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IOWA IDEAS 2019
OCTOBER 3-4 CEDAR RAPIDS

To provide a nonpartisan, statewide learning experience

designed to explore the key questions and big ideas that will shape the future of Iowa.

Iowa Ideas

Gov. Kim Reynolds: Surplus may open tax-cut possibilities

Appearing at Iowa Ideas, governor hints at water quality measure

Oct 3, 2019 at 1:09 pm
    Iowa Gov. Kim Reynolds sits Thursday with Gazette Executive Editor Zack Kucharski for a question-and-answer during the Iowa Ideas symposium at the DoubleTree by Hilton Hotel Cedar Rapids Convention Complex. (Liz Martin/The Gazette)

    CEDAR RAPIDS — Gov. Kim Reynolds said Thursday she is assessing whether the state has the financial capacity to consider more tax cuts, but much depends on a fragile farm economy and the ability to fund priorities like education, health care and workforce readiness.

    “I’m always going to look at ways that we can help Iowans and businesses keep more of their hard-earned money so we’ll have to see,” she said during a stop at The Gazette’s Iowa Ideas symposium in downtown Cedar Rapids.

    Reynolds said the state is in a stronger position now that it has posted a $289 million surplus in the 2019 fiscal year that ended June 30. But there still are multiyear financial triggers that must be met to fully implement elements of the largest state income tax cut in Iowa’s history that began to take effect last Jan. 1.

    The Republican-led Legislature and Reynolds enacted a reform package during the 2018 session that simplified the tax code and reduced individual income tax rates — and envisioned additional reductions in tax rates and brackets in tax year 2023, assuming revenue targets are met.

    The GOP governor said Thursday her administration is plugging numbers into short-term and long-range models to determine whether more tax cuts could be undertaken in a responsible and sustainable way within the safeguards already enacted. Lawmakers and Reynolds also are conducting reviews of state tax credits to determine which ones are keeping Iowa competitive with other states.

    “We’re running runs all of the time. We want to make sure that we’re doing it in a fiscally responsible manner and we want to make sure that we can continue to honor the priorities, which is education and workforce and an integrated and coordinated health care system,” Reynolds said in an interview. “We just have to see how that fits into the overall picture.”

    The governor will spend the coming months assembling a two-year state budget plan and her 2020 legislative package that she will unveil this January when she addresses a joint session of the General Assembly.

    Reynolds gave a little preview Thursday when she told Iowa Ideas participants that she plans to try again next year to create an easier path for released felons to get their voting rights restored; she plans to seek $15 million to help partner with private vendors to expand broadband in rural Iowa; and she wants to do more for water quality in a way that might include Iowa’s Water and Land Legacy, known as IWILL.

    “We’ve been talking about IWILL so we’re taking a look at that — that’s a potential possibility of moving forward,” she said without elaborating.

    In 2010, 63 percent of Iowa voters agreed to a constitutionally protected Natural Resources and Outdoor Recreation Trust Fund, also known as IWILL, that would be supported by raising the state sales tax by three-eighths of 1 percent.

    Reynolds also said she would like to see Iowa address workforce challenges that are the No. 1 barrier to economic growth as well as continue to expand on its leadership in biosciences and renewable energy and make education technology “an emerging sector that Iowa is well-positioned to take advantage of.”

    A big concern, Reynolds said, is the fact that Iowa farmers are weathering a tough season on top of several other tough years.

    She said she is “running out of patience” over the political foot-dragging in Washington over passage of a trade pact with Mexico and Canada and a compromise announcement by the Trump administration on the Renewable Fuel Standard to stabilize Iowa’s ethanol industry and boost corn and soybean farmers.

    Rep. Dave Jacoby, D-Coralville, ranking member of the Iowa House Ways and Means Committee, said he is not convinced the state’s surplus is large enough to support new tax cuts and he questioned whether the last plan was a true reform.

    “Any time you have triggers, it’s not a true tax cut. You either make tax policy or you don’t,” he said.

    Jacoby said he expected any talk of raising the sales tax or cutting other taxes would tie all the issues together and complicate the prospects. He indicated he would support cutting corporate income tax rates if everybody paid it.

    Jacoby also was disappointed lawmakers have not commenced their tax-credit review.

    “It’s ironic that we’re in October now talking about what we might do in January when we should be working right now on those tax credit or tax policy reviews. So it’s a little frustrating,” he said.

    Comments: (515) 243-7220; rod.boshart@thegazette.com

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