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Newsletter 2/25/2010

The first half of the 2010 session in over, and we are working on the last of the policy bills that are still alive, and debating budget issues.  The news on the state’s budget is grim.  The Legislature has not changed its spending patterns.  At this time, it appears that the majority party is about to propose a budget that spends $5.4 billion not counting $200 million that is  to be taken out of the Cash Reserve Fund, $200 million from the remaining Federal Stimulus dollars, and $200 million in underfunding Medicaid.  Underfunding Medicaid is not a savings, it is an expense, because it is considered an entitlement, and must be fully funded in the following legislative session.  When we add the General Fund proposal, the one time money and intentionally underestimate Medicaid expenses, we come to roughly $6 billion in FY 2011 spending.  This is nearly as much as 2009 and 2010.   It will also set us up for an incredibly difficult 2012.

In difficult times such as these, it is always easy for some to say that our problems are impossible to fix without a tax increase.  I think we send enough to Des Moines, and that the problem is that it isn’t managed wisely.  While thinking about our budget decisions, I came across a summary of Iowa’s tax revenue sources.  I’d like to pass it on to the citizens of HD 55 for your review.  This information is from the Iowa Department of Revenue.

In 2009, the Iowa Department of Revenue processed more than 1.5 million individual income tax returns.  Of those returns, 74% were filed electronically.  According to the report, IDR collected a net total of $6.87 billion from taxpayers in 2009.  This statistic is calculated after refunds were issued.  Furthermore, a variety of local taxing authorities collected over $4 billion in property taxes.  That means Iowans spent more than $10.9 billion in taxes.

A net total of $3.1 billion was collected from income taxes, the breakdown is as follows:

• Individual Income Tax: $2.82 billion
• Corporation Income Tax: $253 million
• Franchise Tax:  $28 million

In addition, Iowa taxpayers paid more than $2.88 billion in sales, use and motor vehicle taxes in 2009, the breakdown includes:

• Sales Tax:  $2.29 billion
• Use Tax:  $355 million
• Motor Vehicle Use Tax (registration fees): $239 million

A number of other taxes are levied to fund government activities.  They include:

• Consumption Tax (motor vehicle fuel tax, cigarette tax, and tobacco tax):
  $678 million
• Inheritance Tax:  $73.6 million
• Miscellaneous Tax (environmental protection charge, motor vehicle use 25% EPC deposit, real estate transfer tax, hazardous materials permit fees, insurance premium tax, motor vehicle title surcharge):  $126 million.

In 2009, Iowa property owners paid more than $4 billion in property taxes to various local taxing authorities.  The following taxing authorities and the total amount of taxes they levied are as follows:

• K-12 School:  $1.68 billion
• Counties:  $874 million
• Cities:  $1.2 billion
• Merged Area Schools:  $86 million
• Hospitals:  $80 million
• Assessors: $46 million
• Townships: $23.9 million
• Ag Extension:  $15.4 million
• Miscellaneous:  $15 million

Nearly eleven billion of your tax dollars are collected, yet many say that we need to take more.  I will work to manage your tax dollars in the same way you manage your checkbook.  When you run out of money, you have to stop spending.  Your state government should do the same.  It is an honor to serve District 55 in the State Capitol, and I am grateful for the opportunity to do so.  If you have questions or comments, please call 1-515-281-3221, or email jason.schultz@legis.state.ia.us.