It’s time to review Iowa’s ballooning tax credits, and that has finally become a bipartisan viewpoint.
The state is finalizing $117.6 million in cuts on the current fiscal year. The state faced lower-than-expected revenues, which the governor has blamed on a downturn in agricultural economy.
While this may be partially true, we feel a bigger issue is the steadily increasing number of tax exemptions and credits. And lawmakers from both sides of the aisle are beginning to agree.
A 2014 report showed that exemptions and credits totaled $12.1 billion, for a state that’s operating on a budget of a little over $7 billion. A total of 373 separate credits were listed in the report, some more than 10 years old.
The Legislative Service Agency says the roughly 40 programs used to pay residents and entities for reimbursements will cost $430 million in the next fiscal year. That’s more than any other time in state history, the agency said.
This is all a significant chunk of change that is beginning to compromise our state’s ability to fund the services it needs.
There’s a shortage of troopers on the state’s highways after a year that brought a 27 percent increase in traffic deaths. School funding continues to be an issue, both with amount and the speediness of its allocation. The DOT recently closed a handful of maintenance garages, meaning road crews are not as readily available in rural areas of the state as before.
These are just a few of growing concerns. Between tax cuts and exemptions, as well as a tax base that is indeed shrinking, it’s time for the state to step back and take a hard look at where the money is going, and whether it’s indeed serving taxpayers a purpose.
As of now, we aren’t convinced much of it is. In 2013, what was lauded as the state’s largest property tax cut was passed. It included various properties, but a large focus of the cuts were to commercial property. What good did this do?
The governor contends, of course, it was a worthwhile investment. Yet, where is the proof? No evidence to jobs being created, or investments made, due to these cuts have been shown.
Valuable services are now starting be to chopped in lieu of these credits. One example is the Iowa Public Information Board. Despite warnings from its interim director that cuts may force the office to close, the board received a large cut of $75,000 from it’s budget of $348,000.
The board handles inquiries from citizens, the media and government officials in relation to the state’s open records and open meetings laws. It provides all a valuable resource for both education as well as enforcement of the state’s laws. It also creates a free avenue for challenges, whereas in the past those challenges were handled by the state’s court.
We acknowledge some of these exemptions are good for citizens and business. A total of $125.4 million, for example, goes to nonprofit hospitals. A total of $4.4 million is offered for a sales tax holiday in August.
But it’s time to take a good hard look at where these credits are going, and being critical as to whether they are doing the taxpayers any good. This isn’t a task for down the road. This is a task for now.