Gov. Kim Reynolds takes tax swap plan on the road

Iowa sales tax would rise while other taxes decrease

Gov. Kim Reynolds is joined Wednesday by a group of legislators, state officials and representatives of a wide range of
Gov. Kim Reynolds is joined Wednesday by a group of legislators, state officials and representatives of a wide range of business, tax, mental health, agricultural and other groups in support of her “Invest in Iowa” plan. (Rod Boshart/The Gazette)

DES MOINES — Gov. Kim Reynolds is taking her top legislative priority on the road in hopes of convincing Iowans of her plan to fund water quality projects, mental health care and other needs by increasing the sales tax — but also providing income tax and property tax relief.

The GOP governor, surrounded Wednesday by 26 supporters from a wide range of Iowa organizations at her weekly news conference, said she plans a series of meetings around Iowa to discuss her plan. It entails raising the sales tax by 1 cent to fund water quality, conservation and outdoor recreation programs while reducing income tax rates and brackets and establishing a new state funding mechanism for mental health services now paid for with property taxes.

“I’m going to go out there and drive this,” Reynolds said before embarking on her first stops in Oskaloosa and Ottumwa. She said she hoped to get Iowans’ feedback on “where we hit the mark” or where they might have suggestions.

“The Invest in Iowa Act is a bold vision for Iowa that lowers the overall tax burden on Iowans, and invests significantly in mental health and water quality. This plan will have immediate results for our economic competitiveness and overall quality of life,” the governor said.

The measure Reynolds outlined last month in her Condition of the State address and proposed in bill form this week builds on a 2010 vote by Iowans to approve a constitutional amendment dedicating the first three-eighths of a cent of the next sales tax increase to a number of environmental and natural resources initiatives.

“We have no interest in raising taxes,” Reynolds said, “and I heard that as we were traveling the state, and so we sat down and looked at a lot of different opportunities to not only fund priorities that are important to us but to have it be an overall tax cut.”

Reynolds said Wednesday that $172 million of the projected $540 million raised by a 1-cent sales tax increase would go toward water quality, conservation and outdoor recreation programs. However, she said she expected the distribution formula for the trust fund proceeds to be modified to reflect conditions that have changed since 2010.


Iowa Agriculture Secretary Mike Naig said Iowa has been making progress in improving water quality through an increased emphasis on buffer strips, cover crops and other voluntary conservation measures. The governor’s plan would “completely change the trajectory we’re on today” by providing a new reliable funding stream.

Rep. John Wills, a Spirit Lake Republican who is the third-highest leader in the Iowa House, said Reynolds has offered a “bold” plan but indicated it may not stay intact as it works its way through the Legislature.

“We’re really trying to digest the bill itself, understanding what’s all in it and that sort of thing,” Wills said, “and so we really haven’t had a chance to discuss it in depth.”

Some legislators have expressed concern that proceeds from the sales tax increase would be used to supplant existing state revenue without necessarily increasing the overall commitment, and would adversely impact elderly and poorer Iowans who would not benefit from income tax cuts but would pay more with a higher sales tax.

The governor’s office has not released a schedule of stops for Reynolds’ community meetings.

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