Branstad weighs school tax diversion for water quality
Gov. Terry Branstad is exploring a legislative proposal that would provide money for water quality projects by using projected revenue growth from an existing statewide sales tax for schools, a Branstad aide confirmed Monday.
The 1 percent sales tax, which annually brings in more than $400 million, is now utilized solely for school infrastructure needs, such as the construction or repair of school buildings, and school district property tax relief. Water quality in Iowa has been brought to the forefront by a federal lawsuit filed by the Des Moines Water Works. The suit targets trustees of rural drainage districts in three counties that have water with a high concentrations of nitrates.
The statewide sales tax increased from 5 percent to 6 percent in 2008. The increase replaced all local sales and services taxes that funded school infrastructure, and that 1 percent change is scheduled to expire on Dec. 31, 2029.
The proposal under consideration would extend the expiration date for the sales tax by 20 years, to Dec. 31, 2049. The proposal would offer a minimum projected amount of base funding for school infrastructure, plus some new dollars from projected growth. The remaining growth in sales tax receipts would support water quality initiatives.
Ben Hammes, Branstad’s communications director, said Monday the governor has been studying the sales tax diversion plan. But Branstad has not made a commitment to include it in his policy agenda that will be submitted to the Iowa Legislature, which convenes next week for its 2016 session.
“Nothing is set in stone. This is just a proposal that we have been exercising,” Hammes said. “We have been going through the normal process that we go through every year in developing ideas and seeing which ones are good.”
The initial reaction to the proposal from some state lawmakers and stakeholders appears to be chilly, although Branstad has reportedly been working to line up support from others.
Bill Stowe, chief executive of the Des Moines Water Works, said he would be concerned about placing water quality in competition with school districts because both should be a priority.
“The devil will be in the details in something like this,” Stowe said. “There may be an opportunity to better improve Iowa’s environment while continuing to protect education resources. So we’re going to need to look at it pretty carefully.”
Tom Narak, government relations director for School Administrators of Iowa, said he was aware that Iowa superintendents have been getting called to the state Capitol to discuss the proposal with Branstad and Lt. Gov. Kim Reynolds. But he expressed some doubts about the plan.
“We are not against clean water. We think that it is a very worthwhile thing for the state to do, but they should find other sources of funding,” Narak said. “We would fight scooping any of the money because we believe it should all stay with the original intent for schools.”
Lisa Bartusek, executive director of the Iowa Association of School Boards, said her organization would also have concerns about diverting money from schools, but she wanted to hear more details about the proposal.
Margaret Buckton, legislative liaison for Rural School Advocates of Iowa and the Urban Education Network of Iowa, said both groups she represents support extending the penny tax for school infrastructure without changing the use.
“This has been a godsend for being able to update school infrastructure and be current on technology without having to increase property taxes to do that, so they have all really supported that,” Buckton said.
State Sen. Brian Schoenjahn, D-Arlington, vice chair of the Senate Education Committee, said the Senate approved legislation last session that would have made the 1 percent school infrastructure sales tax permanent by eliminating the 2029 sunset date, but the measure is still pending in the House. He said education and water quality are both extremely important, and he wants to break down the numbers on the proposal and have a full discussion with other legislators. His Republican colleague, Sen. Amy Sinclair, R-Allerton, who is the ranking member of the Senate Education Committee, said she would generally be opposed to diverting money away from something that was voted on and approved by voters in every single county in the state.
But state Rep. Bobby Kaufmann, R-Wilton, said flatly that he would oppose the sales tax diversion proposal.
“I appreciate that the governor is trying to find water quality dollars, but at first glance there is no way that I can support opening up a silo and using the tax growth to fund water quality,” Kaufmann said. “This creates a rural-urban divide that does not need to be. And if we’re going to open up a silo, I’d like to see those dollars stay in the education world, perhaps for transportation. I think there are many other ways we can find water quality funding outside of pitting farmers versus the teachers.”
Larry James, co-chair of the Greater Des Moines Partnership’s Water Quality Task Force, said the panel has been charged with coming up with potential implementation strategies for addressing water quality, but the issue of funding will be left up to the governor and legislators.
“We’re hopeful that the parties will be able to come together to determine how to finance the implementation of the nutrient reduction strategy,” he said.
Ralph Rosenberg, executive director of the Iowa Environmental Council, said that without knowing the specifics of the governor’s proposal he tends to prefer a funding stream like a three-eighths of 1 percent sales tax to fund natural resources and outdoor recreation programs. Iowa voters in 2010 supported a state constitutional amendment to establish an Iowa Natural Resources and Outdoor Recreation Trust Fund, but lawmakers have declined to raise taxes to generate money for the fund.
“I believe most of the environmentalists and outdoor groups will say they prefer a known quantity,” Rosenberg said. “And that known quantity is not raiding money from another source. It’s taking money that’s targeted to natural resources and outdoors. It’s an independent stream of funding. One of the things we want to avoid is competing with other well-deserved sources.”
Rosenberg said it’s also critical that any proposal outlines how those dollars should be spent so that organizations can be held accountable. “I really believe that people understand the water won’t change overnight. But they want to see progress made.”
Phil Roeder, spokesman for the Des Moines School District, said Des Moines’ public schools, like all Iowa school districts, will have ongoing needs to ensure students have access to school buildings that are safe, efficient, and designed for learning in the 21st century.
“In regards to funding water quality initiatives with a portion of the sales tax, we would need to know more details on any proposal before taking a position, but we do believe that funding for school infrastructure must somehow continue so that school buildings in Des Moines and across the state can best meet the educational needs of our students,” Roeder said.