State Policy Update
March 31 was the deadline for the 2nd funnel deadline of the 2023 legislation session, further narrowing the legislation still eligible to become law this session. Many Economic Alliance priorities are “funnel-proof” since they are Ways & Means bills, and therefore are exceptions to funnels. Here are some significant ones:
- SF318/HF639 create an Iowa Office of Apprenticeship within Iowa Workforce Development, leveraging existing staff to oversee program development, compliance, business engagement, and grant management to help address future workforce development.
- HF47 exempts from the individual income tax the amount of wages received by a taxpayer for providing certain child care services.
- HF668 lowers the percentage of a commercial child care facility assessed value that is subject to property taxation by applying the residential rollback percentage to the entire value of the center or facility that is used for child care. The changes to the taxable value of child care facilities will reduce the property taxes owed by facility owners beginning with FY 2025.
- HF642 creates the “Major Economic Growth Attraction Program”, or “MEGA Program”, to allow Iowa to compete for large scale economic development projects that provide high paying jobs and capital investment.
- SF408 is an Iowa Economic Development Authority technical bill that includes the Angel Investor Tax Credit program to encourage entrepreneurship and spur economic growth for our communities.
- SF127/HF671 would allow Iowa to adopt the Professional Counselors Interstate Licensure Compact, a system whereby professional counselors licensed to practice in one member state may practice in another member state.
- HF506 funds the workforce housing tax program to help incentives developing more housing options in both rural and urban areas.
Additionally, a few of the bills we’ve been tracking this session “died” in the second funnel:
- A ban for public Iowa universities from spending state or private funds on diversity, equity, and inclusion (DEI) programs and trainings, including the hiring of professionals to serve as DEI officers. We oppose this ban as it would act as an inhibitor to attract and retain talent, and subjects Universities from receiving certain federal research contracts.
- A requirement for employers to use the federal Employment Verification (E-Verify) system in hiring practices to verify a person’s citizenship status. We oppose the mandatory use of E-Verify because the system is flawed and would penalize employers regardless.
- A two-year pilot program to make child care workers automatically eligible for state child care assistance (CCA) for their own children. We support this program to encourage more people to enter the field.
A change that would allow a regional “Authority” to have specific advantages for regional economic development and placemaking projects. We support the ability for regional authorities to allow for significant regional quality of life amenities.
The Budget: The one thing legislators must do is pass a budget for the preceding fiscal year. Complicating the process this year is the new 1,500-page government reorganization bill Governor Reynolds signed into law on April 4. Funding for the new reorganization will take time to sort out and, in the meantime, the Senate has introduced “shell” budget bills, without real numbers, for purposes of beginning budget discussions. Both the House and Senate released their budget targets after the March Revenue Estimating Committee (REC) report issued its projections for FY24. The Senate and Governor Reynolds both proposed an $8.5 billion budget, a 3.3% increase over current spending, while the House proposed a slightly larger 4.5% increase over current spending. Speaker Grassley has indicated the increase is to pay for mental health and Medicaid reimbursement for nursing homes.
Taxes: Multiple property and income tax proposals remain in play this session, however all indications point to 2024 session as more likely. Senate Republicans continue to view property tax reform as their number one priority. House Republicans have shared their interest is doing a smaller property tax bill this session, and a larger reform bill next session. The final scheduled day for the 2023 session is April 28.