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Branstad backs tax cuts, new plans to create jobs

January 11, 2012

DES MOINES - Legislative leaders Tuesday said they would quickly take up Gov. Terry Branstad proposals to spend $25 million to encourage job creation efforts and to let employees invest in their companies, but Democrats said the governor likely would face strong opposition to his call for deep cuts in business property taxes.

House Speaker Kraig Paulsen, R-Hiawatha, said Republicans, who hold a big majority in the House, needed to wait for a detailed plan on Branstad's proposal to spend $25 million on a High Quality Jobs Program. The governor outlined the proposal Tuesday in his annual Condition of the State speech.

Paulsen, noted, however, that he expected lawmakers to take action quickly.

Article Photos

Gov. Terry Branstad delivers his Condition of the State address before a joint session of the Iowa Legislature, Tuesday, at the Statehouse in Des Moines.

"The pieces will start moving out of committee, probably, as early as later this week," said Paulsen, who credited the Republican governor's focus on job creation.

Sen. Bob Dvorsky, D-Coralville, who heads the Senate Appropriations Committee, said Democrats were open to Branstad's plan for the High Quality Jobs Program, which would replace a tax credit program with direct subsidies.

"We're certainly willing to look at it," Dvorsky said.

Fact Box

Local reaction to Gov. Branstad's speech

Rep. Lance Horbach, R-Tama

"I liked the speech. The thing that caught me the most was his non-partisan position and he was challenging us to work together. I also like the fact that he's concentrating on new jobs and also education and property taxes."

Rep. Mark Smith, D-Marshalltown

"I think the governor hit on things that we can come to some common agreement on to improve the state. I like his proposal for economic development and his 10 point plan for education."

Sen. Steve Sodders, D-State Center

"I have been in favor of lowering commercial property taxes. I think the way to go is to look at small businesses first and not the big box stores."

Rep. Annette Sweeney, R-Alden

"I'm happy that he talked about the top priorities for the state, including education. Iowa needs to make sure that we can compete on a national scale for education, so I'm thrilled that he sees that."

House Majority Leader Linda Upmeyer, R-Garner, noted that some Republicans might be skeptical because the program sounds similar to the program it is replacing, the Iowa Values Fund. That effort, initiated by former Democratic Gov. Chet Culver, used tax credits to reward businesses that create jobs.

Republicans have favored more broad tax cuts than programs that reward certain actions by businesses.

"We've been critical of the Values Fund and many people in my caucus voted against it originally," said Upmeyer. "We'll discuss it."

The centerpiece of Branstad's economic development efforts is his proposed 40 percent reduction in commercial property taxes over the next eight years.

He's sought such a reduction for more than a year but now has coupled the proposal with state aid to local governments as well as an annual 2 percent cap on local government spending increases.

Branstad said those moves would ensure that a commercial property tax cut wouldn't shift the tax burden to other classes of property.

"Passing our plan will give Iowa business owners permanent relief and a fighting chance to compete," the governor said.

Branstad noted there was broad consensus that Iowa must reduce its commercial property taxes, which are among the nation's highest.

Republicans generally favor Branstad's broad property tax cut, while Democrats argue for a property tax reduction aimed at small businesses.

They note that out-of-state companies would be among the biggest beneficiaries of Branstad's proposal.



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