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Reynolds unveils tax reform package for Iowa

DES MOINES — Gov. Kim Reynolds unveiled a significant tax reform package Tuesday that seeks to cut Iowans' personal income taxes by $1.7 billion over six years, revamp rates by phasing out federal deductibility and equalize sales tax collections by treating Main Street and online businesses alike.

Calling her plan the “most significant tax reform package in decades,” Reynolds said the plan she is proposing to the Legislature will provide immediate relief to middle-class workers, small-business owners, farmers, families and teachers across Iowa. She said the plan, which starts in tax year 2019, is “making good” on the commitment she made in her swearing-in address last May and again in her Condition of the State address in January.

“My plan combines meaningful tax relief while protecting our budget priorities,” Reynolds said in a statement. “We’ve prioritized tax relief for middle class taxpayers, small business owners, teachers and working families across the state. We’re long past due for real tax reform that simplifies and updates our system while allowing Iowans to keep more of their hard-earned money in their communities.”

Legislative reaction was mixed, with Republicans hailing it as a great starting point but something they may want to accelerate and compress into fewer rates, and Democrats questioning the plan’s affordability and the fact it “does not touch corporate tax credits, which is the fastest-growing part of the state budget.”

“Kudos to the governor for taking this upon herself,” said Sen. Randy Feenstra, R-Hull, chairman of the Senate Ways and Means Committee. “It’s a fantastic step. It’s a great step for the state of Iowa and now we can build on it from there.”

The governor’s plan seeks to cut income tax rates by 23 percent, resulting in $1.7 billion accumulated relief by 2023. According to the governor’s office, state individual income tax cuts would total $290 million through tax year 2019, $296.4 million in 2020, $337.7 million in 2021, $377.8 million in 2022 and $448.6 million in 2023.

Iowa’s current nine personal income tax brackets will be reduced to eight, with the top rate of 8.98 percent to be reduced to 6.9 percent by 2023 and would only apply to income above $160,965. Currently income above $73,260 is taxed at 8.98 percent.

Feenstra said eight brackets are a “great starting point,” but he believed Senate Republicans would like to compress Iowa’s system into four income brackets and deliver the relief in a shorter time span, possibly as quickly as two years. He said her $1.7 billion total “was in the arena” of the tax relief Senate Republicans would like to deliver to Iowans.

“I applaud her for how far she’s gone with this,” he said. “Now it’s our turn to create our ideas and piggy-back off hers.”

Along with lower rates, the governor plans to eliminate the alternative minimum tax and phase out federal deductibility – a feature that allows Iowans to deduct their federal tax liability from their taxable state income.

“The deduction of federal taxes from Iowa taxable income (known as “federal deductibility”) is a policy that once served a laudable purpose but over time has distorted Iowa’s tax code,” according to the press release issued by the governor’s office. Under the plan, federal deductibility would be reduced to 25 percent in the 2019 tax year, 15 percent in 2020 and eliminated in 2020, aides said.

Among the Reynolds’ plan features, middle-class Iowans would experience lower taxes-- a typical single mother with one child making $30,000 will see a 28 percent tax cut next year that would grow to 54 percent by 2023; a typical family of four making $55,000 will see a 10 percent tax cut next year growing to 23 percent by 2023; and a typical family of four making $70,000 will see an 8.7 percent tax cut next year growing to 20 percent by 2023.

In 2019, the standard deduction will increase from $2,070 to $4,000 for single filers and from $5,090 to $8,000 for married filers and there will be an additional standard deduction of $1,500 for the elderly and blind in 2019, rising to $2,070 in 2021, according to the governor’s office.

Reynolds’ aides said the plan is designed to pass through the benefits of the federal tax cut plan to Iowans, roll the benefit of phasing out federal deductibility into the lower rates, recoup additional state sales tax currently going uncollected, and spur economic growth that will mean more taxable income.

Sen. Pam Jochum, a Dubuque Democrat who is the ranking member on the Senate Ways and Means Committee, called the failure of the governor’s plan to address corporate tax credits was “a big, big mistake” that is unfair to working families and one of several “red flags” in the governor’s plan.

“Any tax cut plan for Iowa must be viewed in light of disastrous tax-cut plans approved in Kansas and Oklahoma, which have resulted in massive cuts to education, public safety, health care and other vital services,” Jochum noted. “In fact, Kansas abandoned failed trickle-down tax cuts and Oklahoma’s Republican Governor is actually proposing higher taxes to dig her state out a fiscal mess in the wake of massive tax cuts.”

