Legislative Session Brings Successes, Yet Work Remains
Jun 30, 2021
The Iowa Legislature brought an end to the first session of the 88th Iowa General Assembly on May 19, 2021. The session ended after weeks of negotiating an omnibus tax bill that includes key Economic Alliance priorities affecting economic development, taxes and housing. Session-end also saw the completion of the state budgets, including more funding for Future Ready Iowa and other job skills program funding. Earlier in session, there was the passage for significant investment into a more reliable broadband infrastructure by providing grants to Internet providers for expansion across the state.
Child care solutions were also a top Economic Alliance priority. The passage of a bill that addresses the “cliff effect” in state-funded child care assistance by creating a graduated system of reduced benefits as a low-income worker’s income rises, allowing for more people to remain in the workforce. Other polices that address barriers to employment, like those that encourage fair and second chance hiring, will also remain an Economic Alliance priority for the next session.
Though not 100% satisfied with the final tax omnibus bill, the Economic Alliance is encouraged to see so many of our priorities included:
Child Dependent & Development Tax Credits: Doubles the income threshold from $45,000 to $90,000 and makes it retroactive to Jan. 1, 2021.*
COVID-19 Funding Provisions:
- Exempts COVID-19-related grants awarded to businesses from state income tax. Retroactive to March 23, 2020.*
- Federal Paycheck Protection Program (PPP) fix to allow FY2019 filers the same business expense deductions granted to FY2020 filers.*
- Removes state revenue “triggers” put in place in 2018 speeding up individual tax cuts to go into effect in 2023.*
- Phases out the state’s inheritance tax by 2025.*
- Couples Iowa law with federal law to allow for businesses to declare a bonus depreciation on equipment and capital assets.*
- Shifts mental health funding from local property taxpayers to the state’s general fund.
- Phases out the state’s backfill commitment to cities, counties and schools that was part of a 2013 commercial property tax compromise to replace lost revenues.
Economic Development Expansion
- Brownfield/Grayfield Redevelopment Program: Extends the program by 10 years to June 2031 and raises the cap from $10 million to $15 million.*
- Manufacturing 4.0: Provides incentives to for manufacturers to invest in smart technologies and prepare for the future.*
- Downtown Loan Guarantee Program: creates a new program administered by the IEDA and Iowa Finance Authority (IFA) to encourage downtown businesses and banks to reinvest and reopen following the pandemic.
High Quality Jobs changes:
- Lowers the annual aggregate cap for High Quality Jobs Tax Credit programs from $105 million to $70 million.
- Lowers the cap on the Renewable Chemical Production Tax Credit program from $10 million to $5 million.
- Prevents companies from qualifying for High Quality Job
- Program assistance for a project while they are simultaneously reducing operations at another site.
- Allows IEDA to consider as an eligibility factor whether a proposed project will include a licensed child care center for employees.*
*Economic Alliance priority