POLICY PERSPECTIVES | January 21, 2018
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THIS IS IOWA
LEGISLATIVE SHOWCASE
Tuesday, January 30, 2018
4:30 - 7:30 p.m.
Iowa State Fairgrounds * Animal Learning Center
Des Moines, Iowa
Join the Iowa tourism and economic development industry to showcase
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*Snow date February 6, 2018
Legislative Session Update

Welcome to the 2018 Iowa Legislative Session, the Second Regular session of Eighty-Seventh Iowa General Assembly. The session officially began on Monday, January 8, 2018 (the second Monday of January, as directed by the Iowa Constitution). This is scheduled to be a 100-day session, with a target adjournment date of Tuesday, April 17, 2018 (however, sessions often go beyond the target date).
 
Since this is the second year of a two-year assembly, all bills from last year are technically alive again. The first year of an assembly is usually the year in which heavy lifting on policy issues occurs, while the second year becomes more focused on issues that appeal to voters, since elections are held in the November of the second year.
 
The First Spouse Doll Display Case in the South Hallway of the First Floor of the Iowa State Capitol.  In the center stands the new doll representing the First Gentleman_ Kevin Reynolds
The First Spouse Doll Display Case in the South Hallway of the First Floor of the Iowa State Capitol.  In the center stands the new doll representing the First Gentleman, Kevin Reynolds
There have been a total of seven special elections in this General Assembly, culminating with this past Tuesday's House District 6 election which saw Jacob Bossman winning a seat that was vacated by former Representative Jim Carlin's election to the Iowa Senate. Despite all the jostling around, the balance of power has remained the same in the Iowa Legislature - Republicans control the Governor's Office, the Senate by a margin of 29 to 20 (with one independent), and the House by a margin of 59 to 41.
 
The first week of the legislative session is always filled with organizational and ceremonial activities, including three speeches delivered to a joint convention of both the House and the Senate. On Tuesday, January 9, Governor Kim Reynolds delivered her Condition of the State address, her first and the first such speech ever delivered by a woman in Iowa. Governor Reynolds outlined her priorities for the session, which included the following:
  • Water Quality - Governor Reynolds said a water quality bill is the first bill that she wants to sign as Governor.
  • Broadband - Provide more broadband access to rural Iowa.
  • Tax reform - She said she'll pursue personal income tax reform for the middle class and remove federal deductibility (along with corresponding rate cuts so taxpayers don't see an increase in their taxes). The Governor also plans to establish a tax force to review corporate tax credits and income taxes with a goal of proposing changes next year.
  • Medicaid managed care - The Governor still supports the move to Medicaid managed care and believes the new directors of the Department of Human Services and Medicaid can fix some of the mistakes that were made during implementation.
  • Mental health - She talked about a new partnership with Des Moines University and the National Alliance on Mental Illness on a program to train providers to better identify and treat mental illness. She also recognized the need to strengthen resources for more mental health treatment services.
  • Opioid abuse prevention - The Governor supports efforts to strengthen initiatives to prevent opioid abuse, including increasing the use of the Prescription Monitoring Program by providers
  • Education - The Governor proposed expanding 529 plans to apply to K-12 education. She also promotes the Future Ready Iowa Initiative, which better links high-school kids to career opportunities in the skilled-trades.
On Wednesday, January 10, the Legislature heard from Iowa Supreme Court Chief Justice Mark S. Cady about the Condition of Iowa Courts. Then on Thursday, Adjutant General Orr of the Iowa National Guard delivered an address about the condition and readiness of the Guard.  
 
Friday, January 19, marked the 12th day of the legislative session, and its first
Adjutant General Orr _backed by Senate President Jack Whitver_ Governor Kim Reynolds and House Speaker Linda Upmeyer_ L to R_  addressing a joint session of the Legislature about the Condition of the Guard_ January 11_ 2018
Adjutant General Orr (backed by Senate President Jack Whitver, Governor Kim Reynolds and House Speaker Linda Upmeyer, L to R)  addressing a joint session of the Legislature about the Condition of the Guard, January 11, 2018
major deadline - All individual bill requests by legislators had to be turned in by the end of the day. Bills can still be submitted by committee chairs and by leadership. Legislators will spend the next four weeks working on policy bills in preparation for the next major deadline, the first funnel on February 16th, when any non-tax or spending bills that have not been passed by committee will die for the year.
 
