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In recent years, the total dollar amount of state tax credits to corporations has increased substantially and left the state with steep budget cuts and more debt. During the same time, investment in critical state services, like public schools and health care, has been low.
Even as corporate tax credits increased dramatically, Republican lawmakers passed a tax bill in 2018 with nearly $500 million in new tax cuts for corporations while leaving public schools with less than $40 million in new funding next year.
According to a 2010 Iowa Department of Revenue study, the state has over 373 tax credits, exclusions, and tax exemptions that cost the state over $12 billion annually.
Many Iowans have raised concerns specifically about the state’s refundable tax credits. These credits allow some of the biggest companies in the state to not only reduce their taxes to nothing for the year, but require the state to give millions in state dollars back to the companies. In 2017, a handful of companies not only paid no state income tax, but received checks for nearly $42 million from the state.
In addition to these state tax expenditures, some companies get even more in local taxes. Property taxes are generally collected and used by local governments, so any property tax exemptions or credits created by the state typically reduce local government revenues. This reduces revenues used by local cities and counties to provide services like police and fire, repair streets, and provide community resources like parks and community centers.
In 2017, leaders in central Iowa decided to give $213 million in state and local incentives to the world’s most profitable company, Apple, to build a data center. With just 50 permanent jobs created, the incentives means taxpayers are giving $4.26 million per job. That deal has led to many questions from Iowans about the approval process for projects like these and if there is any state oversight of these agreements.
Regents approve funding
The Iowa Board of Regents has given initial approval of plans to ask lawmakers for more state resources next year as well as close several centers due to state budget cuts.
For fiscal year 2020, the Regents are requesting a $20.5 million increase for student financial aid. That includes a $7 million increase for both Iowa State University (ISU) and the University of Iowa (UI). The University of Northern Iowa’s (UNI) request is for $4 million.
The requested increase comes on the heels of budget cuts to the institutions. In 2017, the three public universities were cut $8.25 million followed by another cut of $10 million in 2018. This resulted in a 3.8 percent tuition increase for ISU and the UI, and UNI rose 2.8 percent. Earlier this year, Republican lawmakers made another mid-year cut of $11 million. The budget cuts left students and families with higher tuitions and fees again this year.
Labor center closure
The Regents also approved a request for several center closures including five at ISU and five at UI, including the Labor Center.
The Labor Center offers continuing education programs that reach an average of 2,500 workers from more than 70 Iowa counties each year. The organization also conducts research, hosts events, and serves students as a career resource.
The Regents have said that they do not want to close the centers, but are left with no choice because of state budget cuts. The closures have received harsh criticism from Iowans and resulted in several public forums.
The budget request and center closures will be finalized by the Regents at their board meeting in November.