Vander Linden Weekly Update
Rep. Guy Vander Linden (R)
The New Revenue Estimate
In December, House Republicans calculated there was $153 million in revenue growth for the Legislature to allocate in FY 17. As a result of the new revenue estimate made Wednesday, there is now $176.7 million in revenue growth in FY 17.
The 99% Expenditure Limitation Law will limit spending to $7.351 billion in FY 17.
The budget submitted by the Governor in January, based on the previous REC, spent $7.412 billion.
Initial Senate Democrat targets spent $$7.409 billion. Initial House Republican targets spent $7.320 billion.
The new revenue estimate of $7.351 billion not only lives within the 99% expenditure limitation law, it also lives within House Republican budgeting principles.
The latest REC estimate confirms House Republicans’ responsible approach to the state budget. The REC has recognized that Iowa is experiencing slow and steady revenue growth, and that a realistic approach to government spending is a wise path to follow.
House Republicans remain resolute in keeping spending within ongoing revenue. We will continue to budget like Iowa families and businesses by not spending more than the state collects and not using one-time money to fund ongoing needs. House Republicans are committed to funding priorities of Iowans’ in a responsible way.
The Tax Coupling Bill
Part of the agreement between House Republicans and Senate Democrats includes House Republican’s tax coupling bill which provides $95 million in tax relief to Iowans.
The tax coupling bill has an impact on the FY 2016 ending balance and the FY 2017 on-going revenue levels. Any agreement will impact discussions on school aid and budget targets.
The bill couples with everything except bonus depreciation in tax year 2015. It does not couple in tax year 2016 leaving that decision to the 2017 Legislature. There is a $95.7 million impact on FY 2016 revenue/ending balance. That money goes directly to taxpayers. Additionally, $86.5 million is added to FY 2017 on-going revenue with roughly $55 million of that available for appropriation under the state’s expenditure limitation law.
Governor Branstad has stated the House GOP coupling plan is something that he will support.
Consumables
The other part of the agreement involves the so-called “consumables” issue. HF 2443 from 2014, which had broad bipartisan support, clarifies the definition of replacement parts, including the supplies consumed during the manufacturing process as exempt from sales and use tax. Advocates argue that Iowa’s manufacturers are doubled taxed under the current law and administrative rules. The agreement ends this double taxation. It also allows manufacturers who pay good wages and benefits to invest in equipment and employees. Passage of this language also eliminates the ability of the Department of Revenue to reinterpret the administrative rules governing consumables and gives manufacturers certainty in regards to their tax liability.
