Capitol Report: July 2023

July 17, 2023

Fiscal Year 2023

July 1 marked the first day of Fiscal Year 2024. According to Iowa’s Legislative Services Agency (LSA), the state ended Fiscal Year 2023 with revenues nearly matching the record revenues seen in Fiscal Year 2022. For FY23, the state collected $9.6278 billion in net receipts, 0.4% less than revenues collected in FY22. The numbers aligned with the March Revenue Estimating Conference (REC) projections (0.5% reduction). During the March meeting, the REC projected Iowa will see a 1% decrease in revenues as the 2022 legislation to lower both personal and corporate income taxes is further implemented.


While the fiscal year ended on June 30, the state books will not officially close until the end of August. The final collections for personal income tax, sales and use tax, and corporate income tax will be available after all revenue and refunds are accounted. 



Iowa Special Session

On July 5th, Governor Reynolds called for a special session to pass legislation in response to the Iowa Supreme Court affirming the injunction placed on the 2018 fetal heartbeat law. In a 3-3 decision, the Iowa Supreme Court failed to overturn the injunction, the law prohibits abortions in most instances after a fetal heartbeat is detected. For more information on the court’s ruling, continue reading on On Brief, Nyemaster’s Iowa appellate blog.  


The special session convened on July 11th, at 8:30am. Rules adopted for the special session included a time certain provision requiring a vote on the legislation by 11:00pm on July 11th and allowed only legislation regarding abortion restrictions be considered. House File 732 was introduced in the House and Senate and included language nearly identical to the 2018 law. Both chambers advanced the bill out of subcommittee and committee Tuesday morning, with a public hearing occurring at 9:30am for members of the public to address legislators. The Senate adopted HF 732 with a 32-17 vote, with one Republican joining Democrats in voting no, and one Republican excused. In the House, the bill passed 56-34. Two republicans voted no and ten Representatives were absent, including six Republicans and four Democrats.


Existing law allows for abortions in Iowa up to 20 weeks of pregnancy. The newly adopted legislation bans nearly all abortions after cardiac activity is detected in the embryo. Cardiac activity typically occurs within 6-8 weeks of a pregnancy. The law includes exceptions for rape and incest cases that are reported within certain timelines, in cases of fatal fetal abnormalities, and for medical emergencies that endanger the life of the pregnant woman.


Governor Reynolds signed the law into effect on July 14th. On July 12th, abortion providers and the American Civil Liberties Union of Iowa filed a lawsuit arguing the legislation uses vague definitions and criticized the legislation for excluding psychological conditions from the medical emergency exemption.


Legislators argued during debate that the exemption language was purposefully left broad to allow for doctors to care for their patients.



Education Savings Account Program

Applications for Iowa’s new education savings account program closed on May 31st, more than 29,000 families applied for the program with 17,000 already approved. The state has until July 31st to approve or deny the remaining 12,000 applications. Current private school attendees constitute 60% of approved applicants, while 40% are students planning to move from a public school to private school.


The number of applications far exceeded the projections from LSA. LSA predicted around 14,000 students would be approved for the program during the first round. Families approved for the program will receive $7,635 per student for the 2023-2024 school year.


Students First Education Savings Account’s will be based on the following eligibility:


Year 1: School Year 2023-2024

  • All entering kindergarten students
  • All students enrolled in a public school
  • A student enrolled in an accredited nonpublic school with a household income at or below 300% of the 2023 Federal Poverty Guidelines, $90,000 for a family of four


Year 2: School Year 2024-2025

  • All entering kindergarten students
  • All students enrolled in a public school
  • A student enrolled in an accredited nonpublic school with a household income at or below 400% of the 2024 Federal Poverty Guidelines that will be updated January 2024


Year 3: School Year 2025-2026

  • All K-12 students in Iowa regardless of income