State Budget
Along with her Condition of the State speech, the Governor delivered her proposed budget to the Legislature (which includes both the upcoming FY 2019 as well as proposed adjustments to the current FY 2018). Governor Reynolds proposed about $27 Million in cuts to FY18 to help close a remaining shortfall. The cuts include a $10 million cut to Medicaid, $5.1 million from the Regents Universities, $3.4 million from the Department of Corrections, $3.3 million from the Department of Human Services, $1.8 million from Community Colleges, $1.6 million from the Judicial Branch, and numerous smaller reductions spread across State government. The Governor urged swift enactment of the FY2018 reductions in order to give agencies as much time as possible to find the savings.
 
For Fiscal Year 2019 (which begins July 1, 2018), Governor Reynolds is proposing an overall state General Fund spending of $7.4465 Billion compared to FY18's $7.2505 Billion, an increase of $196 million or 2.7 percent. The Legislature will use the Governor's budget recommendations as a guide as they develop the state budget that they will eventually enact into law. However, no further action is likely to take place on the budget until after the March meeting of the Revenue Estimating Conference when legislators will gain a clearer picture of how much revenue is available for allocation in the next fiscal year.
 
Of interest to economic development, the Governor's FY2019 budget contains the following:
  • IEDA Administration - Cut by $119,581 (to $13,280,419)
  • Level Funding proposed for High Quality Jobs ($15.9 million), STEM Scholarships ($1m), and Regents Economic Development ($3M for Regents Innovation Fund, $2.4m to ISU, $209k for Univ. of Iowa Economic Development, $2m for University of Iowa Entrepreneur and Economic Growth, and $1.066m for University of Northern Iowa Economic Development)
  • Level funding for Workforce Training & Economic Development Funds ($15.1 million)
  • ACE Infrastructure - Cut by $1 million (to $5 million)
  • Council of Governments (COGs) - Cut by $1,750 (to $173,250)
  • Registered Apprenticeship Program - Governor's proposal, to be allocated $1 million
  • Iowa Workforce Development - Cuts $20,000 from the Labor Services Division, $71,013 from Field Offices and $150,000 from the Employee Misclassification Program. The budget provides new money to IWD for the following: $250,000 for a Summer Youth Work Pilot, $150,000 for a Future Ready Iowa Coordinator and $350,000 for Future Ready Iowa Marketing.
  • Great Places - Level funding at $1 million
  • Trails - Increases by $1.5 million (to $2.5 million)
  • Railroad Revolving Loan & Grant - Level funding at $1.5 million.
  • REAP - The Governor proposes staying at $12 million for FY 2019 (this was cut by $4 million last year, from $16 million)
  • Level funding (at $5m) for Community Attraction & Tourism and for Regional Sports Authorities ($500K)
  • Restores $1 million to Low Head dams (was zeroed out last year)
You can download and view the Legislative Service Agency's in-depth review of the Governor's budget proposal HERE
IEDA Funding Could be in Jeopardy

The Legislature is predicted to release a deappropriation bill any day now to make cuts to the current Fiscal Year 2018 (which ends June 30, 2018). The Governor's proposal includes a cut of $119K to IEDA, which would be tough on a department that has seen multiple cuts in recent years. However, there is a good chance the Legislature will propose cutting MUCH DEEPER than this, possibly in excess of $300,000 from the IEDA Administration Budget. We should see the bills soon, but these are the rumblings that have been bounced around.  
 
Please take a moment to contact your Senator and Representative and ask them to support the IEDA and its programs.  SPEAK UP NOW FOR ECONOMIC DEVELOPMENT!!
The Property Tax Backfill
 
With the Iowa budget in such dire straits recently, one of the questions that keeps getting raised is whether or not the Legislature will attempt to end or phase-out the Commercial & Industrial Property Tax Replacement Claims system, commonly referred to as the "Backfill." This was an agreement made during the passage of the 2013 property tax reduction bill to make cities, counties and schools districts partially whole for any reduction they experienced as a result of the bill.  The backfill was capped at $150 million; in FY2018, $53.6 million goes to cities, $29.2 million to counties, $59.3 million goes to schools, $339k goes to townships, and $9.7 million goes to other taxing bodies such as cemeteries, fire districts or extension offices.

