Deal may be near on state tax cuts at Iowa Capitol

Negotiations between the Iowa Legislature and governor's office intensified Wednesday in a bid to wrap up the 2018 session of the Iowa Legislature, and leaders say they are close to a final compromise.

"Things seem to be going in the right direction," said Senate Majority Leader Jack Whitver, R-Ankeny.

Lawmakers were a day past their self-imposed deadline to complete a tax cut and budget package — some staff have already left for the year and lawmakers' expense payments have run out — but they pledged they were close to reaching some session-ending agreements.

Whitver told reporters Wednesday his goal is to reach an agreement by the end of this week on a plan to reduce state taxes. Once a consensus is reached on a tax bill, plans to develop a state budget for the fiscal year beginning July 1 should fall into place relatively quickly, key lawmakers said.

"We have made a lot of progress the last two days, and hopefully we will have an agreement in the very near future," Whitver said. Crafting a compromise on tax legislation is complicated and takes time, he added.

House Speaker Linda Upmeyer, R-Clear Lake, said she’s “very confident” the two chambers can reach an agreement on the “big pieces” of the tax plan by the end of the week, though the details may take longer, she said.

“I think the thing we have to remember here is that Republicans have waited a long time to do some tax reform and some tax cuts, and there are 88 Republicans here,” she said. “It’s not surprising perhaps that there are many different ideas on how you might approach this.”

Gov. Kim Reynolds, a Republican, canceled plans to travel to New York City this week for an economic development trip to work with House and Senate leaders on tax reform and other legislative issues, an aide said. Acting Lt. Gov. Adam Gregg has headed to New York in her place.

Rep. Guy Vander Linden, R-Oskaloosa, chairman of the tax-writing Iowa House Ways and Means Committee, said Reynolds has given a blunt message to GOP legislative leaders: “Get a tax bill out that I can sign and let’s get this thing going."

Big differences on taxes

House Republicans have proposed a plan to cut individual state income taxes by about $1.3 billion over the next five years. Senate Republicans have drafted a plan to reduce state individual income and corporate taxes by about $2 billion over the same period.

Upmeyer said House leaders are uncomfortable making tax cuts much deeper than those outlined in their latest proposal, but she recognizes compromise is necessary.

MORE: Why are negotiations over Iowa tax cuts taking so long? Here are the sticking points.

Senate President Charles Schneider, R-West Des Moines, who chairs the Senate Appropriations Committee, said a tax overhaul bill is a top priority for this year's session.

"We don’t have many opportunities to discuss tax policies," Schneider said. "This is the first time we have talked about it in 20 years. So we want to make sure that we get something in code that is going to stimulate the economy and help encourage Iowa families to stay here, Iowa small businesses to stay here, and hopefully attract more people and more jobs."

The Senate released a proposed general fund operating budget Tuesday night for the upcoming fiscal year that would total $7.48 billion, which is a 3.2 percent increase compared to current spending. The Senate plan is just $5 million less than a House budget plan released Monday, a sign that an agreement on spending is close.

State Court Administrator Todd Nuccio sent a message to all court personnel Wednesday saying that the proposed House budget for fiscal year 2019 would provide the Iowa Judicial Branch $4.3 million more than its revised budget for the current fiscal year. At that level, the number of vacancies currently being held would be reduced by about half, he said. The proposed Senate budget addresses spending for the state's justice system, but it doesn't have a specific breakdown for Iowa's courts.

MORE: Cold weather's impact, karaoke and cartoons as the Iowa Legislature slides past its 100 day mark with deals not done

The Iowa House conducted business as usual on Wednesday, debating bills and handling some committee business. But the Senate adjourned after just a four-minute floor session Wednesday morning, allowing Senate leaders and budget subcommittee chairs plenty of time to focus on tax and spending matters. Most Senate members have been told they won't be needed at the Iowa Capitol the rest of this week.