Week 3 Legislative Update

Legislative Update
The 2022 Iowa Legislative Session

Week of January 24, 2022

The hustle and bustle of the legislative session was evident this week as policymakers got their feet under them and settled into a full schedule of subcommittee and committee work. Although bill introductions have been slow coming with less than 500 bills introduced between the chambers as compared to sessions past, we expect to see many more bills introduced as we inch closer to the first funnel deadline. This week the House focused on addressing some of the Governor’s priorities including legislation addressing mental health and child care workforce issues and her renewable fuel access bill which will require all retail outlets to offer E-15 by 2026.

Both chambers introduced their tax bills with various pieces of the Governor’s proposed tax bill. The House plan is the most similar modeling the Governor’s with one exception, they haven’t included corporate tax cuts in their proposal, although they are leaving it open for discussion. The Senate has taken a completely diffident approach to funding tax cuts and accomplishing their tax relief goals. Below you will find a chart printed in the Des Moines Register comparing the proposals.

The Differences
The Senate Republicans are proposing a flat income tax rate 0.4% lower than the House and Governor and an eventual elimination of the state income tax altogether. The House’s plan is the only proposal to not include corporate tax rate cuts. The Senate plan addresses water quality and outdoor recreation advocates’ call for IWLL funding, but not in the way anyone expected.

What’s Clear
Iowan’s can most likely expect to see a decrease in their income tax in the coming years. Retirement income will also become tax free regardless of which proposal prevails. Democrats are not sold on all of the proposals outlined but believe some tax relief measures can be incorporated and plan to introduce their own plan soon. Democrats firmly believe the tax cuts can go to the middle- and low-income taxpayers. House and Senate Democrat leaders continue to issue caution about the size and extent of the cuts, expressing concerns about not having enough funding for essential services like infrastructure needs, education, health care, and public safety.

Looking Ahead
As we have seen over the past week, subcommittee and committee work will only continue to increase and intensify as we head to the first funnel deadline only a short three weeks away. As a reminder, a list of scheduled committees and subcommittees with their virtual access information can be found at the provided link. If you have challenges connecting with the virtual link, you can always call in as well.

Last week, House Republican leadership indicated they would release their plan for school aid to meet their self-imposed February deadline so schools can certify their budgets. We anticipate both chambers will work on school funding, workforce initiatives, and their tax bills this next week.