Senate Republicans are proposing a $750 income tax credit to “every average Iowa family” as a way to return the state’s $1 billion budget surplus to taxpayers.

“That’s real money. That’s money that they can put to use right away in improving the lives of their families,” Senate Minority Leader Bill Dix, R-Shell Rock, said Thursday.

Under his proposal, which is the same as House File 1, the credit would not be pro-rated based on the amount of income tax a family paid.

“We believe everyone is contributing and we should send the money back to taxpayers in that fashion,” Dix said at the weekly GOP leadership news conference. “This is going to average families all across Iowa, hardworking families who will make good use of the money.”

Dix estimated there may be as much as $800 million available to fund the tax credit. However, that’s just one way to use those funds, said Senate Ways and Means Committee Chairman Joe Bolkcom, D-Iowa City.

“Another would be to do some strategic investments,” he said. “We’re not going to have a very prosperous state if we let all our infrastructure go to pot.”

Gov. Terry Branstad has suggested some of the surplus could be used to fund his education reform and property tax relief proposals. Others have suggested investments in redesigning mental health services or fixing Iowa roads.

Democrats are interested in “providing a tax cut to people who need it, especially people who are making less than $50,000 a year,” Bolkcom said.

He’d like to raise the filing threshold for Iowa income taxpayers to match higher federal thresholds. For Iowans younger than 65, the threshold is $9,000 for an individual and $13,500 for a couple. For older Iowans, the thresholds are $24,000 for an individual and $32,000 for a couple.

“We need to pay attention to Iowa low-wage workers and middle-class workers,” Bolkcom said. “They ought to be the beneficiaries of any income tax cut we consider.”

Tax policy over the past decade has provided larger benefits to the wealthiest Iowans than those low-wage and middle-class families, he said.

While Bolkcom would prefer a progressive approach to income tax relief, the GOP approach, because it is not pro-rated, would be a larger benefit to low-income taxpayers than high-income earners.

HF 1 is currently under consideration by a subcommittee of the House Ways and Means Committee.

On other topics, leaders said:

• It’s unlikely the Legislature will approve in-state tuition for the children of illegal immigrants. Senate Majority Leader Mike Gronstal, D-Council Bluffs, called the Iowa Department of Transportation’s decision to issue driver’s licenses to them “a step in the right direction.” However, he didn’t know whether Democrats would support broader benefits. House Speaker Kraig Paulsen, R-Hiawatha, was blunter. Although the House passed similar legislation in the past, representatives “won’t do it again.”
• A proposal by Sen. Kent Sorenson, R-Milo, to reinstate “capital justice” is unlikely to advance in the Senate. Not only is there bipartisan opposition, Senate Judiciary Committee Chairman Rob Hogg, D-Cedar Rapids, said he’s more interested in providing law enforcement with the resources it needs to solve crimes than a bitter fight over the death penalty. “This is a reaction to the Evansdale girls,” Hogg said, referring to 8-year-old Elizabeth Collins and 10-year-old Lyric Cook-Morrissey, who disappeared after going on a bike ride in Evansdale. Hunters discovered their bodies this fall. “It’s premature to be talking about the penalty for the perpetrators when the Department of Public Safety and the Division of Criminal Investigation have not been able to capture the perpetrators,” Hogg said. Sorenson plans to unveil his plan at 11:45 a.m. Jan. 25 in the Legislative Dining Room at the Capitol.
• It was worth noting that a meeting of the House Labor Committee to discuss House Joint Resolution 1 — the so-called right to work constitutional amendment. House Minority Leader Kevin McCarthy, D-Des Moines, welcomed the cancellation. He called HJR 1 part of the GOP’s “focus on divisive issues.” Paulsen called the cancellation “nothing dramatic.” “Make no mistake, we’re happy to defend Iowans’ liberties … and right to work protects them,” he said.
• Paulsen and Gronstal indicated they believe an agreement can be reached on supplemental funding for the Department of Human Services despite partisan differences on Medicaid-funded abortions. There were 22 in Iowa last year. “That’s what subcommittees and committees are for,” Paulsen said when asked about how those differences would be resolved. Gronstal is counting on “people of good faith talking together and working through their differences.”