Former Governor Branstad was a stalwart defender of the backfill since he pushed hard for the passage of the 2013 bill. When Governor Reynolds took the reins, there was some uncertainty about whether she would hold the same opinion of the backfill. Those questions were largely answered when she submitted her budget proposal - Governor Reynolds' budget fully funds the backfill in FY 2019 and makes no mention of a phase-out, studying a phase-out, etc. If you have a chance, please take a moment to send her a message (Link HERE) thanking her for that and encouraging her to continue to defend the backfill. Some legislators have indicated they may look into the future of the backfill, but we have not seen any legislation (yet) to do so.

As you may know, PDI is on record as supporting the continuation of the backfill. What can you do?
  1. Please take some time to reach out to your legislators to indicate your support for maintaining the backfill. House members are HERE. Senate members are HERE. You can figure out who both of your legislators are by going HERE and entering your home address.
  2. Consider whether or not your organization individually wants to sign on publicly as a supporter of the backfill. The Iowa League of Cities is keeping a list of organizations that wish to be "on record" as supporting the continuation of the backfill. If you wish to join the list, send an email to the League's Director of Government Affairs Robert Palmer at robertpalmer@iowaleague.org
If you need background information about the backfill, a one pager with some history and talking points is available HERE. Also, an Excel spreadsheet is available HERE that will allow you to look up how much your city, county, school district or other taxing entity receives from the backfill.
 
Bills Being Tracked for PDI

This is a list of the bills being tracked for PDI. The bill list is updated constantly, so if you wish to see the updated bill list, just go to
http://www.ialobby.com/billtracker/pdi/

Bill# Title Status
HF2038
Nonreversion/Reallocation of State Funds
Summary | Details
House Appropriations Committee

Requires up to 10 percent of funds appropriated to a state entity that remain unencumbered or unobligated at the close of the fiscal year shall not revert to the general fund
HF2046
Sales Tax Collection
Summary | Details
House Ways & Means Committee

Amends definition of "retailer maintaining a place of business in this state" for the collection of sales tax from out-of-state retailers.
HF2047
Legislative Tax Credit Review Committee
Summary | Details
House Ways & Means Committee

Creates a legislative tax credit review committee.
HF575
Bottle Bill Repeal and Replace
Summary | Details
House Ways & Means Committee

Repeals the beverage containers control law and replaces it with new recycling, litter control, and community enhancement programs.
HF597
The WISE Solution for Water Quality
Summary | Details
House Ways & Means Committee

A permanent $180-200 million/year that flows into the Natural Resources and Outdoor Recreation Trust Fund, at least 60% of which would have to be used for specific water quality.
HF603
Eminent Domain
Summary | Details
Senate Floor

Addresses the use of eminent domain and the procedures and compensation required for the use of eminent domain.
HF656
TIF - $5.40 Levy Removal
Summary | Details
House Floor

Would remove the $5.40 levy from the TIF increment for all future projects.
SF2033
Workforce Housing Tax Incentives Program Eligibility
Summary | Details
Senate Ways & Means Committee

Amends the definition of "small city" for eligibility for the Workforce Housing Tax Incentives Program to include any city or township located in whole or in part in one of the 88 least populated counties.
SF2043
Inheritance Tax Repeal
Summary | Details
Senate Ways & Means Committee

Repeals the state inheritance tax and the state qualified use inheritance tax.
SF2069
Forest Reservation Property Tax Exemption
Summary | Details
Senate Ways & Means Committee

Lowers the property tax exemption for forest reservations.
SF512
Water Quality/Wastewater Treatment
Summary | Details
Senate Floor, Second Time

Modifies existing wastewater treatment program, establishes new water quality programs, and creates a water service excise tax and sales tax exemption.
Your Legislative Team
The Advocacy Cooperative | Campbell/Patterson Consulting LLP, PO Box 1403, Des Moines, IA 50131
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