Tighten loose belts on largest waists
It might surprise Iowans to learn that state general fund spending has declined as a share of the economy. That is the reality — even if it’s not the common rhetoric heard from the State Capitol.
But one area of state spending is spinning out of control: spending through the tax code on business development projects. Business tax credits have grown from $144 million in fiscal 2006 to $243 million last year. The Department of Revenue projects this figure to spike to $406 million next fiscal year.
These credits might not be reviewed by the Legislature as it builds its budget. This kind of spending is done through the tax code, not the regular appropriations process. Once enacted, these credits are not subject to annual reauthorization and can grow well beyond what anyone expected, and for activities not intended when they were passed.
Business tax credits in Iowa are on autopilot. We cannot afford this, and the current budget crisis offers a good time to address it.
See the new paper, “Iowa Budget Belt-Tightening: Fosusing on the Largest Waists,” from the Iowa Fiscal Partnership at http://tinyurl.com/d8rkm2.
Tags: tax budget Iowa credits
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