'Wide, wide gulf' between Iowa lawmakers on tax relief plans

Democrats and Republicans staked out their positions on tax relief Tuesday and expressed hope the 10-member House-Senate conference committee will be able to forge some middle ground that will benefit taxpayers and bolster Iowa's business climate.

“We've got a wide, wide gulf between us,” said Rep. Jo Oldson, D-Des Moines, during the conference committee's first day of talks. “We're going to need to narrow ourselves.”

Senate GOP Leader Bill Dix of Shell Rock said the general sentiment among Iowans is that state taxes are too high. Whatever reform the committee agrees on, he said, should be broad-based across all classes of property to avoid a situation where burdens are shifted to income and sales tax payers to provide relief to property owners.

Democratic Sens. Joe Bolkcom of Iowa City and Matt McCoy of Des Moines urged other conferees to narrow the focus to commercial property tax relief, noting that was the common areas of agreement in the competing bills approved separately by the House and Senate.

Sen. Bill Dotzler, D-Waterloo, said quality of life amenities and skilled workers mean more to business prospects that Iowa's tax climate, and he worried about embarking on a comprehensive approach that tries to fix everything when a targeted approach to benefit small businesses might better equip the state to compete in “a war for talent.”

“We need to get something started. The Senate plan gets us started on a path,” Dotzler said. “It might not be everything for everybody. Let's start. Even if it's small, let's get something done.”

Rep. Tom Sands, R-Wapello, noted that getting to conference committee marked the farthest progress the split-control Legislature has achieved on the tax issue, but he said “relief without reform doesn't get us anywhere.”

Republicans favor the House-passed approach that combined Gov. Terry Branstad's proposal for rolling back the taxable value of commercial and industrial properties to 80 percent, with the House GOP component devoting more state dollars to annual increases in education funding. Additionally, future growth in residential and agricultural tax bills would be limited to 2 percent per year, and state funds would be provided to hold local governments harmless from the potential drop in property tax revenue.

Democrats favor the Senate plan to provide $250 million in commercial property tax credits targeted at small and Main Street businesses over five years. Backers say the approach would enable all businesses to be taxed at a lower rate on the first $324,000 of their assessed property value. Commercial entities would have property values above that threshold taxed at the current 100 percent rate.

McCoy said the conference panel will reconvene Wednesday with hopes of making progress toward forging an elusive compromise.