Week Nine Capitol Report
March 11, 2022
Next Friday, March 18th is the second funnel deadline for the Iowa Legislature. All Senate bills must pass out of a House committee and all House bills must pass out of a Senate committee to remain eligible for consideration. Any bills assigned to either chamber’s Ways and Means or Appropriations committees are exempt from the deadline. Following the second funnel, each chamber can only consider legislation that originated in the opposite chamber or bills that have been placed on the unfinished business calendar.
This week, Senator Dawson (R- Pottawattamie) introduced a second tax reform bill, Senate File 2372. The bill includes many of the provisions in the original Senate tax plan that were left out of HF 2317, including:
· Elimination of sales and use tax exemption related to computers and computer peripherals for insurance companies, financial institutions, and commercial enterprises.
· Exempts food from the sales and use tax
· Lowers the franchise tax and insurance premium tax
On March 10th, The Revenue Estimating Conference (REC) met to provide the most recent budget projections the legislature will use to determine the Fiscal Year 2023 (FY23) budget. The REC released a projected revenue of $9,046.1 billion for FY22, 4.2% growth over FY21. For FY23, the estimate is slightly lower at $9,028.3 billion, a decrease of -0.2%.
Governor Reynolds released the following statement following the REC meeting.
“The projections released today by the REC are very encouraging and again reaffirm why we worked hard this legislative session to pass the largest tax reform bill in the history of our state. Our bold tax cuts are necessary as we continue to over-collect Iowan’s hard-earned money. But with the new tax law of a flat fee and fair 3.9% individual tax rate by 2026, and eliminating the state income tax on retirements, among other tax reform, Iowans will see more money in their pockets and not in the hands of the government. These new projections reaffirm the fact that we have steady revenue entering out state, and that revenue will ensure that our key priority areas link education, public safety, and mental health continue to be adequately funded.”
The House held a number of budget subcommittee meetings this week, introducing their Justice Systems and Judicial Branch; Transportation, Infrastructure, and Capitols; and Agriculture and Natural Resources budgets. House Republicans are proposing an overall FY23 budget of $8.274 billion while Senate Republicans are proposing an overall budget of $8.202 billion.
Next week, both chambers will pass any remaining bills out of committee to meet the second funnel deadline and likely hold more floor debate in an effort to push last minute priorities over to the opposite chamber.