State tax reform called a key GOP priority for 2018 Iowa Legislature

State tax reform will be a top priority for majority Republicans who will control the Iowa Legislature in the 2018 session, which convenes in early January, GOP legislative leaders said Thursday.

House Majority Leader Chris Hagenow, R-Windsor Heights, and Senate President Jack Whitver, R-Ankeny, said some other key issues will include state spending to improve water quality, upgrading Iowa's mental health services, and providing quality education and a skilled state workforce while spending tax dollars wisely.

"We would like to take a look at making sure that Iowa's tax system is flatter and fairer, and that everyone gets a break," Hagenow said. He and other legislative leaders spoke to a luncheon sponsored by the Greater Des Moines Partnership attended by about 150 people at the Greater Des Moines Botanical Garden.

Hagenow said later he wants to make changes to both personal and corporate income taxes. But he wants to see the outcome of federal tax legislation pending in Congress before drafting the details of a state tax reform bill.

Whitver said creating jobs, spurring economic development and reforming government were key targets of the Legislature's last session. He added that he remains optimistic as the 2018 session approaches and he is committed to addressing the "big issues and a vision for Iowa" for the next three decades.

"In the Senate, our top priority is going to be tax reform and how we can reform our system to encourage more growth in the state of Iowa," Whitver said. Economic growth is also the best way to generate additional state revenues for government programs, while closely examining state spending, he added.

Hagenow emphasized that state government has to live within its means. "We have budgeted well ... We only have so much resources. We have to continue to set priorities and when we have growth we will be in a position to do other things."

Both Republican and Democratic leaders expressed support for the concept of water quality funding legislation, which is expected to be considered early in the session. The House and Senate approved separate bills on the topic last session, but neither won final approval.

Senate Minority Leader Janet Petersen, D-Des Moines, said she favors pursuing the latest House version of the water quality measure, commenting that a watershed approach is needed to address the issue.

"We should be going after those areas that are poisoning our waters. We should go after those first," Petersen remarked. She added, "Iowans don't want to be Flint, Michigan," which has suffered from a tainted supply of drinking water.

Hagenow pledged that even if lawmakers approve water quality legislation during the upcoming session it won't mark the end of work on the issue. "We will resolve this particular bill, but then we can keep working on this and make sure that the resources get to the projects we need."

House Minority Leader Mark Smith, D-Marshalltown, said education is a critical issue for the state's leaders, and he complained it has been underfunded. He also called for a focus on job creation that benefits both business and industry and the state's workers. In addition, he criticized the state's shift to having private firms manage the state's Medicaid health care program for low-income Iowans, calling it a "cruel prank." He also said he is "very concerned" about inadequacies in Iowa's mental health services.

"Mental health is like everything else. The earlier that we identify it; the earlier we target it, the more likely we are to have a productive citizen," Smith said.

Petersen said the state never should have shut down state institutions that treated mentally ill persons without having services available to replace them. She called for more assertive community treatment teams and efforts to work on the stigma associated with mental health issues. Iowa also needs to respond to an increase in persons diagnosed with Alzheimer's and dementia, she added.

Whitver said he is proud that lawmakers worked to address mental health funding in Polk County last session and that they have worked on mental health reform in past years. Mental health is the "No. 1 priority" for some Senate Republicans, he added, remarking that efforts are still needed to ensure the consistency of mental health services, and to provide sufficient psychiatric beds.

Hagenow said children's mental health is something he cares a great deal about and he expressed a willingness to consider creative options to address the issue. Petersen responded by remarking, "If you believe in it, you have to back it up" by spending state dollars. She warned that some children's mental health services appear to be "on the chopping block."

Petersen was critical of the 2017 session, saying that Republicans "did a lot of bad things to good people." This includes action to roll back minimum wage increases authorized by local governments and legislation that dramatically reduces the ability of public employees to engage in collective bargaining.

Many public employees are now worried about their retirement security, their benefits, and their abiilty to have a voice in their jobs without a fear of reprisal, Petersen said.

"I don't think anyone in this state believes that we should have an unchecked dictatorship in state government," Petersen added. "So these are issues we need to address."

But Whitver praised the achievements of the 2017 session, saying it improved the state's job climate, helped to revitalize rural Iowa, and provided flexibility for local school boards, while creating a smaller and smarter state government that can be more efficient and more effective with the state's tax dollars.

"I think it will have an impact for years to come. We didn't accomplish everything we set out to do last year, but we got a lot of it done," Whitver said. "We are going to come back and just continue on that agenda that we had last year and hopefully we can knock out a few more of those things that we were not able to do last year."

Greater Des Moines Partnership’s 2018 Legislative Priorities

Corporate and personal income taxes: The Partnership would like lawmakers to simplify Iowa’s tax code and reduce income tax rates. Specifically, the organization promotes allowing Iowans to continue deducting their federal income taxes from their state taxes or allowing them to forego that option in exchange for lower state income tax rates.

Economic development: Lawmakers during the 2017 legislative session considered the idea of eliminating or scaling back a number of state tax credits. The Partnership opposes those efforts, saying credits tied to research, innovation and investment are critical economic development tools.

Future Ready Iowa: Gov. Kim Reynolds has championed the Future Ready Iowa program, which seeks to ensure 70 percent of Iowans have education or training beyond high school by 2025. The Partnership said it will support those efforts to align education with workforce needs.

Water quality: The Partnership has said it will support efforts to address water quality across the state, particularly an approach targeted at the watershed level and which includes “annual accountability” for the state’s investment.