Lawmakers talk school funding, taxation at forum

BY BROOKS TAYLOR

Mt. Pleasant News

It wasn?t all doom and gloom at the Feb. 27 legislative forum at the Chadwick Library at Iowa Wesleyan University.

There was enough concerning news, however, that the tone of the forum prompted one attendee to ask the legislators if they had anything positive to report.

Lawmakers State Rep. Dave Heaton, R-Mt. Pleasant; State Sen. Rich Taylor, D-Mt. Pleasant; and State Rep. Tom Sands, R-Wapeloo; were joined on the panel by Mt. Pleasant Mayor Steve Brimhall; and Shahid Hussain, assistant professor of accounting and finance at Iowa Wesleyan University. The topic of the forum was ?Taxation and State Budgeting.?

One of the first questions, naturally, was how much K-12 districts can expect to receive in allowable growth. The Republican-controlled House has proposed two percent, the Democrat-dominated Senate is at four percent, and Iowa Gov. Terry Branstad suggested 2.4 percent.

The legislature pledged to get the funding question answered early in the session as last year funding was not decided until long past the deadline for school budgets to be filed with the state. Although the pledge was made, there has been little movement thus far to answer the school-funding question.

Legislators said that a major issue impacting school funding or any other spending, for that matter, is the slow trickle of additional state revenue. Last year, the state revenue review committee suggested that the state could expect to receive anywhere from five to seven percent in new revenue this year.

It hasn?t happened. Instead, new revenue has come in at about two percent.

?Projections are for $153 million in new state revenue this year,? Heaton reported. ?If we were to give two-percent allowable growth to schools, that would take $143 million of the $153 million. If we gave two percent, allowable growth would take up 93 percent of the new money we receive, and I feel that is the best we can do.

?I am going to have to cut my (health and human services) budget by $12 million,? Heaton continued. ?Sometimes, when we go to the floor, we don?t have a perfect crystal ball. Our sales tax is only up two percent over the preceding year and it is usually between six and seven percent. I feel we are doing the best we can from the House?s perspective. We don?t believe in spending one-time money for ongoing expenditures.?

In a related matter, the legislators said there is practically no support for Gov. Branstad?s plan to divert one cent of the state option tax for schools to a state waterways improvement plan.

?The legislature promised the money would go to schools, we are looking for other funding sources,? Sands said.

Heaton said there isn?t much support for the governor?s plan, and he cannot support the plan. ?I don?t know what the alternative is. Everybody is working to address the issue.?

Count Taylor as another legislator opposing using school sales tax money for the cleanup of state waterways. ?I can?t support taking school tax money for that. There are plenty of other ways to get money. However, I was approached by several superintendents that said they would trade the one cent for extending the sunset clause on the local option tax for school.? The law is scheduled to sunset (end) in 2029.

The commercial and industrial tax rollback also received some attention. Several years ago, as part of the state?s property tax reform legislation, the legislature gave commercial and industrial a property tax rollback which amounts to 10 percent for fiscal 2017. The state promised to backfill the property tax to local municipalities.

While the state has kept its promise thus far, local officials are nervous that if state revenue continues not to meet expectations, the promise will be broken.

For fiscal 2017, the City of Mt. Pleasant is expecting $128,582 from the state in commercial and industrial property tax backfill.

?For the City of Mt. Pleasant, it is vital to get that money back. We need that money,? Mayor Brimhall emphasized.

?It (rollback) did little for larger industrial property, but it helped smaller commercial property,? noted State Rep. Sands. ?Commercial/industrial property was the only one without a rollback. Commercial property (taxable values) doesn?t grow very fast, and industrial grows even slower. It was the right thing to do,? he said. ?The loss of the property tax from commercial and industrial has not handcuffed the state budget, we would have spent that money anyway. There are a lot of problems out there but property tax is not one of them.?

Sands, chair of the House Ways and Means Committee, said the state will backfill commercial/industrial property to the tune of $154M this year.

Hussain, the IWU professor, said he believes that business taxation needs reform in Iowa. ?We have not got to this point in one night,? he began. ?A few years back, American companies were moving their headquarters to other countries, so Congress took action to make that more difficult.

?I think we have to address the issue on why companies are doing it, not making it more expensive,? Hussain continued. ?We have to look at the total picture. We can?t make America a difficult place in which to do business. We have to make it more equitable for business to stay in the United States?.If we cut expenses, are we raising revenue,? he asked.

Hussain said legislators have to make the state more attractive for businesses to come here. ?There are more factors restraining business than tax issues,? he added.

Addressing the privatization of the state Medicaid system, Heaton said it was the correct thing to do, adding that the program was becoming unsustainable and ?eating up a lot of state revenues.?

?Medicaid (expense) is going to increase and it affects a lot of people. It will increase because more people are living longer, making it more expensive?I feel there will be some bumps, but I do believe that without placing it under a managed care system, the state would not be able to afford it,? said Heaton.

Legislative forums are hosted the fourth Saturday each month during the 2017 session of the Iowa Legislature from 8:30 to 10 a.m., at the Chadwick Library on the IWU campus. The next forum will be Saturday, March 26, and the subject will be health care. Forums are sponsored by the Mt. Pleasant Area Chamber Alliance Government Affairs Committee.