Public Hearing on HF 807

Hundreds of taxpayers arrived at the State House this evening for the Public Hearing on federal deductibility. Speakers had to sign up in advance for a three minute time slot.

At about 8:25 there was a fifteen minute delay in the hearing to clear the taxpayers from the chamber for disorderly conduct – applause – after receiving several warnings from the Chairman.

Taxpayers came from all over the state; here is some of their testimony:

Trudy Caviness – Small business owner from Ottumwa
She and husband are small business owners. Don’t want a tax on a tax, and want to continue to stay in business and employee people.

Ken Sager – Iowa Federation of Labor
Supports the bill and believes it taxes Iowans more fairly.

Andy Warren – State director for NFIB
Mr. Warren represents 8,000 business, most of which whom employee less than 6 people. Noted that this bill is a tax increase for these small businesses. Even the bill’s sponsors announced that there are winners and losers with the bill. Half a million tax payers are the losers – the state’s small business owners which are also responsible for ¾ of new jobs in Iowa. This bill is not the way to revive our economic situation.

Ed Failor, Jr. – President of Iowans for Tax Relief
We are here about two things: honoring our past and the investment we’re going to make in our future. Young people came to the State House in busses from every regent university tonight and several private universities. We’re telling them to get out of Iowa, because if they make less than $40,000 when they graduate and they have no other tax credits, they will vote with their feet and leave the state. This bill punishes young Iowans who want to be successful. [thunderous round of applause]

Ben Johnson – University of Iowa Student
Doesn’t want to start a life, a medical practice, and a family in a state that punishes him for being successful.

Chad Airhardt – Executive Director of Waukee Area Chamber of Commerce
Opposes HF 807. Waukee is a fast growing community of young people. What will the next crop of Iowa graduates do when they can earn more in other states and pay fewer taxes? Many small businesses in Waukee are S-corporations, and tax increases will determine whether they put money into expanding, give back to the community, or pack up and leave. Lawmakers need to show fiscal restraint and not double-tax Iowa taxpayers. In Culver’s State of the State, the Governor said that this was not the time to raise taxes on Iowans – what happened to that plan?

Federal Deductibility on the Chopping Block

A Senate Ways & Means subcommittee met this morning to discuss the highly controversial bill to eliminate the federal deductibility. Senate Study Bill 1317 would eliminate the ability for individuals to deduct their federal taxes before they compute their state taxes – requiring Iowans to pay a double tax on their income. The bill’s proponents claim that it reduces taxes for about two-thirds of Iowans and it has no impact on the state’s revenue. This is not quite the case.

At the meeting, Iowans for Tax Relief said that the bill may be revenue neutral to state government, but not so for individuals. The bill will raise taxes for Iowans making more than $125,000.

John Gilliland with the Association of Business and Industry pointed out that a vast majority of employers in the state are S-corporations, partnerships, sole proprietorships, and LLCs which are all pass-through entities that will be adversely affected by this bill.

Dave Roederer with the Iowa Chamber Alliance pointed out that there would be a tax increase on 450,000 Iowans, no change for 242,000 Iowans, and 667,000 would see a decrease in taxes. He suggested that the Senate figure out a system where everybody gets a decrease or no change at all.

Senator Herman Quirmbach (D-Ames) is worried that under the current system, when federal taxes go up because the Bush tax cuts expire, people will have more to deduct from state taxes and state tax revenue would go down. Iowan’s federal income tax liability is expected to increase by $160-$180 million after the December 31, 2010 expiration date.

American Federation of Labor is in favor of the bill, and claimed that it simplifies the tax system and won’t affect most people as the average income for Iowans is $47,000. However, when these individuals lose their jobs because their small-business employers can’t afford to stay in business or the tax increase is passed on to the consumer, all Iowans will begin to feel the effects.

The House has a similar bill that passed out of the Ways & Means Committee Monday night. For a breakdown of the tax affects of the House Bill click here. A public hearing on HF 807 will be held in the house tonight from 7:30-9:00P.M.

Capitol Observations: ABATE's Day on the Hill

Wednesday was ABATE’s Day on the Hill, and while ABATE is not part of CSG, they are an example of a very effective lobbying group. The main piece of legislation they look out for is a mandatory helmet law, which they have effectively lobbied against over the years.

ABATE today stands for A Brotherhood Aimed Towards Education, but at one time stood for A Brotherhood Against Totalitarian Enactments. This freedom-loving group of motorcyclists once used to surround the Capitol on their bikes to promote or protest legislation.

