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REPUBLICAN LEADERS PROTECT BUDGET COMMITMENTS
STATE CAPITOL – Senate and House Republican budget
leaders today said that they want to protect additional revenue from being
scooped for the Fiscal Year 2007 budget should the Revenue Estimating Conference
(REC) increase state revenue projections on Friday.
According to the December REC estimates, after the expenditure limitation is
taken into account, the state has $280 million in new funds to spend in the FY
07 budget year that begins July 1. The law says the Legislature must abide by
the December REC estimate when establishing the state budget.
The REC is also expected to increase their FY 06 budget estimates based on
actual revenue received since July 1, 2005. Republican budget leaders say those
revenues are already committed to paying for property tax credits, repaying the
Senior Living Trust Fund and filling the cash reserves.
“The law is clear, we must abide by December’s REC estimate,” said Rep. Scott
Raecker, head of the House Appropriations Committee. “Any new money this year
is already allocated – to property tax credits, repaying the Senior Living Trust
Fund and filling the state’s cash reserve. For next budget year, I am
optimistic that we will fund the priorities of Iowans, including education,
human services and public safety, and we will get it done on time.”
“ Let’s stop robbing Peter to pay Paul,” said Senate Appropriations Committee
Co-Chair Jeff Angelo (R-Creston). “Let’s stop robbing from our seniors,
veterans and property tax payers to balance the budget and repay these funds.”
REVENUE ESTIMATING CONFERENCE (REC) TO MEET ON FRIDAY
The next meeting of the Revenue Estimating
Conference (REC) is this Friday, March 24, at 3 p.m. at the Capitol. The REC
consists of Mike Ralston (Governor’s appointee), Dennis Prouty (Legislature’s
appointee) and David Underwood (private sector appointee).
The REC is expected to increase the revenue estimates for both FY 06 and FY
07.
In December, the REC estimated that gross revenue in FY 06 would be $5.65
billion, or an increase of $81.4 million (1.5 percent) compared to FY 05. This
does not include refunds, transfers or accrued revenue changes. The REC
estimated that net receipts (which include those three items) would grow by
$5.075 billion, an increase of $51.7 million (3 percent) compared to FY 05.
Also
in December, the REC estimated that FY 07 gross receipts would be $5.822 billion
(3 percent above FY 06) and net receipts would be $5.315 billion (4.7 percent
above FY 06).
Due to revenue coming in above expectations (due both to the growing economy
and to TouchPlay revenue), the REC will likely increase the revenue estimates
for both fiscal years. Through yesterday, gross receipts (which do not include
TouchPlay revenue) were up $145 million, or 3.8 percent compared to FY 05. The
estimate is an $81 million increase for the entire year, which is 1.5 percent
compared to FY 05.
The additional revenue for FY 06 will fund the property tax credits (an
additional $43.5 million is needed to fund them at last year’s level), with the
remainder being split between the Cash Reserve Fund (CRF) and the Senior Living
Trust Fund (SLTF).
Under current law, the additional revenue for FY 07 cannot be spent but must
instead go to the ending balance. Unfortunately, last year this law was
bypassed in order to get a budget deal for FY 06. Also, the Senate Democrats
and the Governor have said a budget deal cannot be reached for FY 07 without
using this additional money.
The best option would be to follow the law and not spend the additional
revenue. However, if this cannot be achieved, then the funds should be used to
repay borrowed funds, bring more items back into the General Fund (and off of
one-time revenue) and sent back to the taxpayers in the form of tax cuts. After
all, the primary reason for the strong revenue growth is that more Iowans are
working (and Iowans are working more overtime) and paying more in taxes due to
their efforts. |
HOUSE BILL FOCUSES ON CLASSROOM
HOURS
The Iowa House on Tuesday passed
House File 2709, which redefines a school year.
The bill, which passed on a 55 to 44 vote, sets the minimum number
of hours of instruction for elementary students at 990 hours, and
requires 1080 hours of instruction each year for middle and high
school students. Recess, lunch, pep rallies and teacher training
time will not count as instructional hours.
I have heard from a number of parents concerned that weekly
early-out days were counting as a full day in the 180-day schedule.
This clarifies an instructional day, and gives students a more
challenging schedule to help them be successful. In order to
compete in the global workplace our students need more time in the
classroom, not less. The bill also takes late starts and early outs
due to weather and emergencies out of what counts as instruction.
Snows days already need to be made up.
The focus needs to be on improving student achievement and more
time in the classroom makes that happen.
The House also passed two “truth-in-education” bills that require
school districts to provide parents and communities better
information about their students.
Under House File 2619 and House File 2621, Iowans will get a clearer
picture of the number of students who graduate or drop out of
school, how students compare to their peers in Iowa and the U.S.,
and whether a student is performing at grade level. The bill now
heads to the Senate for debate.
Ways
& Means Update
Monday, the House Ways and Means
Committee approved House File 2441, which clarifies the machinery
and equipment property tax exemption for the purposes of taxation of
concrete plants and hot-mix asphalt plants.
On Tuesday, the committee approved House Study Bill 701, which
clarifies that the production of master audio,
video, film, or digital recordings or similar media is exempt
from the state sales and use tax. This bill was the result of the
Iowa Department of Revenue attempting to collect tax on these
services through audits. Historically, no tax is thought to have
been due under current statutes and rules.
The committee also approved House File 2295,
exempts from state taxation the sale of certain items
used in the breeding and production of canines by a commercial
breeder of canines licensed by the state of Iowa or by the
federal government. The items exempted are
breeding canine stock; food and medication;
fuel used to heat or cool buildings to house
canines; bedding materials; and gas, electricity, water, or
heat used in implements engaged in the breeding and production
of canines. This exemption is treated like other livestock sales
tax exemptions.
House Ways & Means Committee
turns down property tax increase
The committee as well, considered HSB 727, which is the League of
Cities and Iowa association of Counties (ISAC), property tax bill,
relating to taxation by making changes
involving property tax, income tax, city and county
budgets, creating an implementation task force.
The following is information from the ISAC analysis of HSB 727: HSB
727 would lower the consolidated tax rates in nearly all
jurisdictions. (Some cities and counties see general basic/general
fund rate increases – indeed, 4 of 10 areas sampled for this
analysis would see increased residential rates.
HSB 727 generally increases taxes on residential property between
7% and 18%; it decreases taxes on most commercial and industrial
property by up to 9%. Some agricultural properties benefit (family
farms see a decrease between 6% and 16%); while the impact on others
depends on the county, (non-family farms can see a tax decrease of
up to 5% or an increase of up to 7%). Also, because the bill would
assess the first acre of land at a farmstead as residential,
agricultural dwelling owners would see a tax increase, ranging from
$35 in rural counties to $700 in urban areas.
Finally, the bill costs the state about $10 million - $9.5 million
in increased funding for the new military income tax credit and
$250,000 for the implementation committee.
Armed with this information the Ways & Means Committee voted to
table HSB 727 indefinitely. “We will not pass a bill that could
raise residential property taxes 18% or more under my watch,” said
Chairman Jamie Van Fossen.
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