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Farm groups celebrate tax changes as fuel mandate stalls
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Farm groups celebrate tax changes as fuel mandate stalls

Iowa Capital

A strange session packed with Zoom committee meetings and arguments about masks ended in late May for the Iowa legislature, and farmers are just starting to figure out what it all means for them.

“It will go down as one of the most extraordinary sessions because of the circumstances,” says Iowa Farmers Union President Aaron Lehman.

Iowa Farm Bureau President Craig Hill says he was concerned both with the circumstances surrounding the session and the tenor of the debate at times, but he says that for farmers “it ended well.”

For Hill, the biggest accomplishment achieved by lawmakers this year came at the end of the session when they changed the funding mechanism for mental health care in the state. Local property taxes had been a major part of that funding, and after much debate lawmakers decided in the closing days that the state should take over that responsibility. That change was the No. 1 priority for the Farm Bureau this session, Hill says.

The change did not reduce the amount of government funding for mental health care, Hill says, but it shifted the funding.

“All the tax issues this session were important, but we had been fighting for property tax relief for many years,” he says.

Those other tax issues included the elimination of the state inheritance tax and the removal of triggers included in the 2018 income tax reform bill, effectively allowing tax cuts included in that bill to go into effect whether or not the state met the triggers. The inheritance tax provision will be phased out over the next four years.

There were also changes made to the state’s Beginning Farmer Tax Credit Program. Among those changes were those that allow a landowner or seller to participate in the program through multiple agreements and with more than one beginning farmer. It allows those agreements to be renewed more than once and removes a requirement that the agreement include farmland, thus allowing livestock buildings or equipment to be included. It also increases the current 10-year maximum participation to 15 years.

Those moves will allow more people to take advantage of the Beginning Farmer Tax Credit Program, according to Iowa Secretary of Agriculture Mike Naig.

Lawmakers approved a law that would provide aid to meat lockers and other local businesses. That value-added grant program should be helpful for food hubs, meat lockers and other local businesses, Naig says. The new program includes $250,000 in state funding and should combine with federal COVID-aid legislation to provide a boost to a segment of the food industry that suddenly got a lot of attention and business during the COVID-19 pandemic in the past year.

One thing that didn’t get passed this year was a comprehensive biofuels bill. There was a proposal to mandate the use of at least 10% ethanol in the state and provide more incentives for higher blends of ethanol (as well as for higher blends of biodiesel).

Grant Kimberley, Iowa Biodiesel Board director, issued a statement saying the group was “disheartened that the Iowa Biofuels Standard legislation did not pass,” adding that “Iowa should be at the forefront of adopting renewable fuels.”

Naig, Hill and Lehman all say the failure to pass biofuel legislation was a disappointment, but they said there were valuable conversations on the subject and they are hopeful it could pass next year.

“We started that discussion but didn’t get it done,” Lehman says. “It’s really important for us to take that next step.”

Iowa Corn Growers Association President and farmer from Randolph, Iowa, Carl Jardon said the group will also continue the push.

“We are relentlessly not giving up on the Iowa Biofuels Standard in spite of the bill not making it to floor,” he said.

Another area that saw movement, but not enough to please many farmers, was water quality. In 2018 lawmakers passed Senate File 512, which provided more funding for water quality work over a period of years, but not nearly as much as farm and environmental advocates had sought. At the time, it was called “a start.” This year, lawmakers extended SF512 for an extra 10 years, to 2039. That is helpful, Naig says, because it provides a guarantee that roughly $17 million per year will be there for long-term efforts. But it still leaves the state spending far less on the problem than farm or environmental advocates say is needed.

“There was a frustrating lack of interest (in environmental issues),” says Ingrid Gronstal of the Iowa Environmental Council.

The IEC was also frustrated that lawmakers didn’t renew the state’s solar tax credit program, despite a backlog of roughly 2,000 applicants. The program had been capped at $5 million per year and it had a backlog of nearly two years.

Kerri Johannsen of the IEC says lawmakers also passed legislation pushed by utilities and national companies that would ban local governments from limiting new local propane or natural gas hookups in communities.

“There was a lot of misinformation about that,” Johannsen says. “The gas industry was making a push all over the country on that.”

Overall, some agricultural leaders and organizations are happy with the tax law changes and other items approved by lawmakers. Others are disappointed at the lack of action on renewable energy and water quality.

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Gene Lucht is public affairs editor for Iowa Farmer Today, Missouri Farmer Today and Illinois Farmer Today.

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