Property Tax, Education Reform Among Talks Last Week in the Iowa House of Representatives

First and foremost, I would like to invite you to the upcoming legislative forums listed at the end of the newsletter.  Senator Jack Whitver, Representative Kevin Koester and I will discuss the topics of state budget, tax reform, education and mental health reform as well as topics brought up from the floor.

During the first three weeks at the Capitol, 112 House Bills and 94 House Study Bills have been introduced.  In addition to several other bills, I am managing House File 110 which will likely be debated next week.  This bill will ‘couple’ the Iowa Revenue Code to the IRS rules and incorporates recent federal changes.  We are moving this bill quickly through the House to provide certainty to taxpayers wanting to file their taxes. Key components of this bill for 2012 tax returns are as follows:

•  Deduction for up to $250 for out-of-pocket expenses for teachers.

• Tuition and fees deduction for higher education expenses.

• Election to deduct state sales/use tax in lieu of state income tax as an itemized deduction.

• Deduction for mortgage insurance premiums as deductible qualified residence interest.

• Nontaxable IRA transfers to eligible charities.

• Small businesses can expense the first $500,000 of equipment cost rather than depreciate it.  This is labeled ‘Section 179 expensing’.

Please contact me if you need additional information on what is coming for 2013 changes. 

We continue to work on sending back to taxpayers the overage collected during 2012.  The legislature is at a crossroads.  Should we take the path of spending limited one-time revenues on recurring expenses that grow state government or should we send this overpayment back to Iowa taxpayers?  I believe that families and individuals in our House District 37 should have this money back.  Remember that in 2007 until 2010 this money was spent and created future expectations that couldn’t be met when the economy slowed.  This lead to across the board state budget cuts and huge property tax increases. Those increases are still with us today and are at the base of our property tax reform issues.

In addition to the bills introduced last week regarding the Taxpayer Trust Fund, discussions this week were about Property Tax reform, Education reform and expanding Medicaid.

Property tax reform is centering on taking the state portion of the school foundation funding from 87.5% to 100% over five years, thus allowing local property taxes to drop by that amount.  It is important to not allow a reduction in one type of property, like commercial, to increase another class of property, like residential.

This week the Department of Education released funding details about the Governor’s Education Reform bill. The focus of this bill (HSB 4) is to increase salaries for teachers and provide new career pathways for teachers. This plan involves three components: 1) Increasing teacher salaries from $28,000 to $35,000, 2) creating leadership pathways and providing additional stipends for leadership roles and 3) providing district support for implementation. A more detailed breakdown of the fiscal aspects of this plan for each district can be found at the Department of Education website.

I received emails from constituents this week about expanding Medicaid. If Iowa expanded Medicaid, the estimates are that 150,000 additional people will be covered. The Centers for Medicare and Medicaid Services in Washington, D.C. have stated that there is no expiration date on the decision to expand Medicaid, and the expansion of such a program could prove to be a permanent decision.

In a country that has a record deficit and dysfunction at the federal level, entering into an agreement that is primarily funded in federal dollars may not be wise. If the federal government chose to go to a blended rate or reduce their match on Medicaid in the future, Iowa would have to pick up the balance. Using the Federal Medicaid Assistance Percentage (FMAP) as an example, in 2004 it was 63.8%. For 2014, it is estimated that FMAP will be 58.4% and is likely to continue dropping.

Please understand that we are still in the early stages of all three of these reform bills. There will be many discussions and possible amendments, and I am interested in your opinion as we move towards floor debate.

Finally, I would like to invite you to attend the following Saturday legislative updates:

• February 2, 2013, 9 a.m., Neveln Center, 406 S.W. School St.

• February 23, 2013, 8 a.m., Café Diem, 2005 S. Ankeny Blvd.

• March 9, 2013, 9 a.m., Neveln Center, 406 S.W. School St.

• March 23, 2013, 8 a.m., Café Diem, 2005 S. Ankeny Blvd.

• April 6, 2013, 9 a.m., Neveln Center, 406 S.W. School St.

• April 27, 2013, 8 a.m., Café Diem, 2005 S. Ankeny Blvd.