Branstad item vetoes tax proposals

Governor Terry Branstad used his item veto authority today to nix two tax proposals — one aimed at businesses, the other designed to give Iowa’s working poor a tax break.  Read the Radio Iowa story.  Here’s the press release from Branstad’s office.

(DES MOINES) – Gov. Terry E. Branstad today signed Senate File 209, which provides supplemental funding for indigent defense, Department of Human Services, Department of Public Safety and Department of Corrections, Department of Public Health and community colleges.

The governor also used his item veto authority to insist on broad tax relief, vowing to work with both parties in both chambers to build a tax relief package that promotes economic growth in Iowa.

“I am pleased to sign Senate File 209 to provide indigent defense funding, funding for the Department of Public Safety, Department of Human Services and Department of Corrections,” said Branstad. “I commend the House and Senate for making these supplemental appropriations in areas where the cuts would have adversely affected the health and safety of Iowans.”

In a letter to Senate President Jack Kibbie, attached to this email, Branstad stated:

“I am unable to approve the item designated as Division I. […]Any temporary economic stimulus effect of bonus depreciation is primarily accomplished through the federal tax code.  Iowa should instead focus its energies on improving our state’s long term competitive tax position for new job creation.  With our limited budget, that is best accomplished by reducing our commercial property taxes which are second highest in the country and our marginal corporate tax rate which is the highest in the nation.

“I am unable to approve the item designated as Division II.

“As earlier indicated, it is my desire to approach tax policy in a comprehensive and holistic manner.  As such, I urge members of the House and Senate to continue to work with my office on an overall tax reduction package that both fits within our sound budgeting principles while reducing those taxes that are impeding our state’s ability to compete for new business and jobs.”

Branstad also said, “I am pleased we could reach this agreement to fund our shared priorities in public safety, public health and indigent defense. I look forward to continuing our discussions on job creation and tax changes as we move forward toward adjournment.”

Gov. Branstad and Lt. Gov. Reynolds continue to work with leaders in both the House and the Senate to develop a plan that fits Iowa’s long-term needs, while maximizing effectiveness by creating jobs, growing the state’s economy and putting Iowa on a path to fiscal prosperity.

Gov. Branstad used his item veto authority in accordance with Amendment IV of the Amendments of 1968 to the constitution of the State of Iowa to item veto Divisions I and II of Senate File 209.

Iowans for Tax Relief issued a statement. 

Significant Tax Relief Options Item-Vetoed by Governor Branstad
Weeks of work by the Legislature on Senate File 209 is removed in one day

MUSCATINE, IA—Today Governor Branstad item-vetoed two significant tax relief portions of Senate File 209, the tax and spending compromise bill.
Iowans for Tax Relief President Ed Failor, Jr. issued the following statement:

“It is discouraging to see Governor Branstad’s item- vetoes which remove significant tax relief options in place to help Iowa job creators and Iowa families. A bi-partisan group of Legislators have worked for over six weeks on the compromise bill, and it is built with the best intentions for the taxpayers of Iowa.”

The veto message included the removal of two parts which are important to Iowans. First, the Governor is discouraging Iowa job creators from further investing in their business. The item-veto of the Bonus Depreciation provision is unfair – Iowa’s small businesses should be encouraged to increase business investment, not be penalized by the Governor. Government needs to get out of the way of Iowa’s businesses, both small and large, and taking away this tax relief provision could end up slowing Iowa job creation.

Second, Governor Branstad took away important tax relief specifically targeted at low-income Iowa families with his veto pen. The Earned Income Tax Credit (EITC) would have helped Iowa working families make ends meet through a tax credit which would pay for important needs, like child care and groceries.

Iowa lawmakers have been working to find common ground on Senate File 209 since March 9, 2011. The majority of the bill which was signed by Governor Branstad was supplemental spending, however, one other key provision which was signed into law was the creation of a Tax Relief Fund (renamed the Taxpayers Trust Fund) which will capture excess state tax collections (up to $60 million) and return it to Iowa taxpayers in the form of tax relief.

“We applaud the work of Iowa lawmakers to find common ground. We look forward to finding additional options to provide tax relief to Iowans,” continued Failor.

A key Senate Democrat who worked on the compromise issued a statement.

Iowa blindsided by veto of bi-partisan tax cut
for working Iowans and their communities

Statement by Senator Joe Bolkcom, chair of the Senate Ways and Means Committee

“I don’t how the Governor can sleep tonight after vetoing a bi-partisan tax cut that would have helped 240,000 working Iowa families making less than $45,000 a year. He is thumbing his nose at his own party and at middle-class Iowans struggling to recover from the national recession.

“Every penny would have been spent at Main Street businesses, and it would have helped Iowa recover from the deep national recession.

“The Governor is sending a clear message that he will only support tax cuts that give away hundreds of millions of Iowans’ hard earned money to out-of-state corporations and the richest handful of Iowans.

“In his veto message, Governor Branstad says ‘…it is my desire to approach tax policy in a comprehensive and holistic manner.’ 

“This excuse doesn’t hold water.  The governor has already signed a tax cut for Iowa’s wealthiest citizens, one worth almost exactly as much to them as what the working families tax cut would have provided to a quarter of a million Iowans.*  And today he approved the section of Senate File 209 that creates the 60 million dollar Taxpayers Trust Fund.

“Let’s stop wasting time.  Governor, are you or are you not in favor of the tax cut for 240,000 working families that every member of the Iowa Legislature has already voted for?” 

* Senate File 512 was signed by Governor Branstad on April 12.  This tax cut provides $13.1 million dollars to Iowa individuals making at least $83,000 and Iowa married couples with a joint income of more than $166,000.   The increase in the Earned Income Tax Credit which the governor vetoed would have cost $14.7 million and would have benefited 240,000 Iowa taxpayers making less than $45,000.

A key House Democrat who worked on the compromise issued this:

STATEMENT FROM REP. TYLER OLSON, RANKING MEMBER OF HOUSE APPROPRIATIONS, ON GOVERNOR’S VETO OF SF 209

“The bipartisan compromise passed unanimously by the House and Senate earlier this week will help small businesses and 240,000 working families.  Unfortunately, Governor Branstad’s reckless action today unravels the compromise.  His insistence on rewarding special interests and big corporations at the expense of small businesses and middle class families is bad for Iowa and a serious blow to bipartisanship.”

The top Republican in the Iowa House issued a very brief statement.

Paulsen Comments on SF 209 Item Vetoes

(DES MOINES) – House Speaker Kraig Paulsen (R-Hiawatha) issued the following statement on the governor’s line-item veto of portions of Senate File 209:

“I’m pleased the governor signed the Taxpayers Trust Fund, giving Iowa taxpayers a seat at the table.  Obviously, I’m disappointed that he chose to veto portions of the bill.  House Republicans will continue to fight for tax relief for Iowans.”