During a news conference Thursday morning, House and Senate Republican leaders announced their support for House File 1, a bill that would remove the cap on the $60 million Taxpayer Trust Fund, and create a Taxpayer Trust and Tax Credit Fund.  If adopted, the result would be that Iowa taxpayers would receive a tax credit equal to the amount of money in the new fund, determined by dividing same by the number of eligible individual taxpayers. Today, at their news conference, it was estimated that this could approximate $750 per eligible taxpayer.

This all sounds like a neat idea, but hopefully common sense will prevail and allow the legislature to use the “surplus” not by boldly endorsing a tax credit, but rather use the available funds to 1) protect Iowans from property tax increases resulting from boosting basic state aid for Iowa school districts by 4 percent; 2), increasing the Earned Income Tax Credit, which is a pro-family and pro-economic growth tax cut; and 3), cutting property taxes for all Iowa businesses, with a special emphasis on small businesses.

All this comes about because we learned on Wednesday from the Legislative Fiscal Bureau that the state coffers have approximately $850 million in addition to the $500 million contained in the Economic Emergency Fund and the Rainy Day Fund.  This was quite a surprise to everyone in the legislature, and probably even the governor’s office.