Post-funnel, the legislature’s focus narrowed to the bills that are still “alive.” Only legislation that has been voted out of committee in its chamber of origin is eligible for further consideration. As we noted last week, appropriations, tax, and leadership bills are exempt from the funnel.

Week 9 brought extensive floor work on a large volume of bills, as the chambers work to move their priority bills to the opposite chamber. It also brought floor work on a handful of contentious bills. The Capitol was very lively this week with groups rallying for and against bills being considered on the floor by both chambers.

And it should also be mentioned—the theme of this session continues to be the midweek snowstorm, which has somewhat dictated the legislative schedule. Week 9 brought another Thursday snowstorm that blanketed most of the state with small to moderate amounts of snow (portions of Eastern Iowa received upwards of 6.5” of snow). The Senate had already concluded floor work for the week and sent most of their members home; the House pressed on despite the snow flying in Des Moines, working through an extensive debate calendar—ultimately sending 25 bills over to the Senate for their consideration.

Bills Sent to the Governor

The biggest news of the week was the passage of a bill that bans gender-affirming care for youth in Iowa (SF 538). There was a “Rally to Resist” on Sunday and a student walkout and protest in the rotunda on Wednesday to urge legislators to vote no on the bill in the House. Opponents of the bill, including two of the medical doctors who are legislators, said that the bill ignores medical evidence and will lead to more bullying of transgender children. They said that the best medical evidence shows that transgender children have better results if allowed to begin gender treatments after a rigorous screening process. Representative Holt, who managed the bill, said recent evidence shows hormonal treatments do not improve long-term outcomes for transgender children.

Representative Jones introduced an amendment that struck the prohibition in the bill and instead required parental consent for gender-affirming care. The amendment lost, and the bill passed without amendment. Five Republicans (Ingels, Jones, Lohse, Latham, and Wilz) voted with Democrats against the bill. Three members were absent (Siegrist, Turek, and Abdul-Samad). Representative Ingels, who voted against the bill, said he might have supported the bill if it only dealt with surgery but said that parents need to be trusted to make decisions about the broader area of gender-affirming care.

The House voted 58-39 to approve SF 538 (previously HF 623) on a 58-39 vote. The bill prohibits puberty blockers, hormone therapy, and gender surgery from being administered to any child under the age of 18 in Iowa, citing a lack of conclusive evidence and the potential for long-term side effects. Any Iowans under 18 who are already receiving this care will have to stop the use of these types of medications in 180 days. The bill is now sent to the Governor, who is expected to sign it.

SF538 was among one of a half dozen bills that were sent down to the Governor this week, as the legislature makes quick work of their policy priorities.

Legislative Priorities

Government alignment bill passed Iowa Senate

The Governor’s proposal to reorganize state government (SF514) and cut the number of departments in half passed the Senate on a 34-15 vote. Democrats filed a dozen amendments, all of which were voted down.

The bill passed on party lines, except for Senator Bisignano, who voted with the Republicans. Bisignano said that he voted for the bill because he wanted to be included in the discussions when the bill is considered in the House. Senator Schultz, who managed the bill, said that it will increase efficiency and save the state money.

Senator Wahls said that the bill is a “power grab” by the Governor and said that Republicans failed to listen to the comments of the public on the bill. The Legislative Services Agency (LSA) estimated that the reorganization will eliminate about 215 positions across the re-organized agencies, saving about $6.4 million in state money, with reductions in Health and Human Services and the Department of Inspections and Appeals accounting for a reduction of about $5.8 million in federal funds. A number of administrators will be removed from the salary range, which would allow them to be paid more than the top of the current salary range.

Governor Reynolds released a statement on SF 514:

“Serving the needs of Iowans efficiently and effectively is state government’s primary responsibility, and Iowans rightfully expect nothing less. Government alignment proposes the type of commonsense, fiscally responsible change that will improve how the executive branch works together, elevate services for Iowans, and save taxpayers a projected $215 million over the next four years. For too long politicians have only promised to reduce the size and cost of government, but today the Iowa Senate took an important step forward to making it a reality. I look forward to getting this bill across the finish line in the House and to my desk.”

The House version of the reorganization bill held up the House State Government Committee for many hours on Thursday, March 2; HSB126 needed to advance through the full committee to remain “funnel-proof.” Republicans rejected dozens of Democrat-proposed amendments and the bill finally received committee approval just before midnight, squeaking through the funnel deadline. HSB 126 has not been renumbered/reprinted. The Senate version of the bill has been messaged to the House now that it has cleared the Senate floor.

Education

Education Committees in both the House and the Senate have been extremely busy this session. A few education highlights from this week:

On Tuesday, the Senate passed an Education Improvements bill (SF391) 33-16, which will give schools more flexibility in making decisions regarding flexibility about curriculum, as well as decisions related to instruction ad hiring.

The Senate also passed SF482 related to School Restrooms (33-16) requiring K-12 schools to designate multi-occupant restrooms as being designated for one sex and defining sex as a child’s biological sex.

On Wednesday, the House took up the Senate Education Improvements bill (SF391) approving it 62-34 and sending it down to the Governor. The House also took up a handful of their own Education Committee bills, passing HF 597 (60-37), a bill related to Education and Library Programs that states Iowa’s educational standards, programs, and library materials must be age appropriate. The bill goes on to define “age appropriate” and references the definitions of sex acts in the code. The House also passed a bill related to Teacher Licensing (HF255), a bill related to Gender Instruction Prohibition (HF348), and a bill related to School Abuse and Bee Membership (HF43)—all of these bills will now be messaged to the Senate for consideration.