According to the governor’s office, the Reynolds’ plan includes revenue targets, or “triggers,” that will act as a safeguard in the event of a downturn in the economy and, if there is significant economic growth, the triggers will accelerate the tax cuts and return greater savings to Iowa taxpayers.

Under Reynolds’ approach, Iowans will -- for the first time -- be able to invest in section 529 plans tax-free for K-12 tuition, allowing for more choice in K-12 education. Also, Iowa will fully couple with the federal educator expense deduction, giving teachers’ greater tax savings when they purchase school supplies for their classrooms.

Iowa business owners will be able to deduct 25 percent of the new federal Qualified Business Income Deduction from their Iowa taxable income, and the section 179 expensing limit will increase immediately from $25,000 to $100,000.

Reynolds noted that many Iowa’s Main Street businesses must collect sales tax, but many online, out-of-state companies do not so she proposed putting them on a level playing field with out-of-state corporations in recognition that the economy is changing and Iowa’s tax code needs to adapt to it.

“All increases in sales tax revenue for these online sales will be passed on to Iowans through greater income tax cuts, ensuring that the size of the state’s government is left in check,” according to the governor’s office.

Happy anniversary to the Hansons
GALLAGHER: Valentines celebrate 74 years as sweethearts

ELK POINT, S.D. | Burdette and Gladys Hanson wear smiles and somewhat heavy hearts today, sweethearts celebrating their 74th wedding anniversary on Valentine's Day.

The Hansons for decades have marked their anniversary -- Cupid's holiday -- by going to dinner with relatives Russell and Margaret Hanson, who wed on Valentine's Day three years after Burdette and Gladys tied the knot. Russell and Burdette were cousins.

"One year on Valentine's Day we'd decide where the four of us would go and we'd pay," Burdette said. "They next year, Russell and Margaret would choose and they'd pay."

Russell Hanson died on Sept. 21, 2017, meaning this will be the first Valentine's Day Margaret will have without her husband at her side. Burdette and Gladys said it was an easy decision to keep this sweet tradition going. So, they'll drive in to Elk Point to pick up Margaret and the three of them will head to dinner at Whimp's in nearby Burbank, South Dakota.

"Margaret's tickled we're doing this and so are we," Gladys said.

Burdette and the former Gladys Sandberg, of Vermillion, South Dakota, wed on Feb. 14, 1944, at the parsonage serving St. Paul Lutheran Church and Immanuel Lutheran Church, both of Elk Point. Adrian Hanson, the groom's brother, served as best man. Florence Oveson (she was later Florence Larson) fulfilled maid-of-honor duties.

"People talk about spending $2,000 to $5,000 for a wedding," Burdette remarked, tongue-in-cheek. "I kissed the preacher and gave my wife $5!"

Gladys laughed and shook her head. She'd heard the line before.

"We got married and then went to dinner at my folks' home in Vermillion," she said, noting how they were hosted by her parents, Sigurd and Annie Sandberg, who also invited Burdette's parents, Alfred and Elodes Hanson, of rural Elk Point.

Tim Hynds, Sioux City Journal 

Gladys Hanson shows photos of the pastor who married her and her husband, Burdette, and of the parsonage where the wedding took place, on Monday at their home north of Elk Point, S.D. The Hansons, a special Valentine's Day couple, today celebrate their 74th wedding anniversary.

Following dinner, the couple gave Gladys' brother, Ernest Sandberg, a ride to Sioux City as he was serving in the U.S. Army during World War II and needed to board a train to return to duty. The newlyweds, meantime, spent the night in Sioux City before heading to Omaha for a honeymoon.

Gladys, a 1943 University High School graduate (located in Vermillion), was 18 when they wed. Burdette, a 1940 Elk Point High School graduate, was 21. He's now 95; she's 92, and they're getting along famously in the home they built on their farm north of Elk Point in 1974.

"There's just one step up from the driveway," Burdette said.

The Hansons farmed for years and raised four children in the process: Gerald, Arden, Robert and Sylvia. All but Robert are married and residing near Elk Point, while Robert makes his home in the Twin Cities. The Hansons have six grandchildren and nine great-grandchildren.

"I raised seven pigs here each year until this year," Burdette said of his career post-retirement. "I fed them each year and had them butchered locally for the kids. I stopped when I couldn't get to a local locker."

At 95, he laughed, maybe it was time to give up feeding pigs.

