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Gov. Vilsack Presents
the State of the State Address: Good Speech, Light on Details
On Tuesday, January 11th,
Governor Vilsack delivered his Condition of the State address
and proposed more tax increases.
A lot of details were left unstated. While some ideas look very
rosy on the surface, we need to be aware of the potential for
thorns as we delve into the details.
A missing puzzle piece was how to pay for the early childhood
initiatives. I am worried about his proposal on where to get
the money. Taking money out of this year’s budget is not sound
fiscal policy, especially given the rise in next year’s built-in
spending.
Reforming the property tax code is a noble goal, and we must
make sure we aren’t merely rearranging deck chairs and shifting
the burden to residential property tax payers. I believe there
is a real opportunity, and I have been tasked with reform. I
will continue to search for solutions to a system that is
outdated and unfairly burdens our homeowners.
Judging by the spending proposals laid forth by the governor,
he would seem to be asking for a $3 increase in the cigarette
tax. He may wish to raise the tobacco tax, but by how much?
The governor put forth his ideas. However, it is up to
legislators to turn those ideas into bills and vote on them. We
do not pass ideas – we pass LAWS.. Something may sound good in
an oration, but putting it on paper can significantly change the
way the idea sounds. The Governor does not plan on providing us
with a bill on his tax reform bill or his property tax plans.
It doesn’t sound like he’ll be sending us a cigarette tax
increase bill either.
I appreciate the governor’s ideas and calls for reform. I look
forward to working with Democrats and the Senate to push through
an agenda for the people of Iowa. While it may not mirror the
governor’s proposal, I feel confident that we can find solutions
to our problems, and capitalize on the opportunities we have.
That is how I define leadership.
Revenue Strong Through the First
Six Months of FY 05
Through the first half of FY 05, general fund
revenue growth was strong compared to the first half of FY 04.
Through the first six months of the fiscal year, general fund
revenue grew by $172.5 million, or 7.2 percent compared to the
first six months of FY 04.
All major revenue sources except for
cigarette taxes increased compared to FY 04. Personal income
tax increased by $84.8 million, sales and use taxes were up
$42.1 million, corporate tax payments were up $28.2 million and
other taxes (inheritance, insurance, and beer taxes) were up
$19.8 million.
Interestingly, as the Governor calls for a
massive increase in the cigarette tax, cigarette tax revenue was
down 6.4 percent in December compared to the previous year.
There has to be some concern that increasing the per-pack tax
will not generate the amount of revenue predicted by the
executive branch.
Also, the Governor is going to request the
expenditure of $40 million from the FY 05 ending balance in
order to start his new early childhood program. On top of all
that, the surplus revenue is needed to refill the Cash Reserve
Fund, which was emptied in order to fund the property tax
credits ($160 million).
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CAUTION: The good news on the
revenue side must be tempered by the demands of the spending
side of the ledger. But the increasing revenue should help pay back
some of the funds borrowed by previous legislatures.
Bill would Phase Out State Tax on Pensions
Iowans would stop paying state income taxes on pension and
retirement account payments and Social Security benefits under
legislation filed Tuesday in the House.
House File 26 sponsored by Rep. Jamie Van
Fossen, would phase out the tax over the next five years.
Van Fossen, a Davenport
Republican, is chairman of the House Ways & Means Committee, which
works on tax legislation.
© Des Moines Register
Ways
& Means Update
Bills
introduced introduced in
committee
this week:
House File 2, a five-year
phase-out of state income tax on pension income, beginning with tax
year 2005. The Republicans on this subcommittee are:
Representatives Boal (chair), Soderberg, and Struyk.
House File 13, which provides for an income tax credit for
teacher expenses for up to $250. The Republicans on this
subcommittee are: Representatives Tymeson (chair) and Kaufmann.
House File 23, which
allows taxpayers who were eligible for the 50% bonus
depreciation (as approved during the 2004 special session) to take
the depreciation on their 2004 tax return, rather than file an
amended 2003 return. The Republicans on this subcommittee are:
Representatives Carroll (chair) and Paulsen.
House File 24, a
five-year phase-out of the state income tax on Social Security
income, beginning with tax year 2005. The Republicans on this
subcommittee are: Representatives Boal (chair), Soderberg, and
Struyk.
House File 25 and House
File 27, which allow for an individual income tax deduction for
contributions made to a qualified tuition program established
by one or more educational institutions. This program is the
counterpart to the Iowa Educational Savings Plan Trust (state
program) and allows a taxpayer to make contributions to a
trust set up in the name of a designated beneficiary to pay the
costs associated with higher education. The Republicans on these
subcommittees are: Representatives Tymeson (chair) and Boal.
House File 26, which
is a five-year phase-out of the state income tax on both pension
income and Social Security income, beginning with tax year 2005.
The Republicans on this subcommittee are: Representatives Boal
(chair), Soderberg, and Struyk. |
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