2019 Iowa Legislative Session Review

2019 Iowa Legislature Highlights

The 2019 legislative session is hard to summarize because no single issue or set of issues stand out as prevailing. In 2017, Republicans took on some of the biggest issues possible.  In 2018, they reformed income taxes and finally passed a water quality bill. But 2019 was a relatively normal session: some pomp and circumstance in the beginning, some things to see in the middle and a few surprising or perplexing things at the end.

 

Things started off fairly easily.  For the first time in three years, the session began normally when the Legislature didn’t need to cut state spending in the middle of the fiscal year.  Instead, the session took off right away with bills being introduced at their normal pace and the Legislature’s collective focus being where it normally should be. Governor Reynolds gave her first condition of the state address as Iowa’s duly elected governor, identifying a handful of policy priorities for the session.

 

But as the session wore on, there clearly wasn’t a lot to see compared with the prior two years.  Reforming felon voting rights, an initiative of the governor’s, missed a funnel deadline in the Senate.  Reforming the judicial nominating commission, another governor’s priority, got stuck in the House.  The Legislature did give K-12 schools a bigger increase ($98 million) than they’ve seen in quite some time.  A program for children’s mental health was well on its way to becoming law.  But it just seemed like most legislators wanted the March Revenue Estimating Conference to bring good news, to get the budget done and go home.

 

There was an uptick in activity at the end, however, as there always is. A version of the judicial nominating reform got through on the last day of session. The GOP put in some speed bumps to inhibit property tax growth.  SAVE got extended for 20 more years even though Republicans publicly questioned its propriety two years ago. And, as always, a handful of bills with strong support couldn’t get done as tensions rose between the two chambers at the end.

 

Major pieces of legislation that will be remembered from this session include:

 

SAVE (signed into law):

When Governor Branstad proposed extending the Secure an Advanced Vision for Education (SAVE) sales tax option for school districts in 2016, it was roundly rejected in the Republican-controlled House.  There were even subcommittees that questioned the prudence of SAVE that session.  So, it was a little surprising to see the House pass SAVE virtually without issue so early in the session with a 96-3 vote.  The Senate took its time but eventually passed it with a 48-2 vote later in April.  Legislative Republicans extended SAVE to 2051 and made a handful of modifications to address school property taxes.   The bill is HF 546.

 

Medical Cannabis (no major initiative became law)

HF 732 would have dramatically improved Iowa’s medical cannabis program.  The bill removed the much-maligned three-percent THC formulation cap on medical cannabis products and replaces it with a purchase cap on how many grams of THC a patient can receive within a 90-day supply.  This bill also brought political surprise, as the House Public Safety Committee brought it forward in March and the full House passed it with a 96-3 vote the same month. Previous sessions had seen the House wait until the eve of adjournment to address this topic.  The past is usually prologue, though, as the Senate then waited until the final day of session to pass the bill 40-7 and send it to Governor Reynolds.  Governor Reynolds, however, vetoed the bill on May 24.

 

Children’s Mental Health (signed into law):

In her Condition of the State address Governor Reynolds named children’s mental health as one of her top priorities. After the restructuring of the adult mental health system last session, the focus moved to children. On May 1st Reynolds signed House File 690, which creates the statewide Children’s Behavioral Health System Board, establishes core services for children in the MH regions, regional crisis stabilization, mobile response teams, and 24-hour crisis hotline services. Despite the policy language and developing the infrastructure of the program, funding concerns still linger.

 

Managed Care Organizations (no major initiative became law):

Medicaid managed care continues to be embraced by the governor and Republican members of the Legislature, despite patient and provider concerns including level of service, consistency of providers, and claims processes. Medicaid managed care continues to be unpopular with Democrats and providers who receive inaccurate and tardy payments.