"I've been blessed," he continued. "Five years ago, at age 90, I had cancer under my right ear. The doctors at Mayo said they wouldn't do surgery on a 90-year-old. And then one of the doctors said, 'Well, he's only 70!'"

Burdette was cleared for surgery and had it the next day. He's had no recurrence.

"I had breast cancer in 2002 and I beat it," Gladys said.

Burdette Hanson said one key to their health is the fact no one in the family took up smoking. The couple promised each child a birthday present of $1,000 if they reached age 21 without taking up smoking. Each child passed the test. So, the couple extended the gift to their grandchildren.

"We paid the last grandchild a few years ago," Burdette said of their $10,000 pledge. "It was a great investment!"

The couple, faithful members of nearby St. Paul Lutheran Church, said they enjoyed hard work with the family on their farm. They also savored dances every Saturday night and would dress for those occasions. Big Band music rated as their favorite.

"We don't dance anymore because my knees are shot, bone-on-bone," Burdette said with a shrug of his shoulders.

That's a small price to pay for a life of raising crops and feeding livestock. The couple said they're blessed to still be celebrating their most romantic anniversary date 74 years after saying "I do."

Burdette still purchases Gladys a corsage for Valentine's Day. And for her beau, Gladys buys a card and writes a short message.

There's something more: The color tied to their big day.

"Burdette liked red, always did," Gladys said with a smile. "And beings we married on Valentine's Day, I wear red, too."

New owner to raze historic Okoboji resort, sell six lots for homes

OKOBOJI, Iowa -- Okoboji’s mayor and at least three city council members are taking a wait-and-see attitude toward a multimillion-dollar plan for redevelopment of the property known for more than a century as The Inn at Okoboji.

The plans, revealed Monday night during a special session of the council, calls for demolition of all existing buildings, beginning in March, and dividing the lakefront portion of the property into five, single-family residential lots, each about 75 feet in width and about 450 feet deep. A sixth lot also would be carved out that would face but not front the lake.

Rapid City, South Dakota-based Whitecap, LLC bought the property at auction in a $5.7 million deal that closed in December 2017 without identifying the principals in the corporation.

San Francisco hedge fund manager William Duhamel, and his wife, Katharine Duhamel, were the only two principals identified Monday night. In addition to several other properties in the area, the Duhamels own a summer cottage at 3515 Fairfield St., less than a quarter-mile from The Inn. The home, which dates to 1903, and land are assessed for property tax purposes at more than $869,000, according to Dickinson County records.

Duhamel’s hedge fund, Route One Investment Company, lists more than $4 billion in assets under management, according to recent regulatory filings. The firm was founded in 2010.

Whitecap's redevelopment plans are contingent on vacation of Eden Street, which would require council approval. Eden Street runs north and south, between Lakeshore Drive and Fairfield Street, separating what has been the main campus of The Inn from the indoor pool on the west side of the street. The six proposed homes would be the only construction to replace the 155 units of The Inn.

Reciting the city’s mission statement, to “Improve and Protect Our Community,” real estate broker Michael Jensen, who represented Whitecap in its purchase, told the crowd of several dozen local residents packed in to the small council chambers that the Duhamels intend to do just that with a much lower density development.

Under the redevelopment, all parcels north of Lakeshore Drive -- about 69 acres comprised of a golf course and farmland -- would be turned into greenspace and a park with paved trails.

"It is the intent of Whitecap to develop and maintain this park, without any cost to the city whatsoever,” Jensen wrote in the letter he presented to the mayor and council.

Mayor Mary VanderWoude, who is a non-voting member of the council, explained after the meeting that the council has no history of vacating city property. VanderWoude was elected mayor 12 years ago after serving on the planning and zoning commission for four years.

“But I like the idea,” VanderWoude said, adding that she expects the council will have many more questions before taking the issue to a vote. The council voted against a vacation of 16 feet of lakeshore within the last year, she noted.

“We’ll be taking this one day, one step, at at time. This is a huge deal for the city of Okoboji," VanderWoude said. "It’s very important to do this right.”

“The people I saw after the meeting were very happy they would be involved in the decision process, because their opinion does matter. Right now it’s looking good. I’m not sure if it will stay that way or not.”

Councilman Jim Dalperdang, a retired physician who has been elected to five terms on the council said his impression is that the Whitecap offer, “is sort of a natural evolution of the property."

"I’m sensitive to the community’s needs, but also have to respect private property rights," Dalperdang said. "These people have every right to work through the process and do what they are doing. I can only do what’s legal and in the best interests of the residential character of Okoboji."