Today, the group is incorporated,has volunteer lobbyists at the State Capitol, and even has its own PAC. They have done all the right things to evolve into a highly respected organization. Their primary objective today is to provide motorcycle education courses and to promote motorcycle safety. They do this at the same time they are opposed to mandatory helmet laws balancing the safety issues. ABATE is a force to be reckoned with and know that at any time they can still surround the Capitol with bikes.

For more information about ABATE Iowa visit their website at www.abateiowa.org

Trans Iowa Teams up with CSG

Capitol Strategies Group recently began representing a new client at the State House – Trans Iowa, which includes Yellow Cabs, corporate limo services, and charter busses. The company’s initial cause for concern was Senate File 157 which would have the effect of requiring independent contractors to be employees of the hiring party invoking all kinds of legal ramifications. The bill did not survive funnel week and died in the subcommittee.

Part of ensuring a company’s legislative success is to align it with allies who have similar interests and can partner together on various bills. CSG is searching for allies for Trans Iowa on another issue.

Those allies may be found in the aircraft industry who should be particularly concerned with a new study bill that came out this week. Senate Study Bill 1302 eliminates the sales and use tax exemptions on the sale of aircraft and aircraft services and equipment. This includes exemptions for aerial crop spraying, sale or rental of aircraft, all aircraft parts, services, maintenance. Such a bill would be very detrimental to the industry and have negative impact on sales at a time when businesses are already struggling.

What prompted this bill was a study that came out revealing how much each exemption reduces state sales tax receipts. However, the study says nothing about the economic advantages of these exemptions. Section 423.3 in the Iowa Code has a list of items that are exempt from sales tax. This section includes the most common exemption of food and food ingredients. The fear is that one by one, these exemptions will be picked off, hurting taxpayers and the sellers of the goods.

What legislators must keep in mind is that tax policy changes behavior. The behavioral change resulting from this bill would be a decrease in planes that want to land in Iowa. It is not a good situation for airlines, airports, or their personnel.

Top O' the Morn!

The Conservative Breakfast Club met Tuesday morning at the Republican Party of Iowa Headquarters. Once again the tables were packed with Conservatives enjoying each other’s company and an Irish breakfast thanks in part to organizers Darrell Kearney and Wes Peterson.

Jeffrey Boeyink, RPI’s new Executive Director, was introduced and spoke to the growing strength of the Republican Party. He and the State Chairman, Matt Strawn, have been traveling around the state energizing Republicans at town meetings. Boeyink is excited about the energy and new leadership he has seen across the state. His sole purpose, said Boeyink, is to foster this energy and to get Republicans elected.

Freshman Senator Randy Feenstra from Hull, Iowa in Senate District 2 was up next. Senator Feenstra had been the head of a foreign candy company that made popular sweets, like my personal favorite, Black Forest Gummy Bears. He resigned the successful career to begin a family, and was soon approached by community leaders to be Hull’s City Administrator. His political career took off from there, and was elected County Treasurer where he streamlined the budget and cut government waste. Senator Feenstra ran for the Senate for three reasons: He felt that the state shouldn’t pass laws mandating certain aspects of local and county governance; he wanted to reign in on the state’s bureaucratic mess as he did in his own county; and he wanted to promote Conservative values and fiscal responsibility.

Freshman Representative Kevin Koester from Ankeny, who touted his Irish heritage, described how he was persuaded to run for office. He enjoyed his work as a Community Service Administrator and gave an adamant “No” after being asked to run for State House several times by Steve Boal, former Representative Carmine Boal’s husband. He finally gave it some thought after being asked to pray about it, and made a successful run for the office. Representative Koester credits the state party leadership and the legislative leaders for their successes in reorganizing and reenergizing the Republican Party.

Both of the these freshman legislators are illustrative of the rest of the new class of Republicans; not only are they excellent speakers, but they are full of energy and are excited for the rebirth of the Republican Party and getting Republicans elected in 2010.

3M Day on the Hill

Wednesday was 3M Day at the State Capitol. 3M business leaders and local plant managers led by Dan Gary, 3M's Public Affairs Manager, met with the House and Senate majority and minority leaders and their local legislators to discuss issues and concerns affecting 3M plants in Iowa.

Among those concerns were Big Labor’s bills, particularly doctor shopping (a.k.a. choice of doctor). 3M provides healthcare for its employees and over the past five years of 1,000 employees each year has had ZERO complaints filed about the occupational doctors 3M has provided for its employees.

Another concern is the yearly threat of combined corporate reporting. The bill was killed early this year, but inevitably will come up again. Forest City, Iowa is home to 3M’s largest distribution center. Forest City plant manager John Roisen told legislative leaders that the Iowa distribution center competes with states nationwide, and combined corporate reporting would make it easy for them to pack up and move their operation and 140 jobs to another state.

