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Iowa Dismisses Talks of Gambling Tax Hike, Focuses on State Budget

Posted on April 11th, 2011

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The governor’s office has, for a long time now, sought to increase the tax levied on casinos in order to prop up the state’s struggling finances as well as make sure gaming operations are kept in check and do not expand unnecessarily without sufficient consultation with government officials. However, this debate looks to be headed for the backseat as lawmakers promise that negotiations on a new state budget will not even include talks of gambling tax increase. The view is shared by both Democratic and Republican leaders alike. “As far as the Senate is concerned, we are not particularly interested in raising taxes,” explained Michael Gronstal (D-Council Bluffs) and the current Senate Majority Leader. . “We’re a little surprised that the governor recommended a tax increase and were also a little surprised he’s going to single out a single industry for tax increases so he can give breaks to other industries.”

The Iowan government currently charges 22 percent of gross receipts for casino operations with two facilities paying a little higher at 24 percent. The proposal by Gov. Terry Branstad calls for this number to go up to 36 percent and, in theory, is expected to raise the state income from gambling outlets to $200 million per year. Said Branstad, majority of that amount will be earmarked for cutting corporate income taxes in half. Senators and House Representatives alike contend that increasing one industry’s taxes to give relief to another is a little bit unfair. Paulsen and Gronstal both spoke over the weekend regarding the governor’s proposal.

In Gronstal and Paulsen’s words, there has been little inclination in supporting the governor’s push for increased taxation of the gaming sector. For Paulsen, it’s clearly not a part of on-going negotiations for the latest state budget as it will most likely further delay the proceedings if an issue as controversial and as hotly debated as taxation finds its way into the discussion. The legislative session will adjourn by April 29. The current Iowa legislature is split between Republicans running the House and Democrats manning the Senate. Both Paulsen and Gronstal expressed considerable enthusiasm in saying both chambers should be able to work out their differences and come up with a workable proposal for the state. There is increased pressure on local legislatures following Congress’ inability to agree on budget merits as it faces an impending government shutdown.

Gronstal adds that Iowa is a competitive political state which oftentimes finds itself in the crossfire between issues drawn across political lines. This has oftentimes stalled bills and measures but Iowa gets by. At one point, the General Assembly session came out on a 25-25 voting score rendering decision-making next to impossible. “We’ve got a lot of experience in split government in many different ways,” added Gronstal. “Speaker Paulsen and I are smarter than they are in Washington, D.C.,” he chides. But shifting to a more serious countenance, Gronstal said he knew coming into this session that a compromise is absolutely necessary in order to get things done. This is becoming all the more a necessity as the legislature heads into the last weeks of the session and important measures will still have to be passed to make sure there is nothing left as both chambers go on recess.n “There’s little likelihood of impasse,” said a confident Gronstal. “We’re used to looking for common ground and compromise, that’s kind of the nature of our positions.” ”The system in Iowa is designed to lead us to that position,” finished Paulsen.

Among the matters that still needs a decision is the approval of a new map containing the revised legislative and congressional districts and is scheduled for a vote by next week. Both leaders were optimistic of the maps’ chances for going through saying it’s looking as we would want it to be from an electoral fairness standpoint. “As I look at the House map, I see a pathway to Republican control and I can also see a pathway to Democratic control,” said Paulsen. “That tells me it meets a certain level of fairness.” ”We both kind of don’t like what we see, but don’t figure there’s a way to get to a better map,” said Gronstal.