Capitol Report - October 2022
October 21, 2022
By: Casey Nickel, Dustin J. Miller, Brad C. Epperly
The accrual period for Fiscal Year 2022 closed on September 30, Iowa ended FY 22 with a budget surplus of $1.9 billion in the general fund, $830 million in reserve funds, and $1.06 billion in the Taxpayer Relief Fund. This is an increase from FY 21’s budget surplus of $1.24 billion.
Net corporate income tax receipts exceeded $850 million in FY 22, triggering provisions of the recently adopted tax bill, House File 2417 that addresses individual and corporate income taxes. HF 2417 gradually phases down the corporate tax rate until it reaches 5.5%. The rate is reduced each fiscal year net corporate income tax receipts exceed $700 million. The top corporate tax rate will be lowered from 9.8% to 8.4% for FY 23. Additionally, the number of corporate tax brackets will be reduced from three to two, a change that was not projected to occur until 2027.
On October 12, the Cato Institute, a nonpartisan association, ranked Governor Reynolds first in the nation for fiscal responsibility in the 2022 Fiscal Policy Report Card of America’s Governors. The report credits Iowa’s recent tax policy reforms and trends in general fund spending when determining the ranking. Governor Reynolds is one of five governors to receive an A.
On October 13, Iowa’s Revenue Estimating Conference (REC) projected state revenues will decrease by 2.7% in FY 23 and increase by 0.6% in FY 24. The REC is a three-member panel that meets three times a year to project the upcoming fiscal year revenues. Lawmakers are required to use the projections when crafting the state budget. The panel cited the decrease in federal COVID-19 aid and the implementation of recent tax cuts as reasons for the estimated decrease. Iowa Department of Management Director Kraig Paulsen, who serves on the panel, shared that the estimates are somewhat conservative with members of the committee agreeing the current state of the economy makes it difficult to predict.
“Today’s projections confirm once again that Iowa’s competitive tax code is fully compatible with sustainable revenue and a resilient budget. Going forward, we’ll continue to exercise restraint with taxpayer dollars while prioritizing high-return investment in key priorities.” – Governor Kim Reynolds
2022 Midterm Election
On October 15, a new Iowa Poll was released. The poll tests Iowans’ opinions on both issues and candidates. Governor Reynolds maintained her 17-percentage point advantage over Democrat candidate Deidre DeJear. Support for both candidates increased equally by 4 percentage points since the July poll, with Governor Reynolds receiving her highest approval rating since fall of 2021, at 53%. Among all Iowans, 51% responded that they didn’t know enough about DeJear to form an opinion, a drop from 63% in March.
Incumbent U.S. Senator Chuck Grassley’s lead over Democratic challenger Mike Franken narrowed to 3-percentage points since the July poll, indicating the race may be the closest contested reelection race for Senator Grassley since 1980. In the July poll, independent voters were nearly evenly split between the two candidates, however the October poll shows a now 11-percentage point advantage in independent voters for Franken.
Grassley reportedly raised $1.7 million for the quarter that ended September 30, Franken raised $3.6 million during the same period. Grassley continues to have more funding in the bank, but both candidates have spent about the same throughout the campaign; $6.8 million for Franken and $6.7 million for Grassley.
The Iowa poll found that likely voters continue to favor Republicans in the 1st and 4th Congressional Districts, while the 2nd and 3rd Districts are tightly contested. In the 2nd District, 48% of likely voters favor a Democratic candidate while 46% favor a Republican. In the 3rd District, 49% favor a Democratic candidate and 48% a Republican.
1St Congressional District
- Republican: U.S. Representative Mariannette Miller-Meeks
- Democrat: Iowa Representative Christina Bohannan
2nd Congressional District
- Republican: U.S. Representative Ashely Hinson
- Democrat: State Senator Liz Mathis
3rd Congressional District
- Republican: State Senator Zach Nunn
- Democrat: U.S. Representative Cindy Axne
4th Congressional District
- Republican: U.S. Representative Randy Feenstra
- Democrat: Randy Melton
Important Dates for the 2022 General Election
- October 19: First day of absentee voting
- October 24: Pre-registration deadline; Deadline to request an absentee ballot to be mailed
- November 5: Auditor’s offices open for absentee voting
- November 7: Absentee voting in-person deadline
- November 8: General Election Day; Absentee ballots receipt deadline