Capitol Report - Week 17 2021

Tax Day, Right Around the Corner. Monday, May 10, marks the 120^th calendar day of what was officially to be a 110-day session – and there’s no apparent end in sight. Republicans are deadlocked on what to include in a tax relief bill. And until that is resolved, final agreement cannot be reached on the budget bills. Despite the standoff between the two chambers, the House did take action on five budget bills on Thursday night – Ag & Natural Resources, Education, Economic Development, Transportation and RIIF – debating until 11:48 pm to get them done. House members reported to work again on Friday morning and worked until mid-afternoon to pass several policy bills. As the session drags on, it will become increasing more difficult for Republicans on both sides to have enough members present to pass any bills. Graduations, weddings and family vacations, scheduled around an April 30 end date, will begin to pull legislators away. 

In an attempt to move Republicans closer to a compromise tax bill, Governor Reynolds offered a plan on Wednesday that aligns more closely with the Senate’s proposals than the House’s. Among other things, the Governor proposed eliminating the 2018 state income tax “triggers”, shifting mental health funding from property taxes to the state and eliminating the “backfill” to local governments. The mental health funding shift is the major sticking point for House Republicans. House Speaker Pat Grassley has said throughout the session that the legislature needs to spend more time analyzing the consequences of the state taking over the mental health system. He continues to doubt whether it’s something that can get done yet this session. 

On Thursday, the House moved a tax bill out of the Ways and Means Committee, on a bi-partisan vote, 22-0. The House bill, HF 893, includes elimination of the income tax triggers, which is something House Speaker Grassley had raised concerns about but said its inclusion in the bill should show movement by the House to work towards an agreement. HF 893 would also create a new tax credit that would return to Iowans the entire balance of the Tax Relief Fund in any year the fund’s balance equals or exceeds $120 million – a proposal Senate leadership says it does not like.

Also this past week, the Senate released its latest version of a tax bill, SSB 1276, that will be considered in subcommittee on Monday. Similar to the House bill, SSB 1276, would phase out the inheritance tax, exempt COVID-related federal relief payments from taxation, double the child care eligibility threshold, require parity for telehealth mental health services, and increase funding for the brownfield redevelopment program, among many other things. 

The House and the Senate Tax bills are both very long – the House bill is 55 pages and the Senate is 103. They include many tax changes not highlighted in this report. Given the differences in chambers’ proposals, compromise on a tax relief package this week seems elusive.

*  *  * 

Bills to Pay (I mean, Sign).  A bill, HF 802, that would ban teaching certain concepts as part of diversity training by governmental entities and in public school curricula, passed in the House for the last time and is now on its way to the Governor. Also legislation, HF 889, banning vaccine passports and prohibiting businesses and governmental entities from requiring proof of vaccination before entering their premises received final approval in the Senate and is headed to the Governor’s desk. The House also passed a bill unanimously, SF 562, for the final time that removes the statute of limitations on criminal charges brought against persons who commit sexual abuse of a minor.

*  *  *  

It’s in the Budget. The House did some work on budget bills this past week… the Senate did not. Following is the status of the budget bills. 

The Nyemaster Goode Government Affairs team tracks and analyzes legislation as part of its full range of legislative services. At the statehouse, our public policy attorneys use experience, knowledge, and technical skills to achieve our clients’ goals.