• About Us
  • Advertise
  • Contact Us
  • Privacy Policy
Sunday, May 22, 2022
The Iowa Torch
  • Home
  • State Government
  • Federal Government
  • Local Government
  • Politics
  • Education
  • Opinion
No Result
View All Result
  • Home
  • State Government
  • Federal Government
  • Local Government
  • Politics
  • Education
  • Opinion
The Iowa Torch
The Iowa Torch
No Result
View All Result
Home Opinion

Hendrickson & Ginn: The Road to Tax Reform Starts with Conservative Spending

John Hendrickson & Vance Ginn: To enact pro-growth tax reform, policy makers must continue to practice sound budgeting by passing a Conservative Iowa Budget. 

John HendricksonVance GinnbyJohn HendricksonandVance Ginn
November 17, 2021
in Opinion
Reading Time: 3 mins read
Hendrickson & Ginn: The Road to Tax Reform Starts with Conservative Spending

Photo by Shane Vander Hart

Gov. Kim Reynolds and Republican legislative leaders are making tax reform a priority for the upcoming 2022 legislative session. The path to keeping government from excessively burdening people with taxes and allowing for pro-growth tax reform starts with conservative budgeting. 

RELATED POSTS

Ernst: Democrats’ Strange Multiverse of Madness

Grassley: Democrats are deepening the political divide

Vander Hart: How can we trust Liz Mathis?

Fortunately, Iowa has been practicing prudent budgeting. Iowa will end the current FY 2021 with a $1.24 billion budget surplus in its general fund, which is substantially larger than last year’s surplus of $305 million. 

Iowa state leadership deserve credit for their recent prudent spending and tax relief. As a result, Iowa was prepared fiscally for much of the costs related to the government shutdown in response to the COVID-19 pandemic. Truth in Accounting’s Financial State of the States 2021 report ranks Iowa in the top 10 (9 out of 50) of fiscally stable states. 

 In addition, the legislature has been careful to avoid using the billions in COVID-19 related federal funding on ongoing expenses. The $1.24 billion surplus is not a result of these federal dollars, but rather the fiscal conservativism that has spurred economic growth. 

ADVERTISEMENT

Nevertheless, policymakers will need to continue this approach to strengthen the state’s improving fiscal foundation by keeping spending from excessively burdening taxpayers to provide needed tax relief. 

This is a reason that the Iowans for Tax Relief (ITR) Foundation recently released the Conservative Iowa Budget (CIB) for FY 2023. This conservative budget approach helps limit spending by setting a maximum threshold on the state’s general fund based on the rate of the state’s resident population growth plus inflation. Given the 2021 rate of 4.51% and a base of $7.1B, excluding $1 billion provided in tax relief this year, the FY 2023 budget should be less than $7.44 billion. 

This fiscal rule of a spending limit on the general fund provides a reasonable limitation that essentially freezes inflation-adjusted spending per capita. This helps to lessen the crowding out of private sector activity and helps to stabilize expectations over time. 

Iowa’s Revenue Estimating Conference (REC) estimated that revenues will increase for both FYs 2022 and 2023. The REC is estimating $8.9 billion in revenue for FY 2022 and $9.1 billion for FY 2023. This projection is a healthy improvement from the previous year. These optimistic projections by the REC make it prudent to continue using budgetary caution to fund only limited roles for government instead of spending every taxpayer dollar.

Therefore, it is important to keep spending reined in and will require legislators to prioritize every taxpayer dollar, which is difficult as many special interests will be arguing for either new funding or expansion of their previous allocations. 

Already public education (K-12, community and technical colleges, and higher education) along with Medicaid comprise 79% of the general fund budget. This creates additional pressure because spending on these items continue to increase and crowd out other priorities. 

Many families and businesses, especially during the pandemic and now as inflation reduces their purchasing power, must prioritize their spending. Government should also focus on priorities, even more so than families and businesses—because it is not the government’s money. 

Fiscal rules that limit spending help achieve this goal. While Iowa currently has a 99% spending limit in code, this limitation must be strengthened. 

