Week eight marks the halfway point in the legislative session and two weeks until the session funnel on Friday, March 18. This week brought the most floor action we have seen all session, with over 50 bills advancing through the House and Senate and 11 of those bills being sent down to the Governor for her signature. The focus of this week was the Governor signing into law two of her priorities, the Tax Reform Plan (HF2317) and Transgender Sports (HF2416). Notably, these two significant bills are the first of three bills that the Governor has acted on this session.

Tax Reform

On Tuesday, Governor Reynolds signed into law (HF2317) the Tax Reform bill passed by the House and Senate at the end of last week. The bipartisan bill lowers the individual income tax rate for all Iowans to a flat and fair 3.9% rate by 2026, eliminates income tax on all retirement income starting in 2023, and overhauls Iowa’s corporate tax system. Governor Reynolds made the following statement at the signing of the historic tax reform:

“When I took office, Iowa had the sixth-highest individual income tax rate in the nation at 8.98%. I believed Iowans deserved better. Since then, I’ve worked with the Legislature across multiple sessions to make transformative changes to our tax code, let Iowans keep more of their hard-earned money, and make our state more competitive. With this bill, Iowa is now the fourth lowest for individual income tax rate in the nation. There’s never been a better time in Iowa for bold, sustainable tax reform. This bill rewards work, takes care of our farmers, and supports our retirees, all while protecting key state priorities. Iowans will reinvest these dollars in our economy, communities will prosper, and families will rest a little easier. Once again, we’re putting our faith in Iowans, and they won’t let us down.“

A Press Release from the Governor’s Office touted the following impacts of (HF2317):

• Beginning in Tax Year 2023, the tax liability for nearly 295,000 Iowa taxpayers will be eliminated under the retirement provision of this new tax law and 98% of Iowa taxpayers with $10,000 or more of taxable income will see a decrease in tax liability by Tax Year 2026.
• For farmers, age 55 or older who have farmed at least 10 years and are retired, this bill allows an option to eliminate the tax on cash rent or crop share agreements for all years the income is earned.

Minority Leader Wahls said that the tax cuts go disproportionately to “the ultra-wealthy and big corporations.” He said that the bill doesn’t help ordinary Iowans or help fix the state’s workforce problems. 

Transgender Sports

On Wednesday, the Senate approved (HF2416) Transgender Sports on a party-line vote (31-17). The bill sets student eligibility requirements in school districts and accredited nonpublic school athletics; it requires that interscholastic athletic teams, sports, or athletic events sponsored or sanctioned by a school or athletic organization must be designated as females/women/girls or males/men/boys or coeducational/mixed based on the sex at birth of the participating students. The House passed the bill 55-39 last Monday.

During the Senate debate, the floor manager declared that this is an issue of fairness and that equality does not always mean fairness. The Democrats stated that schools in Iowa have been able to manage athletics and trans athletes for years without trans athletes dominating sports in that time; that this is a distraction from the state’s current workforce crisis. 

This bill was a priority for Governor Reynolds. She signed the bill into law on Thursday in the Capitol rotunda, declaring this a “victory for girls’ sports in Iowa.” In a statement issued by the Governor’s Office, the Governor declared:

No amount of talent, training or effort can make up for the natural physical advantages males have over females. It’s simply a reality of human biology. Forcing females to compete against males is the opposite of inclusivity and it’s absolutely unfair.

Senator Wahls released a statement prior to the signing on Thursday:

The decision by Governor Reynolds to sign discriminatory legislation today is appalling. Just weeks after claiming that the workforce crisis was an important issue for our state, the Governor is rushing to sign legislation that will make the crisis worse. Rather than support real solutions to the workforce crisis, she’s pouring more gasoline on the culture war fires and pitting Iowans against each other. Because the legislation would go into effect as soon as the Governor signs it, she is showing once again that she’s more interested in scoring political points than caring about the impact of legislation on some of the most marginalized kids in our society. I renew my call for the Governor to veto this hurtful legislation today.

Executive Branch Updates

State of the Union Response

On Tuesday night, Governor Reynolds delivered the Republican response to President Biden’s State of the Union address. In her response, the Governor said that all Americans must stand up for Ukraine against Russian aggression but said that the Democrats have been weak on the world stage. Governor Reynolds said that President Biden and the Democrats have caused high inflation rates due to over-spending and anti-energy policies and that Republican governors and legislators have taken bold action against inflation by cutting spending and by cutting taxes.

Governor Reynolds said that across the nation, Republican Governors and legislators respected the American people on COVID by not adopting mandates and by re-opening schools as soon as possible.  She said that Republicans understand that parents have the right to control what their children are taught in schools. She also discussed the border, stating that Republican governors in Texas and Arizona have acted to protect the border when the federal government has failed to protect the nation at the border.

Ukraine

On Monday, Governor Reynolds announced efforts to support Ukraine. The Governor directed the Alcohol Beverage Division of Iowa to remove any liquors that are produced in Russia from its wholesale list as part of the effort to “demonstrate its solidarity with the brave people of Ukraine as they defend their freedom against Putin’s tyranny.” Reynolds also called for ending the Iowa Sister State relationship with Stavropol Krai in Russia.

Manufacturing 4.0 Funding

In February 2021, Iowa’s Manufacturing 4.0 plan launched, a roadmap to help Iowa manufacturers remain globally competitive through a fourth industrial revolution that emphasizes automation and smart technology.

On Thursday, Governor Kim Reynolds and the Iowa Economic Development Authority (IEDA) announced that $20 million in Manufacturing 4.0 Workforce Innovation grants have been awarded to 46 companies in Iowa. These grants are geared toward Iowa manufacturers with 76-250 employees across locations investing in Industry 4.0 technologies to address workforce issues exacerbated by the negative impacts of COVID-19. Recipients received up to $500,000 in grant funding and a minimum match of 25% was required. A full list of the Manufacturing 4.0 Technology Investment grant recipients can be found here.

An additional $1.9 million in Technology Investment grants was awarded to 37 companies with 3-75 employees for projects that encompass the adoption and integration of smart technologies. These smaller companies received grants of up to $75,000 and a minimum match of 1:1 was required.

Statehouse Races

The deadline for filing for the June primary is Friday, March 18. At this time, at least two dozen House members and at least a dozen Senators have announced that they are retiring or plan to seek another elected office. In the coming weeks, we will provide a full summary of the primary races. 

What’s next?

Week nine will bring additional floor work and committee action will ramp up as we approach the second funnel deadline on March 18. There is also a strong possibility of budget bills being introduced in the coming weeks as we begin work on the fiscal year 2023 budget. At this time, there are still several priorities of the Governor and legislative leadership that need to be finalized.