Rural Emergency Hospitals

On Tuesday, the House passed SF 75, a bill to license Rural Emergency Hospitals in Iowa, 97-1. This is a priority bill of the Iowa House Republicans to ensure access to emergency care in rural areas. The bill was amended and sent back to the Senate for consideration of the bill as amended by the House.

Auditor Information

The Senate has introduced and advanced a bill targeting the work of the State Auditor’s Office (SF478). The primary purpose of the bill is to expand confidentiality protections, which will limit the types of information that can be audited by the Office. Senators who proposed the bill have stated these protections are necessary to keep information about Iowans that are not needed for an audit confidential. 

Auditor Sand held a press conference on Thursday expressing his concern that the bill will “gut” the ability of the State Auditor to conduct audits—he stated the bill is: “the single most pro-corruption bill that has ever come out of the Iowa Legislature.” He believes the bill will allow state agencies to hide information and will prevent the Auditor from going to court to force the release of information; this may impact state bond ratings and jeopardize federal funding. The Office of the State Auditor is currently the only statewide office in Iowa held by a Democrat.

Sales Tax

Senator Dawson advanced his bill reforming Statewide Sales Tax (SF550) through the full Ways and Means Committee (10-6) on Wednesday. A similar version of this bill was introduced and reviewed in 2022 but did not receive a floor vote from either chamber.  The bill has numerous provisions:

• Sales tax: Increases the sales tax to 7% as of 2025 and strikes local option sales taxes (LOST). Transfers part of the sales tax increase to local governments and requires the money to be spent according to the jurisdiction’s revenue purpose statement. (Specific requirements for Polk County; Polk County is required to use at least 75% of the money received from the fund for property tax relief.)
• Water: Makes the water excise tax a sales tax. Increases it to the rate of the state sales tax and deposits all the funds in the general fund.
• TIF: Authorizes the use of state sales tax in lieu of local sales taxes. Allows city ordinances using LOST revenue for urban renewal to remain in effect until repealed or expired
• Property Tax Credits Exemptions: Phases in a homestead property tax exemption in place of the homestead credit. Increases the income eligibility for the Elderly/Disabled credit to 330% of the FPL. Increases the military property exemption to $4,000 by 2025. Phases on funding for the military credit.
• Natural Resources: Scoops part of the sales tax increase for the Natural Resource and Outdoor Recreational Trust Fund, commonly referred to as Iowa’s Water & Land Legacy (IWILL). 
• Conservation: Prohibits a charitable conservation contribution credit from being claimed after 2025, except for credits being carried forward.
• Transit: Establishes conditions under which Des Moines can impose a franchise fee of 7.5% and requires that the amount over 5% be used to reduce property tax levies for regional transit

Most notably, this reform of the local option sales tax to a statewide tax will trigger the 3/8-cent funding IWILL or water quality and other environmentally related programs. IWILL is part of the state constitution, but when it was approved it was set up so the funding for it would not be available until the next time the state sales tax is increased. At that time, IWILL will get 3/8 of a cent of the increased tax.

SF550 still has many hurdles to clear; it will need approval by the full Senate chamber before the House even begins to consider its numerous provisions reforming sales tax/various property tax provisions. It is expected this bill will be in the mix during the property tax reform discussions.

Funnel Roll Up

A brief overview of the progress of the Governor’s legislative priorities:

Bills that are “Alive”

Below is a brief snapshot of the bills that survived the first funnel (March 3) and are eligible for further consideration. This is not an exhaustive list. Bills that received approval from a full committee in their originating chamber remain “alive” and eligible for further consideration; exceptions to the funnel deadline exist for appropriations, tax, and leadership bills.

Executive Branch Update

Chad Aldis appointed new Director of the Department of Education

The Department of Education will have a new leader after Ann Lebo resigned as director. “Chad is the type of leader we need at this pivotal time for Iowa’s education system,” Governor Reynolds stated. “His unique perspective will help lead reform within the department and across our schools so that every Iowa student—regardless of what school they attend—receives a quality education that prepares them to be successful in life.”

Director Aldis said, “I’m honored to accept this opportunity to serve the students of Iowa. The governor’s unwavering commitment to ensuring all children are provided with a quality education that fits their needs is a vision I share and one that will drive the department’s work.” 

Attorney General TikTok Consumer Protection Investigation

Attorney General Bird joined 46 states in an amicus brief Monday, requesting that TikTok, Inc. fully comply with a multistate investigation into whether the China-owned company violated consumer protection laws.

Bills Signed by the Governor (as of 3/10/2023)

Fourteen bills have been enrolled and sent down to the Governor, nine of these await her signature. Five bills have been signed into law by the Governor to date.

Revenue Estimating Conference

The Revenue Estimating Conference (REC) met on Friday morning for the scheduled March REC to provide an update on Iowa’s revenue (the legislature is statutorily required to utilize the lesser of the December or March REC when crafting their budgets). A separate update will be provided summarizing Iowa’s revenue forecasters’ opinions on the state budget and the revenue numbers for FY 2024 and FY 2025.

What’s next?

Week 10 will bring more floor action. Subcommittees and committees will begin ramping up in anticipation of the second and final funnel deadline, March 31. We can also expect negotiations on a property tax reform plan and preliminary conversations related to the development of the FY 2024 budget now that the March REC has convened.

The full 2023 Session Timetable can be found here.