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Cedar Rapids, Iowa 52401
DES MOINES - Gov. Terry Branstad said Monday he is “very hopeful” the 2012 legislative session will produce significant property tax reform and relief.
The GOP governor told his weekly news conference he has had “some positive and fruitful” discussions with Democrats who are in charge of the Iowa Senate that have made him optimistic an accord can be reached that will provide permanent relief for all property classes, but especially commercial and industrial property owners. At the same time, he noted that no details have been worked out on a compromise that remains a major obstacle to adjourning the split-control Legislature for this year.
Commercial and industrial property is taxed at 100 percent of its market value. Branstad would like to see that lowered incrementally over eight years to 60 percent and he would like to cap yearly increases at 2 percent for residential and agricultural properties up to a future maximum of 60 percent as well.
As a token of his good faith, the governor has indicated he will accept a Senate-passed plan to increase the earned income tax credit for working families, a proposal he vetoed twice last year.
Sen. Joe Bolkcom, D-Iowa City, chairman of the Senate Ways and Means Committee, said he welcomed Branstad's acceptance of the earned income tax credit increase but said that was “catch-up” for other tax cuts the Legislature sent him that favored businesses and other taxpayers which were signed into law. “We've passed more tax cuts than he has,” Bolkcom said.
Democrats have offered a targeted property tax cut aimed at small and Main Street businesses that would guard against shifting the tax burden to residential classes and would put up $250 million in state “backfill” money to protect local governments against a loss of revenue due to commercial property tax relief.
Branstad and House Republicans do not favor delivering relief via a state tax credit as Democrats propose, noting the state has a poor track record of fully funding such commitments. A major disagreement in the fiscal 2013 state budget is House Republicans' insistence on providing an extra $55 million from the state general fund to fully fund current property tax credits - such as the homestead tax credit - to local governments for the next fiscal year that begins July 1.