Last week it appeared that the conference committee on Senate File 209 was close to reaching consensus. SF 209 is the federal tax code coupling and FY 2011 supplemental appropriations bill.
House Republicans offered a compromise that would include all of the original provisions of SF 209 including coupling and bonus depreciation as of January 1, 2011, increasing the EITC from 7 to 10 percent, $46 million in supplemental appropriations. The compromise also included $20 million for mental health funding and the language creating the Tax Relief Fund (TRF).
Senate Democrats responded that they wanted language changes to mental health and the TRF. They offered to push the repeal of the mental health law to July 1, 2013 (allowing the current system for one additional year) and agreed to the creation of the Tax Relief Fund starting in FY 2013 but wanted only 25 percent of the ending balance and wanted it all for property tax relief. The remaining money in the ending balance would still be available to spend.
House Republicans countered that we would accept the repeal date on mental health and push out the start date for the Tax Relief Fund to FY 2012 (splitting the difference between the House and Senate). However, 100 percent of the ending balance would go into the TRF instead of 25 percent.
Unfortunately on Thursday, the Senate Democrats rejected that counter offer and instead wanted to pull everything from the bill except the Governor’s coupling changes (not including bonus depreciation) and the Senate’s supplementals (not including the $20 million for mental health waiting lists).
The Senate was informed that House Republicans were not interested in approving the supplemental spending without agreement on the Tax Relief Fund.
Senate Democrats said they would take another look at the TRF language but instead approved Senate File 512, which is simply a bill that just has $18.55 million for indigent defense.
The main reason that the funding is needed is because in order to balance their budget last year, the Legislature and former Governor purposely underfunded the program. They knew that would happen since the right to counsel is constitutionally protected and therefore the new Legislature would be forced to fund the program this year.
The House has already approved supplemental spending for indigent defense in two occasions. HF 45 contained $16 million for indigent defense and SF 209 contained $18.5 million. Had the Senate allowed the funding to remain in HF 45, the money would have already been approved and it would not be an issue now. It is unlikely that the House will take up SF 512 while SF 209 is still a live round.
House Republicans will continue to work with Senate Democrats and the Governor to try to reach resolution on this important tax and spending measure and will continue to fight for tax relief and measures contained in the bill necessary for businesses to create jobs and grow Iowa’s economy.