Groups weigh in on Iowa budget problems

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DES MOINES, Iowa (AP) — Liberal and conservative groups pressed Iowa lawmakers on Thursday to take different approaches to resolving a budget shortfall of $500 million or more in the next fiscal year.

The conservative Iowans for Tax Relief proposed major changes that it said would save $762.8 million, including selling off the state’s prisons to private groups, eliminating the Department of Economic Development and cutting state worker pay by 5 percent.

“I, like many other Iowans, thought it was time for the Legislature to look for ways to be more fiscally responsible,” said Ed Failor Jr., the group’s president.

At the same time, labor and liberal activists announced the formation of the Coalition for Better Iowa. Spokesman Andrew Berg said its goal is to persuade lawmakers to look at both revenues and spending as they struggle to overcome the budget shortfall for the year beginning July 1. Berg said his group wasn’t pushing a particular plan but wanted to keep the discussion open.

“Tax increases are certainly a hard thing to look at, but the Legislature itself has hard decisions to make on both sides of the equation,” he said.

Gov. Chet Culver and Democrats who hold majorities in both legislative chambers have ruled out any new taxes, saying they will balance the budget by cutting spending and tapping into the state’s cash reserves.

After failing last year, Democrats also said they wouldn’t try again to overhaul Iowa’s income tax code. Democrats had wanted to eliminate the ability to deduct federal tax payments when calculating state liability, then use the money that generates to lower income tax rates.

The package lawmakers considered also would have generated several hundred million dollars, largely by raising taxes on upper-income taxpayers.

Failor said he wasn’t convinced that cash-strapped legislative leaders would stick with their pledge to drop the issue.

“Taxpayers successfully defeated the proposal to repeal federal deductibility last year, yet it likely will be introduced again this year,” he said. “The way to fix the state budget is not a $600 million tax increase, it is through changing Iowa government.”

Failor’s group sponsors one of the state’s largest political action committees — Taxpayers United. While it primarily backs Republicans, it also finances moderate and rural Democrats who are sympathetic to its anti-tax message. Those Democrats were crucial in heading off the effort to overhaul the tax system.

Labor and its allies are a linchpin of the Democratic coalition, offering money and supporters to candidates in an election year where they are likely to need it. Some labor leaders are restive that Democrats running the Legislature haven’t delivered on key issues, and that increases pressure on the party.

Democrats control the House 56-44, and the Senate 32-18. All members of the House are on the ballot this year, as well as half of the Senate.