Costello open to 1 cent sales tax increase

Senator Mark Costello and State Representative Cecil Dolecheck speak at a legislative coffee held February 22 in Shenandoah sponsored by Shenandoah Chamber and Industry Association.

During the legislative coffee sponsored by the Shenandoah Chamber and Industry Assocation Feb. 22 in Shenandoah Gov. Kim Reynolds’ “Invest in Iowa” initiative was discussed

In January, Reynolds proposed a 1 cent state sales tax increase to boost funding for water quality, mental health care programs and the environment.

State Senator Mark Costello said revenues from the proposed tax is estimated to generate approximately $540 million. As specified by the Iowa Code, he said $178 million of that total would go to natural resources or outdoor recreation programs.

“For example, we’ll probably spend about $12 million on Rural Energy for America Program (REAP),” said Costello. “Currently, the governor’s plan would be up to $17.2 million. Her plan is to put it into water quality issues to address non-point sources of pollution, practices that farmers can put into practice to try and help keep the nitrogen and other pollutants out of the rivers.”

Costello said funding for mental health issues and property and income tax relief are also included in the proposal

“Her legislation is going to be tax cut, ultimately,” he said. “She wants it to be at least neutral, but she’s talking about a 10% net tax cut. So, this would be a tax shift, not a tax increase. It would be a shift to sales tax. Also, we’re going to have about $94 million in new spending, ok. So, in order to become a neutral thing, were going to have to cut spending in other areas.”

Costello said he is open to the governor’s proposal when asked.

“It’s all in the details,” said Costello. “I’m open to it. I haven’t said no, but there are things that I’m looking for. I certainly want a net tax cut. I want to make sure that the formula as to where this money we’re required to spend goes, but I’m open to it.”

State Representative Cecil Dolecheck said Reynolds’ proposal has a lot of good merit and hopes that it will be at least revenue-neutral.

“I think there seems to be a willingness in the Republican caucus to take a good look at it,” said Dolecheck. “We want to make sure we don’t put ourselves in a position where we have to come back and do another tax increase if we fall short. That’s why I think within her scenario that she put forth, it is pretty well tax neutral, so to speak, even though it does provide a dedicated funding stream for conservation and water quality, which I think we’ve all been wanting.”

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