This week, the Iowa Legislature went into overtime. We were supposed to have completed our work within 110 days, by May 1st. At that point, legislators were no longer being paid per-diem, a great system to help ensure we get done in a timely manner.
I believe that Republicans in the Legislature have acted boldly in moving forward with legislation to address our priorities – protection of unborn children, strong 2nd Amendment protections including the passage of Constitutional Carry, pushback against the “woke” crowd that seeks to silence and destroy all who disagree with them, prohibitions against Marxist-inspired Critical Race Theory being mandated to staff and taught to our children, restoring Iowans’ freedom and normalcy following government’s response to the Coronavirus, prohibitions against vaccine passports, supporting our brave law enforcement officers, increasing access to affordable childcare, holding sexual predators accountable, fighting human trafficking, and much more. The hold-up is on budgets and taxes, and House Republicans are working to find a compromise that will honor our commitments to reduce taxes and budget responsibly. In this week’s newsletter, I will highlight our proposal.
Iowa House Republicans are proposing this compromise following extensive negotiations with the Iowa Senate and Governor’s office. Iowans elected us to a 59-seat majority in part because of the disciplined, responsible approach to the state budget that they have come to expect from House Republicans, and that resulted in Iowa being named the best positioned state in the nation to deal with the financial consequences of the Coronavirus pandemic. We have proposed a plan that is fiscally sound, eases the tax burden on Iowans, and includes priorities of the House, Senate and Governor.
The Tax Changes and policy in this proposal Include:
- Removal of triggers from the 2018 tax reform bill which ensures income tax cuts go into effect Jan. 1, 2023, resulting in another great tax cut for hard-working Iowans
- Phaseout of the inheritance tax over 10 years
- Returning money in the Taxpayer Relief Fund ($450 million currently) to Iowans in the form of a credit on 2021 tax returns
- Increasing eligibility for the Child Care Tax Credit for families from $45k to $90k
- Increasing the percentage and raising the cap for the School Tuition Organization tax credit (STOs), leading to greater parental choice in education
- Exempting COVID-19 grant money and Paycheck Protection Plan loans from state income tax
- Requiring payment parity for mental health services provided via telehealth and in-person
- Increasing workforce housing tax credits to $30 million
- Increasing Volunteer Firefighter, EMS, and Peace Officer Tax Credit to $250
- Exempting food banks from Iowa Sales Tax
One of the sticking points is removal of the mental health levy from property taxes, with the state assuming the cost of mental health services. I support doing this, but it must be done carefully and correctly. There must be strong state oversight in place to ensure the state’s fiscal stability going forward is protected. In its current form, the Senate proposal for transferring the cost of mental health includes eliminating the local commercial property tax backfill to help pay for it, which is strongly opposed by our cities and counties. It also requires the state to take on a major financial obligation at the same time we are facing increasing Medicaid costs being handed to us by the federal government. I believe we can find a path forward, but our decisions must be carefully considered.
Now that we have a more accurate picture of revenue growth, we feel comfortable in removing the triggers and allowing the previously passed tax cuts to take place in 2023. The triggers are all but certain to be met anyway in 2022. We can now be more certain that this is a fiscally sound decision, but it must be taken in consideration with these other proposals before us that would increase spending on the state level. As previously mentioned, these include increased costs of Medicaid being forced on states by the federal government, and the proposal to remove the cost of mental health from property taxpayers and bring it to the state level.
We will continue discussion on getting the cost of mental health services off of property taxpayers in a responsible way. I am hopeful we are nearing agreement with the Senate and Governor that will be responsible, sustainable and fund Iowa’s priorities. Republicans in the House will stand strong for our priorities, which include substantial increases in funding for Public Safety, Corrections, and the Judicial system that are badly needed; creation of a Public Safety Equipment Fund to pay for the cost of essential public safety equipment for law enforcement; budgets that spend hard-earned taxpayer money wisely; and implementing previously passed tax cuts for hard-working Iowans.
There is important, unfinished business in addition to budgets and taxes, and I will discuss these in my next newsletter.