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Dems back tax plan, say Iowa gov must compromise

Catherine Lucey, Associated Press

DES MOINES, Iowa (AP) -- Senate Democrats on Monday challenged Gov. Terry Branstad to negotiate with them on how to cut property taxes for Iowa businesses.

The demand came as a Senate subcommittee approved a Democratic plan to cut commercial property taxes that takes a different approach than the one backed by the Republican governor.

After several years of failed efforts to pass property tax cuts, Sen. Matt McCoy, D-Des Moines, said Branstad shouldn't try to "cram his plan down our throats."

"We are a separate and co-equal branch of government and we will insist that our views be considered with the same degree of respect," McCoy said. "We won an election too. If we're going to have property tax relief it's going to have to involve compromise."

Under the Democrats' plan, commercial property owners would gradually get a tax credit equivalent to a roughly 40 percent tax cut on their first $324,000 in assessed property value. Democrats said roughly 80 percent of the state's 116,900 commercial properties are assessed at or below $324,000 and that their plan would give bigger tax breaks to those businesses than Branstad's plan.

Branstad's plan gradually cuts taxable property assessments by 20 percent for all businesses at a cost of $350 million.

The Democratic proposal would cost $250 million over five years and funding would not go to the credit if the state's revenues don't grow by at least 4 percent more than the previous fiscal year.

Tim Albrecht, a spokesman for Branstad, said the governor will support property tax legislation that permanently reduces taxes for all classes. To the call for negotiation, Albrecht said Branstad is prepared to work with lawmakers but "does not believe finger-pointing and accusations are particularly helpful to this debate."

Mayors from two Iowa towns testified before the subcommittee about the proposal. Carlisle Mayor Ruth Randleman told a Senate subcommittee that the plan would help her town.

"My local businesses are impacted positively by this kind of approach. It does address the small businesses in my community," Randleman said.

John Stineman, executive director of the Iowa Chamber Alliance, raised concerns about the fact that the credit won't definitely be funded every year, calling it "conditional relief."

McCoy said the Democrats want to create legislation that they know the state can afford.

"We've got to put a budget together that's balanced," he said.

McCoy said he expects the tax proposal will go to the full Senate committee for a vote within the next week.