Tax coupling, water quality funding highlight legislative session
The Iowa Legislature during the 2016 session approved Farm Bureau-backed legislation which couple state tax rules with recently-passed federal rules to provide needed economic help for farmers and rural communities; maintain funding for water quality and soil conservation programs and protect property taxpayers, Craig Hill, president of the Iowa Farm Bureau Federation, said last week.
"Farm Bureau’s grassroots work at the statehouse during the 2016 legislative session had a positive impact for agriculture and for all of Iowa," Hill said after the close of the legislative session which ended April 29. "Our members continue to step up to develop sound policy and work with lawmakers to implement it."
The tax coupling measure, which was signed into law by Gov. Terry Branstad in March, was clearly needed to keep farmers’ tax bills from rising at a time of low commodity prices and reduced cash flow in agriculture, Hill said. "Tax coupling was a key issue for Farm Bureau members during this legislative session because the lack of coupling would threaten to raise farmers’ state tax bills at a time when low commodity prices have drastically-reduced margins and incomes," Hill said.
Tax coupling became an issue after the U.S. Congress passed federal tax legislation in late 2015 to make Section 179 small business expensing permanent. In visits with lawmakers, Farm Bureau members stressed that the lack of coupling would hit farmers’ pocketbooks and would harm Iowa’s rural communities because farmers would not be able to investment in equipment, buildings and other capital purchases. Those investments, members said, help create jobs in our rural communities.
The coupling extension only applies to tax year 2015. Farm Bureau members will continue to urge legislators to make the coupling with federal taxes permanent, Hill said.
"It’s critical that we continue to work to make changes permanent," Hill said. "We need to provide certainty to taxpayers so they can develop long-term plans and know the tax consequences ahead of time."
In the 2016 session, Iowa lawmakers committed status quo funding to support farmers’ efforts to improve water quality and reduce soil erosion.
"Our members are committed to conservation progress and to the Iowa Nutrient Reduction Strategy and have invested as much as $2.2 billion in conservation practices in the past decade. We believe it’s important for the state to also do its part," Hill said.
In the 2017 fiscal year, which begins July 1, $9.6 million will be allocated to Iowa’s Water Quality Initiative (WQI). Additionally, nearly $2 million will go to the Ag Drainage Well Closure Program and $6.75 million to continue funding the conservation cost-share program which provides state matching funds for farmers to implement successful conservation practices on their farms.
Hill and Iowa Farm Bureau members have pledged to continue to work with Governor Branstad and both chambers next session to create a long-term, sustainable funding plan that prioritizes conservation and water quality and supports the Iowa Nutrient Reduction Strategy.
Hill said Farm Bureau members are disappointed lawmakers did not pass a long-term funding plan for water quality during the 2016. The organization supported a House-passed bill that would have prioritized nearly $500 million in existing state funds to create a long-term, sustainable funding source to supplement Iowa farmers’ own investments to improve water quality and reduce soil loss. Unfortunately the Senate did not advance the bill.
"We were encouraged by the serious discussions on the critical issue of water quality funding and we will continue to work to secure long-term funding for water quality programs through our grassroots policy development process," Hill said.
Iowa lawmakers also took steps during the 2016 session to protect property taxpayers, Hill noted.
The legislature once again also extended property taxpayer protections in the funding of the mental health system. The county levy system has operated under a statewide dollar cap since 1995, and they kept these property taxpayer protections in place for an additional year. Farm Bureau, Hill said, will work to ensure that the statewide dollar cap is not increased.
Property tax credits
Additionally, lawmakers approved a one-year extension of last year’s property tax credits.
In other key measures supported by Farm Bureau during the 2016 session, lawmakers approved:
A measure to bring uniformity to the current requirements for terminating a land lease agreement. The measure requires that all land lease termination agreements be in writing, even those with a timeframe that is outside of the "typical" September 1 and March 1 dates.
An extension of the expiration date of four biofuels tax programs from 2018 to 2025 passed the House and has been sent to the governor. Two of the programs being extended are for ethanol, and two of the programs being extended are for biodiesel. The Legislature also sent the Governor a bill that extends renewable energy credits for wind and solar.
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