Iowa state treasurer candidates debate office’s role in tax cuts, college savings program

By: - October 7, 2022 4:47 pm

Democrat Michael Fitzgerald, right, will face off against former state Sen. Roby Smith in the November election. (Photo by Iowa Capital Dispatch. Money image from Getty Images.)

In a debate Friday, incumbent Iowa State Treasurer Mike Fitzgerald said that his office’s focus is managing the state’s money, while former Republican state Sen. Roby Smith said he would take a more active role supporting tax cuts passed in the Iowa legislature if elected.

Smith, who has served in the Iowa Senate for 12 years, said the Iowa Press debate was his first time meeting Fitzgerald, who has served as the state treasurer since 1983. Fitzgerald, a Democrat, did not register in support of recent tax cuts, Smith said. If elected, he would advocate for tax cuts, he said, by registering the office in support.

“Let me tell you, we made it so easy at the Capitol,” Smith said. “It takes one minute to register for or against it. He hasn’t advocated for tax cuts.”

But Fitzgerald said that supporting tax cuts was not the purpose of the office. Legislators are responsible for deciding Iowa tax policies, not the treasurer’s office, he said.

“Our responsibility in the treasurer’s office is taking responsibility for the funds the state has and we’ve done a great job of doing that,” Fitzgerald said. “That is what our mission is, keeping the money safe. Now, if the legislators and the governor want to increase taxes or decrease taxes, that is their decision. It’s not something that directly effects programs that we run in the state treasurer’s office.”

The treasurer said his office focuses on bills that have a direct effect on state finances and programs, such as the “College Savings Iowa” program that lets parents and grandparents set aside money, tax free, for children’s college education. Fitzgerald established the program in 1998. The office cut the program’s cost nine times in the last 15 years, he said, proving that it is working well.

“It’s not free but it’s getting pretty doggone low cost, less than one-fifth of one percentage point,” Fitzgerald said. “People love it. It works.”

But Smith said the program was mismanaged, pointing to an April report from the financial services firm Morningstar, which downgraded the saving program’s rating. Morningstar analysts decided to move the program from a ‘neutral’ to ‘bronze’ rank because it “delivers a set of glide paths that court unnecessary timing risks compared with the other plans that use Vanguard’s investment advice,” the report found.

Fitzgerald said that the firm misunderstood the program’s investment options. Families have 14 options to choose from as to how much money goes into bonds and stocks, he said, and Morningstar analysts were concerned because of the “aggressive” options available.

“They thought we were forcing people into that,” Fitzgerald said. “We aren’t. We explained it to them just a couple of weeks ago. You’re going to see an upgrade in another couple of weeks.”

Smith also criticized Fitzgerald for not supporting legislation passed in 2015 that allows families to contribute up until April 30 and have it count within the previous tax year. Previously, the cutoff was Dec. 31. Fitzgerald said that he did not register for the bill because there are benefits either way on how Iowans keep their tax records.

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Robin Opsahl
Robin Opsahl

Robin Opsahl is an Iowa Capital Dispatch reporter covering the state Legislature and politics. They have experience covering government, elections and more at media organizations including Roll Call, the Sacramento Bee and the Wausau Daily Herald.