended last year to get something done,” he said. “We think there'll be more buy-in this time.”

Last session Branstad proposed that commercial property taxes, which currently are taxed at 100 percent of assessed value, be gradually lowered to 60 percent over five years at a cost of $250 million. New business ventures would get the 60 percent break immediately. He also proposed agricultural and residential property tax increases be capped at 2 percent.

The GOP-led House approved a tax rate phase-down to 75 percent for commercial property and limits on spending growth by local governments. The Senate passed majority Democrats' plan to provide $200 million -- $50 million annually for four years -- to ease property tax burdens for small and Main Street businesses without hurting local governments, but Branstad and legislative Republicans insisted on an approach that Democrats believed would tilt benefits too heavily to out-of-state corporations.

“We're going to look at trying to work something out with the local officials who have concerns about protecting their budgets while we reduce this tax burden,” he said. “They have concerns about some of the mandates that have been placed on them. We're looking at how we could provide them some relief and help in this process as well.”

Branstad was noncommittal on a proposal to raise the state's gas tax by up to 10 cents a gallon to generate more revenue to meet the projected $215 million in yearly critical transportation needs that are going unmet. He said the recommendation by a citizen advisory panel to boost the gas tax and vehicle registration fees now goes to the state Transportation Commission, which will decide what proposals will be forwarded to the Legislature and governor for consideration next session.

“I don't know that I'm going to endorse it,” Branstad said during the IPTV show. Later he told reporters “I think it's wrong to jump to conclusions on these things.”

The governor noted that transportation is evolving with improved fuel efficiency, hybrid and electric cars, trucks that operate using natural gas or propane. He said government must adapt to these changes and find ways to share the cost of maintaining the transportation system among all users.

“We need to come up with a mechanism to deal with those changes,” he said.

“I don't think that there's any particular panacea as to how we address it,” Branstad added. “We need to come up with an equitable system for the future and it may be something that has to be phased in over time.”

Asked about a proposed 3.75 percent tuition increase for Iowa students attending regent universities, Branstad called the increase “modest” compared to some past years and noted that tuition rates are “still a bargain” compared to other Midwest universities.

On another topic, the governor noted his administration had its “best month yet” for job creation in October and he is hopeful a new public-private approach to economic development and efforts to ease tax and regulatory burdens in the upcoming legislative session will build on early successes. He indicated he does not plan to propose any chances to the state's collective bargaining law in 2012.