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.

Author: iowapolicypoints

The Iowa Policy Project is a nonprofit, nonpartisan organization that provides research and analysis to engage Iowans in state policy decisions. We focus on tax and busget issues, the Iowa economy, and energy and environmental policy. By providing a foundation of fact-based, objective research and engaging the public in an informed discussion of policy alternatives, IPP advances effective, accountable and fair government.

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s