Legislators pushing for property tax relief, gas tax hike

UPDATE: The Legislature's 2012 session opened Monday with calls for property tax relief and for an increase in the state's gas tax.

“Let's make this a session that historians will write about,” said Senate President Jack Kibbie, D-Emmetsburg, in delivering his opening-day charge to his colleagues on the day that the 84th General Assembly launched its 2012 session – a scheduled 100-day assemblage that leaders from both chambers and both sides of the aisles hoped would finish before reaching that target.

“It's going to be an exciting year. I believe it's going to be a productive session and I believe it can be a short session with your help,” Gov. Terry Branstad told the annual GOP fundraising breakfast that kicks off the legislative session.

Branstad told reporters he will ask lawmakers this session to lower commercial property taxes 5 percent annually for the next eight years while, limiting the growth of spending by local governments to the cost of living and capping yearly tax increases for residential and ag property owners at 2 percent as a way to provide broad-based relief.

Meanwhile, Senate President Jack Kibbie, D-Emmetsburg, used his opening-day remarks to call for an increase in the state's gas tax, saying there are many roads, bridges and other highway infrastructure that need upgrades but the state currently lacks the resources to meet the critical transportation needs.

“It is time for us to step up and have the courage to raise the gas tax,” said Kibbie, a long-time legislator who has indicated he will not seek re-election this fall. “I believe there is bipartisan support for this.”

A bipartisan group of legislators have called for legislation that would boost some vehicle registration fees and boost the state's gas tax by 4 cents per gallon each of the next two years to provide an overall 8-cent increase by January 2014. However, Branstad has indicated he believes the state will have adequate resources to get through the upcoming highway construction season with existing funding levels and up to $50 million in efficiencies that he wants the state Department of Transportation to achieve in the coming year.

On the issue of providing property tax relief, Branstad said he will propose a state commitment of $50 million for each of the next three years to help “backfill” the potential loss of property tax revenue for cities, counties and school districts. After that, state and officials will assess the financial impact of the changes to determine what adjustments may be necessary to protect both property taxpayers and local governmental entities, he said.

The governor said he would roll out the specifics of his property-tax reforms as part of a four-part plan to create jobs that he will deliver as part of his Condition of the State address – the 17th for the five-term governor – on Tuesday.

Branstad said he modified his property-tax reform proposal to spread it out over more years and to drop a provision that would have cut tax rates for new business startups immediately to 60 percent of current rates. Instead, all property tax rates would decline by 5 percent each year to a level that would be 60 percent lower at the end of the eight-year phased period.

Under his plan, spending growth for cities and counties could not increase more than the cost of living each year.

“Now is the time to create jobs in Iowa by cutting the property tax,” said Senate Democratic Majority Leader Mike Gronstal, D-Council Bluffs, who pledged to work with Republicans to find a property tax compromise that will provide relief to small businesses and “the people who need it.”

Branstad said he is hopeful this year's session will produce major reforms for all classes of property taxes, education and the county-based mental health system.

The governor said he plans to present his fiscal 2013 budget plan and a five-year projection for state finances when he delivers his 17th Condition of the State address to a joint session of the 84th General Assembly on Tuesday. He said most of the work on the budget for next fiscal year will be “supplemental” since much of the two-year spending plan was approved last session when lawmakers agreed to go to biennial budgeting.