Capitol Report: Week 2 2023

This Week:

Week 2 was a short work week as the legislature took Monday off to celebrate Martin Luther King Jr. Day.

Governor’s Proposed Budget

Governor Reynolds released her proposed budget for Fiscal Year 2024 which begins on July 1. The Governor proposed increasing state spending by 3.5%, falling just short of $8.5 billion for the upcoming budget year.

Key priorities in the Governor’s budget include:

• Creating Education Savings Accounts (ESAs) for eligible students to receive $7,598 per pupil
• Increase funding to the More Options for Maternal Support (MOMS) program to $2 million as well as increase reimbursements for legal expenses associated with adoption from $500 to $1000 per child.
• Expand the Iowa Health Careers Registered Apprenticeship Program from $3 million to $15 million, adding additional health care certifications.
• Consolidating the 37 state cabinet-level departments from 37 to 16 – carrying with it an estimated savings of $214.6 million over the next four years.

Overall, Gov. Reynolds’ proposal would provide 56.4% to education, 26.5% to health care, 9.5% to the justice system and the remaining 7.6% to other areas.

In December, the Revenue Estimating Conference met and released the most recent estimate for FY23 and FY24 revenues. The state General Fund is estimated to see a 1.9% decrease in revenues in FY23 before seeing a 0.1% increase in FY24, with the General Fund estimated to see $9,625.5 million in revenue. The Governor’s proposed budget would spend 88.17% of the estimated revenues. The REC will meet again in March to adjust the estimates. The legislature will use the March projections as a guideline for budget proposals.

Property Taxes

Following the 2022 tax reform bill that lowered both individual and corporate income taxes, this year Republicans are focusing on property tax reform in 2023. House Republicans introduced the first proposal last week.

House File 1 focuses on lessening the amount of tax levied by school districts from $5.40 per $1,000 of assessed valuation on taxable property to $4.90 per $1,000 on taxable property.

Additionally, bonding requirements would be altered. For a school district or county to issue bonds it must deposit at least 10% of the overall cost itself, give public notice as to the projects purpose and overall estimated cost of that project.

Individual notice will also be required to be given to property owners found within the school district or county. After notice is given, voter approval will be necessary to allow for the bonds to be issued.

HF 1 was referred to the Ways and Means Committee. The bill will need to be assigned a subcommittee and receive approval from both the subcommittee and full committee before it can be considered on the floor of the House. The Senate is expected to introduce a proposal in the coming weeks.

School Choice

On Tuesday, a public hearing was held to discuss the Governor’s school choice proposal. Legislators heard from Iowans who voiced both concerns and support for the bill.

There were roughly 1600 written submissions by interested parties online. During the public hearing, 44 individuals that included parents, teachers, lobbyists and concerned citizens, spoke on the bill. 

Democrats have continued to oppose the bill, while Republicans remain committed to moving the bill forward.  In the Senate, Senate Study Bill 1022 passed both the Education and Appropriations Committees and was renumbered to Senate File 94. The House amended chamber rules to allow for bills that pass the newly formed Education Reform Committee to be eligible for floor debate without having to go through either the Appropriations or Ways and Means Committees. The House Study Bill passed the Education Reform Committee on Thursday and was renumbered to House File 68.

Next week: Legislators will continue to hold subcommittee meetings on proposed legislation. The House is scheduled to debate HF 68 on Monday, January 23.