 

Iowa currently has two MCOs: UnitedHealthCare and Amerigroup. In March, United announced their intent to leave withdraw from Iowa on June 30th. UHC provides coverage for 425,000 members that will be transitioned to the other two. United joins AmeriHealth Caritas as the second MCO to withdraw from Iowa’s managed care system. Iowa Total Care, a Centene owned company, is set to start services on July 1, 2019. Centene has received scrutiny in over a dozen states for denial of services and misrepresentation of information. We expect DHS will put out an RFP in coming months in hopes of securing a third MCO.

 

A number of bills were introduced this session to address Medicaid managed care, but no major reforms passed. Bills covered such topics as public assistance oversight and long-term services and supports population. The Legislature passed legislation removing the brain injury waiver cap, allocating $1.2 million to buy-down the children’s mental health waiver, and made multiple changes to the prior authorization processes. In addition, they allocated $150 million in supplemental funding for the FY19 MCO contract.

 

Solar Energy (No major initiative became law)

HF 669 / SF 583 became colloquially known as “the solar bill”. Brought forward by Mid American Energy, the bill would have allowed investor-owned charge fees to any customer generating their own solar electricity who remain connected to the utility’s power grid. Mid American claimed solar customers receive subsidies through the rate they pay for electricity and the generous prices utilities must pay those customers when they buy customers’ solar-produced electrons for distribution on the grid.  Solar producers, environmental groups and the Iowa Pork Producers (whose members often use solar for their CAFOs) formed one of the strangest political coalitions in recent memory to oppose the bill. They pointed to an IUB analysis that said cross subsidization is not occurring and urged the Legislature to wait until a more thorough analysis can be completed. That succeeded. While the Senate passed the bill but with a slim margin:  28-19.  The House Commerce Committee appeared to barely get its version through committee, but the full chamber never took it up. SF 583 is alive, however, and eligible for consideration in the House next year.

 

Property Taxes (signed into law):

Property taxes have long been a topic in Des Moines, but it took on heightened attention this year as assessments jumped up in many areas of the state. Most seemed to think something would get passed on property taxes this session, and they were right. But whether SF 634  is really something substantive, cosmetic or somewhere in between likely depends on your own perspective.

The bill retains existing limits on city and county tax rates and adds a new limitation on revenue growth. It places a 2% limit on the annual growth of revenues in the general and rural services funds for counties and in the general fund for cities, effective for FY 2021 budgets that will be debated early next year. A city council or board of supervisors is allowed pass a budget with revenues exceeding 2% only with a supermajority: a two-thirds vote of the board or council.  Many counties, however, have only a three-member board, so a two-thirds majority is already required. Cities or counties with a five-member board or council will now need four of those five members to pass a budget with more than 2% revenue growth.

While debt service and capital projects are excluded from the caps — along with mental health and disability services, cemetery care, and emergency services in the case of counties — funding for pensions, health insurance and other employee benefits are now included in the general fund and subject to the 2% “soft” growth cap.

The bill passed the Senate 33-17 and the House 53-47 and was signed by the governor. It will likely take some time for local governments, taxpayers and legislators to fully assess the true impact of SF 634.  Property tax is a notoriously complex subject with intervening factors that can color almost any assessment of property tax policy.

Sports Wagering (signed into law):

The U.S. Supreme Court ruled last year that an archaic federal statute could no longer bar states from enacting laws allowing sports wagering. Assuming Governor Reynolds signs the bill, Iowa will soon join the ranks of states allowing betting on professional and collegiate sports. Iowa’s casinos are the biggest winners. The bets will happen within their facilities and the Iowa Racing and Gaming Commission (IRGC) will regulate the activity. The IRGC hopes to have the law ready for full implementation ahead of this year’s football season, when betting is most common.  The bill, as all gambling bills have for years at the Capitol, passed with “no” votes from both parties and “yes” votes from both parties.  SF 617 passed with 31 votes in the Senate. Nineteen of the Senate’s 32 Republicans voted “yes”, and 12 voted against it.  Twelve Democrats voted for it, and six voted against. The House had 16 Republicans and 15 Democrats vote “no”.