The spending limit should be strengthened by passing a constitutional amendment or changing it in the code to be based on a maximum rate of population growth plus inflation. This is an important measure because it accounts for more people paying taxes, higher wages—which are highly correlated with inflation over time, and economies of scale.

Policymakers have a historic opportunity to enact pro-growth tax reform that will benefit all Iowans and make the state more competitive. To achieve this goal policy makers must continue to practice sound budgeting by passing a Conservative Iowa Budget. 

Tags: 2022 Iowa Legislative Sessionfiscal conservatismfiscal responsibilityIowa LegislatureKim ReynoldsRevenue Estimating Conferencetax reform
ShareTweetShare
ADVERTISEMENT
Previous Post

Hinson, Grassley Discuss $1.2 Trillion Infrastructure Package

Next Post

Federal Judge Blocks “Tax Mandate” in American Rescue Plan Act

John Hendrickson

John Hendrickson

John Hendrickson is the Policy Director for TEF Iowa.

Vance Ginn

Vance Ginn

Vance Ginn, Ph.D., is the chief economist with the Texas Public Policy Foundation based in Austin, Texas. He is the former chief economist of the White House’s Office of Management and Budget (OMB) during the Trump administration.

Related Posts

Reynolds Launches New Teacher and Paraeducator Registered Apprenticeship
Politics

Reynolds endorses two pro-school choice Iowa House candidates

May 19, 2022
State Government

Appel to retire from Iowa Supreme Court

May 13, 2022
Hendrickson: Reynolds Outlines a Bold, Conservative, and Pro-Growth Agenda
State Government

Reynolds announces $20M in grants for downtown housing projects

May 6, 2022
Reynolds Launches New Teacher and Paraeducator Registered Apprenticeship
State Government

Reynolds signs 2022 Day of Prayer proclamation

May 5, 2022
State Government

If Roe v. Wade is reversed, Iowa will still recognize abortion rights

May 5, 2022
Hendrickson & Williams: Governor Reynolds’ Tax Reform Ideas are Pro-Growth
Education

Reynolds signs bill requiring parental consent for school health screenings

May 3, 2022
Next Post
Reynolds Appoints Meghan Corbin as District Court Judge

Federal Judge Blocks "Tax Mandate" in American Rescue Plan Act

Cisneros Announces He Will Run for Re-Election in Iowa House District 96

Cisneros Announces He Will Run for Re-Election in Iowa House District 96

Sign-Up For Our Daily Updates

Get The Iowa Torch right in your inbox!

Please wait...

Thank you for signing up!

Recommended Articles

Ernst: “Defending freedom in Ukraine is defending freedom everywhere.”

Ernst: “Defending freedom in Ukraine is defending freedom everywhere.”

March 24, 2022

Poll Shows Iowans Closely Split on Protect Life Amendment

June 29, 2021

Iowa Republicans and Iowa Democrats Release Precinct Caucus Locations

February 1, 2022

Popular Stories

  • architecture building city facade

    Five Iowa House Republicans took money from teachers’ union PAC

    0 shares
    Share 0 Tweet 0
  • Reynolds endorses two pro-school choice Iowa House candidates

    0 shares
    Share 0 Tweet 0
  • Bird raises $300k for Attorney General campaign in 2022

    0 shares
    Share 0 Tweet 0
  • Vander Hart: How can we trust Liz Mathis?

    0 shares
    Share 0 Tweet 0
  • WATCH: Iowa 3rd Congressional District Republican Primary Debate

    0 shares
    Share 0 Tweet 0

The Iowa Torch

The Iowa Torch​ is a for-profit, news organization that focuses on political news as it relates to Iowans

Categories

  • Education
  • Federal Government
  • Iowa History
  • Local Government
  • News
  • Opinion
  • Politics
  • State Government
  • Uncategorized

Newsletter

Please wait...

Thank you for signing up!

© 2022 The Iowa Torch, a publication of 4:15 Communications, LLC.

No Result
View All Result
  • Home
  • About Us
  • Advertise
  • Contact Us
  • State Government
  • Federal Government
  • Local Government
  • Politics
  • Education
  • Opinion

© 2022 The Iowa Torch, a publication of 4:15 Communications, LLC.