Why Can’t Iowa Pay All Its Bills? Tax Cuts Among Reasons

DES MOINES, Iowa (AP) — A major tax cut several years ago on commercial buildings and other properties has sliced hundreds of millions of dollars from the state budget.

It helps explain why Iowa is in the position today of struggling to pay its bills despite a relatively strong economy.

Signed into law in 2013 by Gov. Terry Branstad, the largest tax cut in state history has gradually cost Iowa more than $400 million over several years. A separate $300 million will hit Iowa’s main spending fund this budget year, and that cost will be permanent for the years to come.

The law’s effect on state spending is coming into sharper focus in 2017 as a new GOP-controlled Legislature works privately to cover a roughly $110 million shortfall in the $7.2 billion budget that began last July.

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