Council member Jim Hentges noted, “At this point it’s all in the informational stage. We have to go through the process to see how the people feel about it. That’ll help decide. I’ll listen to everything they have to offer, and make an educated decision at the end.”

Julie Andres, who began her second council term in January, said, “It’s early yet. We were just pleased to finally sit down and hear the official word because there has been so much talk and speculation. It’s nice to hear from the horse’s mouth. The Inn is a piece of property that’s very historic, and is located in the very heart of our residential neighborhood. I’m looking forward to hearing everybody’s feedback.”

Editor's note: An earlier version of this story misstated the number of lakefront lots that would be developed.

Woodbury County Supervisors will consider return to ban of weapons in courthouse

SIOUX CITY -- The Woodbury County Board of Supervisors next week will consider bringing back a ban of guns in the county courthouse, as they continue to work through controversial issues related to an expanded gun rights state law.

Woodbury County Sheriff Dave Drew on Tuesday challenged the county board to return to the gun ban, saying otherwise it could cost nearly $1 million to add new security measures in the Woodbury County Courthouse, and also add them in two other nearby downtown county buildings that have court functions.

As Drew verbally sparred primarily with Supervisor Jeremy Taylor on whether the security measures should be extended to the Trosper Hoyt Building and the Woodbury County Law Enforcement Center, two members of the public weighed in. Both people from Sioux City, William Burrows and Kevin Keane, said it is preferable for safety reasons to not have guns in the courthouse.

"It is simple, no guns in the courthouse, ever," Burrows slowly said, his voice rising to nearly a yell.

The courthouse has county departments mingled with court functions, which is complicating how Drew's office handles security in the eight-story building. Drew said recent court orders saying guns can be brought in parts of the building means that carrying out the security plan, which first started in 2014, is "extremely difficult."

"I would ask you to walk it back, to say there is a ban in the courthouse," Drew said.

There have been two important supervisory orders from the Iowa Supreme Court since June on the issue. Those orders said guns can't be carried into areas with court functions, and they were updated locally on Feb. 6 by Duane Hoffmeyer, chief judge of the Iowa Third Judicial District.

After Hoffmeyer's order, weapons can be brought into all portions of floors 5, 7 and 8 in the courthouse, while guns cannot be brought on any parts of floors 2, 3 and 4, but they can be on some portions of floors 1 and 6.

"Trying to make sure people don't enter certain floors... is almost an impossibility," Drew said.

Currently, people can bring guns into the courthouse if they have a permit for concealed carry. The 2017 law, among other things, broadens the state’s so-called stand-your-ground provision, so a law-abiding citizen does not have a duty to retreat in a public place before using deadly force when confronted with danger to life or property.

Trosper-Hoyt has juvenile courts on the second floor, while the law enforcement center has court functions on the main floor.

Drew shared four security plan options Tuesday, with costs that range from $560,641 to $945,951. The first security program cost less than $300,000 four years ago, but that amount of money wouldn't come close to covering the costs Drew projects as necessary now for security in the three buildings.

Taylor said it was curious that Drew was making the cost projection for more security to address guns through an apples-to-oranges scenario. He noted the sheriff had never before brought forth costs for security at Trosper Hoyt and the jail building.

"These costs may not be necessary," Taylor said.

Sheriff's Office Maj. Todd Wieck answered that in many past county security committee meetings Drew had said there was an unaddressed need in the other buildings.

"That (Hoffmeyer) order says we are required to screen for weapons on the second floor of Trosper Hoyt," and the county law enforcement center, Wieck said.

Board Chairman Rocky De Witt brought the discussion to a close by offering a motion, speaking similarly to Drew in asserting that having guns in the courthouse is unpopular among county residents.

"I have yet to find someone who is in favor of weapons in the courthouse," De Witt said. "I would be in favor of reinstating the weapons ban and letting the chips fall where they may."

Hofmeyer told the supervisors he would issue a new order reinstating a weapons ban, if they requested it.

De Witt said that vote will come at the next weekly meeting on Feb. 20. That is the final meeting in which the supervisors plan to address potential expenses, such as security costs, in setting the 2018-19 fiscal year budget, which will be settled on March 13.

Taylor said the FY 2019 budget is shaping up well. After tapping $300,000 from the county's portion of gambling revenues from Hard Rock Hotel & Casino in Sioux City, Taylor announced sufficient changes had been made to result in a reduction in the county's property tax levy compared to the current fiscal year.

That would make a fourth consecutive year with a reduced property tax levy in the county, which Taylor cited as highly notable.