Sales tax increase among water-quality options being eyed

DES MOINES - Members of the Iowa Senate are looking at several options for financing water-quality improvements that include a boost in the state sales tax, a checkoff system for taxpayer contributions or use of surplus dollars in years the state budget has a healthy ending balance.

'There are several proposals out there,” said Sen. Joe Bolkcom, D-Iowa City, chairman of the Senate Ways and Means Committee, but he noted that Iowa voters agreed overwhelmingly in 2010 to establish a trust fund financed by three-eights of any future one-cent sales tax increase for conservation, resource protection and recreational purposes that would be constitutionally protected.

Bolkcom said a number of agricultural, environmental and other groups support the sales-tax approach and legislators looking for new resources to fund water quality improvements rather than siphoning money from education or other general fund areas are saying 'let's take a run at it.”

'It's got a lot of support around the state for it,” Bolkcom said one day after the GOP-led Iowa House passed an approach which would shift $478 million over 13 years to water quality projects from a water metering tax and the gambling-funded state infrastructure account.

Gov. Terry Branstad, who lists addressing water quality as his top 2016 legislative priority, has proposed to share future school infrastructure sales tax revenue with water quality projects as a long-term approach that would not increase current taxes but that concept garnered limited legislative traction.

'This is a big, expensive problem that's going to require new revenue,” Bolkcom said Tuesday. 'It seems most of the plans are trying to take revenue from other places that's currently needed to fund our schools for example. I think any plan needs to bring in new revenue and the three-eighths (sales tax) would do that and it's protected.”

Senate Majority Leader Mike Gronstal, D-Council Bluffs, said there's 'significant support” for the sales tax option but it would require bipartisan support and a receptive Iowa House to get far in the process as the election-year session winds down.

'We'll see what people produce and we'll see what we can reach in terms of a consensus,” he said. 'There are multiple opinions and consensus seems difficult right now,” added Gronstal, who supports an ending-balance trigger that he says would have generated up to $400 million had money been set aside in 2011 when Branstad returned as governor.

Sen. David Johnson, R-Ocheyedan, a strong supporter of the sales tax option, said he envisions a water-quality 'road map” that would be revenue neutral with other tax relief offsets and would provide sustainable, permanent soil conservation and water quality assistance for farmers along with additional money for state resource enhancement and protection, parks and trails.

'If we can do all of those things, then the House plan is out the window,” said Johnson, who added that he 'would do anything I could to block a water quality plan that doesn't include” the three-eighths sales tax increase to flow into the constitutionally protected trust fund.

Last week House Speaker Linda Upmeyer, R-Clear Lake, told reporters she did not think there is interest in a tax increase to address the water-quality issue. On Tuesday, Senate GOP Leader Bill Dix of Shell Rock said his caucus would consider whatever proposal majority Democrats offer to see if it was an approach Senate Republicans could support.

'My sense is that in this chamber there's less support for a sales tax increase to address this issue than just about any other proposal,” Dix noted. 'Personally, I'm not supportive of increasing the sales tax to solve this issue and I think there's very little support from what I hear.”

Bolkcom conceded that 'it's never easy to raise taxes” especially in an election year, but Johnson said this is the time to move on the water quality issue because Iowans want improvements, adding: 'I would say to members of both parties that if you don't agree to moving ahead and funding the trust and trying to make it revenue neutral, I would say that you might have choppy waters ahead this fall if you're up for election.”