- Associated Press - Thursday, March 10, 2016

DES MOINES, Iowa (AP) - Legislative leaders agreed on some standing budget issues involving tax credit measures on Thursday, but neither side released additional details about their budget plans for the upcoming fiscal year.

The bipartisan compromise over a retroactive tax process known as coupling and a manufacturing tax exemption will help lawmakers determine how much money they have to work with for the budget year that begins in July, said Senate Majority Leader Mike Gronstal, D-Council Bluffs. He acknowledged there may be cuts to the budget targets that his party released a few weeks ago, but he did not elaborate.

“We will probably adjust down in some areas … we’re still working through that, figuring the revenues that are available,” he said.

Leaders in the GOP-majority House were also vague about changes to their budget targets. Rep. Pat Grassley, a New Hartford Republican who is chairman of the House Appropriations Committee, said he would have more information when state budget experts release new revenue figures Wednesday.

“From these two pieces being settled … after Wednesday, we’ll have a pretty good picture what the size of the pie is,” he said.



House leaders have been vocal for weeks about approving tax coupling, a process that mirrors updated federal tax guidelines and makes changes for the 2015 tax year. It would allow some business owners to write off additional assets, a process that would reduce taxes owed the first year but increase what is owed in later years.

Both Gov. Terry Branstad and Senate Democrats opposed the retroactive measure at first, saying the estimated $95 million cut to state revenue for the current fiscal year would make it difficult to pay for other priorities in the roughly $7.4 billion budget. Branstad later changed course, though he has insisted the state only couple for the 2015 tax year. Democrats made the same point Thursday.

The new legislation also includes a tax exemption for certain machinery and equipment used for manufacturing. Gronstal said his chamber negotiated to lower its financial impact, but he also indicated Branstad’s office has made some suggestions. Branstad spokesman Ben Hammes did not elaborate and only said the governor will reserve judgment until he sees the bill in its final form.

Thursday’s announcement comes as each side tries to find common ground on funding issues like additional basic aid to K-12 schools. Legislative leaders said they were making progress, but neither provided more information.

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