Prepared remarks to the Administrative Rules Review Committee by Senator Joe Bolkcom,
Chair of the Senate Ways and Means Committee
“I appreciate the opportunity to talk about the unprecedented proposed rule to create a massive corporate tax cut that is before you today.
“I’m here because I believe this proposed rule is an extreme example of Executive Branch overreach.
“If the current Governor was a Democrat, and if she proposed a rule that would change the state’s tax receipts by as much as 70 million dollars a year, I would also ask you to oppose that rule.
“I am a Democrat, but I am also proud to be a little ‘d’ democrat.
“The increasing use of ‘government by executive order’ at the federal and state level is not a good thing for our democracy.
“And that is the issue before you today. The issue is about protecting the Legislature’s prerogatives and the Legislative process.
“For more than 15 years, the definition and practice on how to apply the sales tax on consumables has been in place.
“I was chair of the Senate Ways and Means Committee in 2013 when Governor Branstad’s Director of the Department of Revenue submitted legislation to change how the sales tax would be collected on consumable supplies used in the manufacturing process.
“The House passed that legislation. In the Senate, we did not move that bill out of committee.
“You may remember 2013 as the year that the Legislature approved a $300 million industrial and commercial property tax cut.
“There were people in the Senate interested in the sales tax changes suggested by the Branstad Administration. However, the majority on the committee believed it would be fiscally irresponsible to approve a large additional, on-going corporate tax cut on top of this historic property tax cut.
“Was our caution justified? Let’s pay attention to what Governor Branstad had to say about the state budget on July 2 of this year.
(Over)
“On that day he vetoed the bipartisan compromise to invest $56 million in one-time money in our local schools. He didn’t say it was a bad idea or that the money wasn’t needed. He said the state of Iowa couldn’t afford it.
“I was shocked when, less than a month ago, Governor Branstad’s Department of Revenue filed for a rule change to make the same tax law changes rejected by the Legislature two years earlier.
“Months after vetoing $56 million in one-time money for education, Governor Branstad now claims he can cut corporate taxes by as much as $70 million a year without legislative approval.
“I want to stress that we don’t know how much this tax change will cost. In 2013, Governor Branstad’s Administration said the cost could be between 25 and 70 million dollars.
“At that time, the nonpartisan Legislative Services Agency said it did not have enough information to estimate the size of this tax cut. That is still LSA’s position today.
“There is not enough information to estimate the size of this corporate tax cut. If you need a reason to vote for a delay, that’s a good reason right there. What’s the rush?
“Of course, the Governor can veto legislation he does not like. No one challenges his power to do that.
“What Governor Branstad and every other Iowa governor up to now cannot do is re-write existing law to get his way after failing to win Legislative approval.
“And that is exactly what Governor Branstad is trying to do in this case. Having failed to convince the legislature to change the tax code, he’s trying to change it by rule.
“If Governor Branstad is successful in this maneuver, he’s making history.
“If you let this one slide by, you are setting a precedent that will be there for all future Governors, be they Republicans, Democrats or independents.
“This rule is an overreach. This rule is bad precedent. The Branstad Administration should withdraw the rule.
“This seems unlikely. So, members of the committee, I want to strongly encourage you to stand up to the legislature’s role and prerogative to establish tax policy and any other policy it deems appropriate.
“And not allow the executive branch to usurp our constitutional powers, and in this case, illegally establish an enormous, costly tax policy that will continue to undermine our ability to educate our kids.”
