January 17 Public Policy Update: Governor Reynolds Outlines Proposals in Condition of the State Address

Jan 17, 2020


Governor Reynolds gave the Condition of the State address Tuesday morning during a joint legislative session. In the speech, the governor addressed her budget priorities and proposals for the 2020 legislative session, which kicked off on Monday. Keep in mind that these are proposals. The governor will still have to work through the legislature to make any of them a reality. A few highlights from her speech and budget that address the Economic Alliance’s state policy focus for 2020 include:


  • Increase funding for the Last Dollar Scholarship to $15.8 million to award scholarships to more students and expand eligibility by allowing more flexibility in enrollment requirements. Increase funding to $4 million for the Employer Innovation Fund to support more community level education and workforce development initiatives and expanded the fund to include the “Child Care Challenge Fund” to help with the construction, renovation or remodeling of child care facilities.
  • To further address Iowa’s child care crisis, the governor calls for allowing more parents to utilize the Early Childhood Development and Child Care tax credits by doubling the maximum net income amount from $45,000 to $90,000. Her budget also seeks to provide solutions to the child care cliff effect by implementing a tiered co-pay system that will increase eligibility for assistance.
  • To eliminate barriers to employment, the governor’s budget calls for creating a competitive grant program to support and enhance the re-entry efforts of nonprofit organizations and establishes the Second Chance Employer designation for businesses that hire re-entering citizens and expanding transportation options to help address transit barriers
  • The governor’s budget calls for a 2.5% increase in public PK-12 education spending.


The governor has proposed increasing the state’s sales tax by one penny under a broad strategy entitled “Invest In Iowa.” Implementing an additional 1-cent sales tax will increase Iowa’s revenue by $540 million, enabling the following:

  • Creation of additional tax reform by cutting individual income tax by an average of 10% in 2021.
  • Lower the highest tax rate from 8.5 percent to 5.5 percent by 2023.
  • Reduce the number of tax brackets from nine to eight in 2021, and further reducing to four brackets in 2023.
  • Increasing the state’s sales tax will fully fund the Natural Resources and Outdoor Recreation Trust Fund (IWILL), further improving Iowa’s placemaking options and water quality.
  • Increased revenue will replace 70% of the property tax levy for Iowa’s Regional Mental Health System.


  • An additional $20 million for flood relief following the flooding from last spring and summer.
  • $1.1 million for the Iowa Flood Center that predicts and prevents future disasters.
  • $15 million for the existing Broadband Grant Program which is a $10 million increase from the previous year.

To read the governor’s speech entire, click here. To read more details on the governor’s budget, click here.


International Trade Deals Good for Iowa’s Economy
The past week was good for Iowa on the international trade front. The United States-Mexico-Canada Agreement (USMCA) passed a major milestone this week with strong bipartisan passage in the US Senate. The agreement, previously passed in the US House, is expected to be made official next week at a presidential signing ceremony. Mexico’s government has already approved the deal, and Canada is expected to follow suit soon. The agreement will begin to be implemented sometime this year. Highlights of the agreement include:

  • Creating a more level playing field for American workers, including improved rules of origin for automobiles, trucks, other products, and disciplines on currency manipulation.
  • Benefiting American farmers, ranchers, and agribusinesses by modernizing and strengthening food and agriculture trade in North America.
  • Supporting a 21st Century economy through new protections for U.S. intellectual property and ensuring opportunities for trade in U.S. services.
  • New chapters covering Digital Trade, Anti-corruption, and Good Regulatory Practices, as well as a chapter devoted to ensuring that Small and Medium Sized Enterprises benefit from the Agreement.

Earlier in the week, President Trump signed a partial economic deal with China that commits them to buy an extra $200 billion in American products, including agricultural products, over the next two years. The deal also has the two sides agreeing, through direct consultations, to resolve disputes like the tariffs that both have implemented in recent years.


Friday, February 21 | 4:30 - 5:30 p.m.
Goldfinch Tap + Eatery
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