Governor Terry Branstad has nixed Iowa Democrats’ top tax policy priority for the second time this year. The governor signed the broad budget “standings” bill yesterday, but used his item veto power to eliminate several provisions, including an expansion in the earned income tax credit for working people. The governor’s veto message said,
“This change is estimated to reduce revenue to the state general fund by $28.5 million for fiscal years 2012-2013,” Branstad said. “It is my desire to approach tax policy in a comprehensive and holistic manner. As such, I urge members of the House and Senate to continue to work with my office on an overall tax reduction package that both fits within or sound budgeting principles while reducing those taxes that are impeding our state’s ability to compete for new business and jobs.”
Branstad vetoed the same tax credit expansion in a compromise bill the legislature approved in April. At that time, he also cited his “desire to approach tax policy in a comprehensive and holistic manner.”
Spending $28.5 million over two years would have helped at least 225,000 Iowa households, more by some calculations. The earned income tax credit goes entirely to lower-income and middle-income families earning less than $48,000 per year.
In a press call this morning, AFSCME Council 61 president Danny Homan described Branstad’s action as “mean-spirited,” and I would agree. In this economy, why would you block a little extra help to working households? Iowa Senate Ways and Means Committee Chair Joe Bolkcom noted in a statement, “Studies show that the Earned Income Tax Credit is the most effective antipoverty program for working families. Plus the money is spent at our small and Main Street businesses, helping to further spur our local economy.”
Branstad’s veto doesn’t look like smart politics either. During the 2012 legislative session, he wants to pass a major education reform package, comprehensive property tax reform and corporate income tax cuts. Yet he’s tanked the top Democratic tax priority twice. He is forging ahead with closing Iowa Workforce Development offices, even though saving those offices was high on the Democrats’ list throughout the 2011 session. Democrats have only a narrow Iowa Senate majority, but that majority held together for the last six months. I don’t understand why Branstad thinks he’ll be able to get any of his priorities through the upper chamber next year.
The Iowa Fiscal Partnership published a short piece on why expanding the earned income tax credit is good policy. I’ve posted that piece after the jump, along with the full text of Bolkcom’s statement on the Branstad veto and a comment from U.S. Representative Bruce Braley (IA-01).
Iowans for Tax Relief, an advocacy group that claims to be “the taxpayers’ watchdog,” was missing in action today. The organization endorsed Branstad in the 2010 gubernatorial primary as well as the general election. Iowans for Tax Relief criticized Branstad’s veto of the earned income tax credit expansion in April. Since then, the organization has had substantial turnover on its staff and board of directors. Still, you’d think they would notice the governor blocking a tax break for hundreds of thousands of Iowans.
Also from the standings bill, Branstad item vetoed a ban on bonus pay for state employees. His communications director says the bonuses are needed to attract and retain “exceptional employees,” but it looks bad for Branstad to insist on bonuses for his favorites while vetoing help for woking families. O.Kay Henderson noted at Radio Iowa that Republican lawmakers criticized Democratic Governors Tom Vilsack and Chet Culver for awarding bonuses to some state employees. Speaking on behalf of AFSCME, Homan slammed Branstad for “running around the state telling the citizens how the state’s going broke because they’re giving the union employees a two percent raise and a one percent raise and now he’s going to allow for bonuses for his department heads.”
If Republican legislative leaders comment on Branstad’s vetoes, I will add their statements to this post. So far, it’s been radio silence from the Iowa House and Senate GOP leadership.
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