Area legislators talk taxes, economy with constituents

By SALLY Y. HAYES

Mt. Pleasant News

Taxation and the economy were the focus of Saturday morning?s legislative briefing held at Iowa Wesleyan College. State Senator Gene Fraise, D-Ft. Madison, and State House Representatives Dave Heaton, R-Mt. Pleasant, and Tom Sands, R-Wapello, participated in the forum, Jason Hutcheson, director of economic development for the Greater Burlington Partnership, moderated.

Sands, chairman of the House Ways and Means Committee, opened the forum discussing House File 2274, a tax reform bill that has been discussed this session. ?There are four main divisions in the bill,? he explained. ?Division one goes to increasing the state?s portion of the foundation levy from the present 87.5-percent up to 100-percent.

?Division number two goes into trying to do a little additional for commercial and bringing equity into the commercial class,? continued Sands. This commercial class includes railroads and industries. ?It starts rolling the taxable value from 100-percent assessed value down to 60-percent over an eight year period.?

The second section of this bill brought up questions of Tax Increment Financing program (TIF) districts in cities across the state. The program allows cities to declare certain areas as TIF districts, in which industrial and commercial businesses receive tax incentives.

?So what we did to protect bonds and bondholders is exempt commercial businesses inside a TIF district from the rollback until the TIF district matures. I?m going to tell you that piece still needs some work but that?s the best we could do in the short time we had to work on that,? stated Sands.

The third leg of the bill concerns modernizing telephone company taxes.

Sands explained the final part of the bill as ?slowing the growth of government and it ties the growth of local governments to an index so it reflects more to the people?s ability to pay.?

Rep. Heaton then asked Sands about TIF districts, ?So lets say, that TIF district matures in eight years, you have reduced the commercial rate by 40-percent the taxable value, does that mean then that when the TIF district matures at the end of eight years that the property values will be reduced to 40-percent??

?Yes,? replied Sands. ?They enter right where all other businesses are. I will also say that that part needs some further massaging and work but that does protect the bonds and the bondholders.?

?I think the important thing in our proposal is that all tax payers will receive some type of property tax relief by addressing the school foundation formula,? responded Heaton.

?We have two different plans, of course, we have the Senate plan and we have the House plan,? stated Fraise. ?We limit how high up we give the tax breaks. We don?t believe that the multi-companies ought to have massive tax breaks they already get a lot of advantages.

?Walmart, for instance, which has almost 60 stores in Iowa, would receive just over $400,000 on the Senate plan. Under the House plan Walmart?s tax cut would be an astonishing $7 million,? stated Fraise.

The three legislators concurred that the House and Senate will have to compromise to pass a tax plan and avoid a conference committee.

?As soon as it gets out of the full committee, I?m going over to the Senate to start working with Senator Hatch and try to find common ground so that we can eventually agree on a bill,? said Heaton. ?And perhaps send the agreement over to the Senate and they can finalize it and get it to the governor, rather than having a conference committee and all the restrictions it puts on you.?

Fraise concurred, ?To come to an agreement the House is going to have to give and the Senate is going to have to give, that?s what compromise is all about.?

Following the open discussion, questions were taken from the floor.

Dave Helman of Salem, referencing Iowa Auditor David Vaudt, asked, ?What is it going to take for a governor ? any governor, a legislature ? any legislature, to sit down and take a comprehensive look at the entire Iowa tax structure, local through state, and possibly revamp the whole thing? Is that possible someday??

?I have a lot of respect for David Vaudt as auditor and he?s doing a great job,? replied Sands. ?Looking at the entire tax structure not only needs to be done, it would be a great thing to tackle everything at once. The trouble is putting together 51 (House) votes, 26 (Senate) votes and a governor to sign it because you see the problems we have with just passing property taxes.?

Helman then suggested a non-partisan group to conduct the overview of the tax code.

Lee County Supervisor Larry Kruse questioned, ?There are discussions on changes of TIF and obviously with us looking at bringing a fertilizer plant to Lee County that may be one of the options that we?re looking at. And how are some of those changes going to affect that??

?I think when the dust finally settles that most local governments will be okay with the changes to TIF,? answered Sands, who sees TIF as a tool for local governments.

Fraise said that he always cautions cities to be conservative with TIF.

Heaton believes that there should be safeguards on TIF.

Mt. Pleasant Community School District Superintendent Dr. John Roederer spoke in favor of TIF. ?As far as a school district we do look at ourselves as part of economic development as well and it?s all about the economy ? the economy, the economy, the economy. And unless the economy is strong we can?t grow as a school district.

?One statistic I would like to refer to, and I refer to it all the time, is that I think 57-percent of the kids under the age of five are in 13 counties in the state of Iowa, and that concerns us. But TIF when used appropriately, in our experience anyway, has been a very useful tool,? said Roederer.

Kiley Miller of the Mt. Pleasant Area Development Commission presented his concern and statistics. He said, ?My understanding is that the city of Mt. Pleasant has approximately $150 million in commercial valuation. You roll that back 60-percent, that takes us down to $90 million. To recover that though, because you?ve done the rollback, my read on that is that you would need to increase commercial valuations by $100 million, which is a 66-percent increase over current values. That?s not going to happen.?

He continued, ?My concern as a rural economic developer is that this is a program addressing urban issues that is going to wash across the rural communities and really hamstring local government.?

In response, Sands explained that it is important to adjust over time and that there are two ways to grow; by increasing existing businesses and adding new businesses and construction to communities.

The forum concluded with closing remarks from the legislators. ?Taxation is a very complex issue. I recognize that there is a lot of concern here in the room about our proposals,? Heaton said.

?One of the great things that I saw today, and I think all of you can see is that there is common ground between the Senate and the House on these issues and that in the end I?m really hopeful that we?ll see accommodations between the two of us to try to resolve some agreement on TIF and some agreement on property tax,? he concluded.