There is one good-for-Iowa bill out now that 3M would like to see passed. House File 199 provides for the use of safe and environmentally friendly cleaning products by the state’s schools. 3M is a maker of the “green-cleaning products” which are certified as “green” by an independent agency. The bill is currently in the House Education Committee and will need to move by Friday to survive Funnel Week.

Legislators and legislative leaders recognized 3M as a model corporation that provides valuable jobs to Iowans. Senate Minority Leader Paul McKinley (R-Chariton) expressed his appreciation for good companies like 3M who invest in Iowa, and believes that it is manufacturing jobs that can help get America out of the economic slump it’s in.

The Big Four for Big Labor

Next Friday, March 13, is the funnel deadline requiring all Senate bills to be reported out of Senate committees, and all House bills to be reported out of House committees. Bills that don’t get reported out of committee are effectively killed. However, issues may be resurrected until the last day through amendments of leadership bills. There are four main labor issues CSG is keeping an eye on - a couple of which are already funnel-proof.

Right to Work

House File 555 authorizing the negotiation of “fair share” fees in collective bargaining agreements was introduced on Wednesday by Representative Bruce Hunter (D-Des Moines) and referred to the House Labor Committee. An individually sponsored bill being introduced on such a major issue at this late date may be going nowhere, but if it does, it must be voted out of the committee by next Friday.

Choice of Doctor (a.k.a. Doctor Shopping)

House File 530 states that employers would no longer be able to select proper medical care for employees injured on the job. This bill was also introduced on Wednesday by Representative Hunter and referred to the House Labor Committee. Similarly, it must be voted out of the committee by next Friday to survive in the House.

A similar bill exists in the Senate, Senate File 155, and was voted out of the Senate Labor & Business Relations Committee in mid-February and placed on the Senate Debate Calendar. The bill is very much alive and funnel-proof, and so is the issue regardless of action taken on it in the House.

Prevailing Wage

A motion to Reconsider was filed February 23, after that weekend-long prevailing wage debacle. House File 333 has not shown any signs of life after having been shot down, but could be revived at anytime if a previously "No"-voting Democrat decided to change his or her mind. No such bill has been filed on the Senate side.

Collective Bargaining

Expanded bargaining bills add specific things to the list of what unions can bargain for. Nothing has been filed yet and there is no word of anything coming up. Legislative leaders are going to wait for Governor Culver’s approval before any action is taken regarding a collective bargaining bill.

At this point, the Prevailing Wage and Choice of Doctor bills are funnel-proof. The Right to Work bill must be voted out of committee by next Friday if it is going to become an issue, and a Collective Bargaining bill would need to be both introduced and voted out of committee before the end of the week.

On a lighter note, it was a beautiful day in the State’s Capitol today - sunny and 73 degrees. Who else is ready for spring (and an early end to the session)?

Early Out for State Lawmakers?

In a normal non-voting year, the Iowa General Assembly is in session 100 days beginning the second Monday in January. In a move to send legislators home early, Senate Majority Leader Mike Gronstal (D-Council Bluffs) has informally moved up the funnel deadlines by one week.

Generally speaking, funnel deadlines require bills to have advanced to a certain level by some date, otherwise they’re killed. The Session Timetable says that by March 13, Senate bills must be reported out of Senate committees and House bills must be reported out of House committees for them to receive any further consideration. Senator Gronstal’s informal acceleration of the process would require Senate bills to be reported out of Senate Committees this Friday, March 6, but would have no effect on the House funnel deadlines. The Senate Majority Leader could implement this by not scheduling any committee meetings other than Appropriations, Ways & Means after this week, and bills not moved out would effectively die.

This move by Senator Gronstal reflects the fact that state revenues continue to fall which eliminates the need to stay in session and wait for the April revenue estimation. During growth years there is incentive to stay and spend the new money projected in the revenue estimate. The state would save some much needed money on those days they are not in session.

Launched:

Monday evening I attended the launch party for a fantastic new website called The Bean Walker. The site is an Iowa news aggregate – a one stop shop for Iowa news and politics that includes links to news sources, blogs, and leading articles. The design is similar to sites such as The Dead Pelican in Louisiana and The Drudge Report – a national right leaning news aggregate.

The site’s creator, Tim Albrecht, has done an excellent job promoting the site on TV news and radio. The name of site came from the summer job of many rural Iowan kids – bean walking – the dreaded, but well paid, task of walking through the bean fields to pull weeds and volunteer corn stalks. While bean walking is a thing of the past, The Bean Walker represents the growth of the present conservative movement.

The launch party was a huge success, with many prominent elected officials in attendance. If the party was any indicator, this website will be a huge success as well and a daily must read.

The site promises something for all Iowans, because in Iowa we’re all bean walkers!