DES MOINES – The ability of a 10-member House-Senate conference committee to reach agreement on a tax relief and spending package may be a harbinger of how the 2011 session will play out for the split-control Legislature in the coming weeks, panel members said Thursday.

“This is the first step of the resolution of the big picture. This is a kind of a microcosm of what we’re going to see happen throughout the rest of this session,” said Rep. Scott Raecker, R-Urbandale, chairman of the House Appropriations Committee and a co-leader of the joint panel assigned to find compromise in competing versions of Senate File 209.

Raecker said he was optimistic Republicans and Democrats on the panel could forge agreement by next week although there considerable partisan gulfs over key components of the package that potentially could provide more than $311 million in tax relief over three years under House Republicans’ approach to the tax “coupling” issue and nearly $71 million in additional state spending for the current fiscal year if Democrats accept a GOP call for revamping the county-based mental health funding system by July 1, 2012.

Conference panel co-chairman Sen. Joe Bolkcom, D-Iowa City, who leads the Senate’s Ways and Means Committee, said he was hopeful there could be movement next week, but he spoke against GOP efforts to create a vaguely defined tax relief fund designed to capture surplus funds from the state’s ending balance that would be returned to taxpayers and to establish a minimum health insurance premium of $100 per month for all state employees. He was especially unhappy that House Republicans favored keeping the earned income tax credit at 7 percent rather than raising it 10 percent for about 240,000 working families making less than $45,000, which carried a price tag of more than $14 million, while moving forward tax “coupling” breaks that primarily benefitted businesses with accelerated depreciation on equipment purchases for the 2010 tax year and beyond.

Conference Committee member Eric Helland, R-Grimes, said Republicans preferred their approach in a separate bill to cut state personal income taxes by 20 percent across the board rather than targeting relief to one group as the Senate did by expanding the earned income tax credit.

Senate Majority Leader Mike Gronstal, D-Council Bluffs, called Republicans “mean spirited” for stripping the enhanced tax break for Iowa’s working poor, saying they are trying to “manufacture” a state budget crisis when the state has a $900 million surplus “to create a slush fund to cut taxes for the super wealthy and out of state corporations.”

“That shows how little they understand about poor people in Iowa. They are just plain dead wrong. There are thousands of people in Iowa who don’t have an income tax liability,” he said. “An across-the-board cut of zero tax gets them nothing and it shocks me that they’re that stupid.”

Democrats on the panel said Thursday they would accept a GOP provision that would require the state Revenue Estimating Conference to set a growth rate for fiscal year 2013 at its next meeting but likely would remove it from S.F. 209 and deal with it in a separate House measure. The conferees generally were in agreement on $46 million in proposed supplemental spending yet this fiscal year, but Democrats balked at a GOP call for pumping $25 million into the county mental health system to ease waiting lists and setting a 2012 sunset to force legislative action to revamp the current system.

Bolkcom called that action premature on an issue that is complicated and likely would require a two or three year transition once a reform consensus is reached.

House Speaker Kraig Paulsen, R-Hiawatha, said his “greatest optimism right now” focuses on the likelihood that the conference committee will be able to reach an agreement that will begin the process of formulating a bipartisan fiscal 2012 budget plan.

“I think we’re actually closer than what it might appear on the surface,” he said in assessing the prospects for a S.F. 209 compromise.

Along with the supplemental mental health funding, Senate File 209 included these spending proposals for the current fiscal year:

$5.9 million for the community colleges to restore Governor Culver’s cut

$14.2 million for the Department of Corrections (prisons, CBCs and central office) to restore Governor Culver’s cut

$18.6 million for public defender and indigent defense to make up for the underfunding used by the Democrats to balance the budget in FY 2011

$2.96 million for the Department of Public Safety to restore Governor Culver’s cuts with $2 million going to the Iowa State Patrol, the rest going to administration, Narcotics Enforcement, DCI and the State Fire Marshal’s Office

$1.2 million for the Department of Public Health to restore Governor Culver’s cuts to addictive disorders, community capacity, healthy aging, healthy children & families and infectious diseases

$2.64 million to the Department of Human Services to restore Governor Culver’s cuts to the mental health institutions

Allow the state Department of Revenue to use previously appropriated funds for tax processing.

Comments: (515) 243-7220; rod.boshart@sourcemedia.net