Lawmakers closer to compromise on tax cuts, spending increases

DES MOINES – House and Senate conferees moved closer to compromise Tuesday on a package of tax cuts and spending increases but still faced significant philosophical differences in trying to seal a final deal.

GOP legislators on the 10-member conference committee offered to accept the Senate position on tax coupling issues which would include more relief for working families earning less than $45,000 a year. As a trade-off, they asked House and Senate Democrats to agree to create a special taxpayer relief fund that would segregate ending surpluses for tax cuts and they pushed for a “sunset” on the current county-based mental health funding system by July 1, 2012.

“We're trying to move this forward,” said Rep. Scott Raecker, R-Urbandale, a conference committee co-chairman who also leads the House Appropriations Committee.

Sen. Joe Bolkcom, D-Iowa City, said he was pleased the House was receptive to the Senate approach to conform the state tax code to federal changes -- which would provide $152 million in tax relief but would not implement most changes retroactively for the 2010 tax year as Republicans had proposed. However, he said the GOP push for “an off-budget” tax relief fund still gives legislative Democrats “heartburn” and he said the accelerated timetable for revamping the current mental health funding system seemed “a bit foolhardy” because it might trigger property tax increases without a well-thought-out transition.

Raecker countered that providing an extra $20 million in state funding for mental-health service but setting a deadline to revamp the current system would help spur legislative action, noting that “without the repeal, I don't think you get people to the table to get something done.” He also said Republicans were insisting on the tax relief fund as a way to “put the taxpayer at the table” whenever lawmakers make state budget decisions.

Bolkcom, the other committee co-chairman who leads the Senate Ways and Means Committee, said lawmakers have the option of providing tax relief without a speficially designated fund that might impede efforts to meet state spending needs in the future, while Sen. Bob Dvorsky, D-Coralville, chairman of the Senate Appropriations Committee, said he was nervous that Democrats could agree to compromises in S.F. 209 that later could fall victim to item vetoes by Republican Gov. Terry Branstad.

Raecker called Dvorksy's concern “well founded” and said any House-Senate compromise would have to be discussed with Branstad to ensure agreement before the package was shipped to the governor's desk.

Rep. Tyler Olson, D-Cedar Rapids, one of the 10 conferees, opposed creating the special tax relief fund but said it would have to be designated for one-time purposes only if it becomes part of an overall compromise to apply the same standard for not applying surplus state money for ongoing purposes.

In making their proposal, GOP conference committee members dropped proposals to establish a minimum health insurance premium of $100 for all state employees and to prohibit the state Department of Natural Resources from purchasing land through the end of the current fiscal year while reducing Resource Enhancement and Protection (REAP) by a like amount – provisions that were in the House-passed version of S.F. 209.

The conferees – who planned to reconvene Wednesday -- proposed no changes to the $45.7 million in supplemental spending items for the current fiscal year that were contained in the bill. Included in the package were $5.9 million for community colleges, $14.2 million for the state Department of Corrections, $18.6 million for the public defender and indigent defense programs, nearly $3 million to restore cuts to the Iowa State Patrol and public safety functions, $1.2 million for public health, and more than $2.6 million for mental health institutions with the state Department of Human Services.