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Public Policy Update: Final Legislative Funnel of the Session Approaches

April 1, 2025 | Public Policy

State Policy Update

April 4th marks the second and final legislative funnel of the session. Policy bills must pass in one chamber and advanced out of full committee in the opposite chamber to remain eligible to become law this session. Tax and budget bills are exempt from funnel deadlines.

We await the introduction of budget bills this session, and continue to actively monitor bills related to our 2025 priorities, including the following:  

Incentivize Business Growth  

  • A bill that would cut economic development funding for Iowa’s fourth most populous counites, including Linn, passed a House subcommittee last week. Proponents say this would help rural counties compete. Status: The Economic Alliance strongly opposes this legislation, and it is not expected to move further than the subcommittee action.
  • Legislation to overhaul Iowa’s property tax system progressed out of subcommittees in both chambers this week. Some key proposed changes include eliminating the rollback rule, allowing property values to rise. However, tax increases would be limited by capping most levy rate hikes at 2% per year (excluding new construction) and restricting local government revenue growth. The bill also shifts K-12 school funding from property taxes to the state. Status: Passed out of House and Senate Ways & Means subcommittees. Legislators have indicated they will take their time moving forward to ensure input continues to be received.
  • The Iowa Economic Development Authority’s (IEDA) tax credit reform bill had subcommittee meetings in both chambers this week. The bill calls for significant restructuring of tax credit incentives by consolidating and/or eliminating some existing incentive programs and creating new programs. Status: Passed House and Senate Ways & Means subcommittees in both chambers on 3/27. Legislators continue taking input as the bill continues to move forward.
  • A bill to further reform Iowa’s unemployment insurance program continues to make its way through the legislature. A priority of the Governor, the proposal would lower the maximum benefit tax rate to 5.4%, the lowest allowed by federal law, and cut the taxable wage base by half. It also reduces the number of tax tables. Status: Awaits Action in Ways & Means Committees of both chambers. Fiscal Note.

Invest in Talent Development 

  • The Governor’s Health Care System Reform bill aims to recruit and retain medical providers by creating a “hub-and-spoke” partnership funding model to enhance Iowa’s rural health system. Additionally, a health care professional incentive program is created to provide financial awards to eligible health care professionals working in underserved areas. Status: Passed House Appropriations Committee 22-0 on 3/20; Awaits Action Senate Health & Human Services Committee.
  • The Iowa New Resident and Graduate Tax Credit Act introduces two tax credits: one for new residents who have recently taken full-time employment in Iowa and another for recent graduates from Iowa-based educational institutions. Each credit allows eligible individuals to reduce their income tax liability by 100% for up to four consecutive tax years. Status: Awaits Action in House Ways & Means Committee.
  • The Career Education Enhancement Act aims to connect students with local career opportunities and enhance their readiness for the workforce. It mandates the Iowa Department of Education to create a list of industry-recognized credentials for high school students, which will be aligned with career and technical education service areas. Additionally, the bill modifies the curriculum for grades five through eight to include career planning and pathways. Status: Passed House 61-28 on 3/10; Awaits Action in Senate.

Remove Barriers to Expand our Workforce  

  • The Governor’s child care proposal continues to move forward. The proposal would launch a $16 million program to provide three-year grants of up to $100,000 to preschool providers and child care providers to provide wraparound transportation services for working parents. Status: Passed House Health & Human Services Committee, Passed Senate Education Committee; Awaits Floor Action in both Chambers.

Enhance Community Attraction & Livability Efforts 

  • A workforce housing tax incentive bill proposes to raise the cap from $35 million to $50 million, and aims to improve housing availability and affordability in the state. Status: Awaits Action in both Chamber’s Ways & Means Committees.
  • Another housing bill removes the current $7 million annual cap on the amount of Real Estate Transfer Tax funds that can be transferred to the Housing Trust Fund allowing for more attainable housing development. Status: Awaits Action in both Chamber’s Ways & Means Committee

The Midwest Interstate Passenger Rail Compact continues to see bipartisan support to promote passenger rail travel in midwestern states, including Iowa. Status: Passed House 95-1 on 3/12; Awaits Action in the Senate.