IPA Legislative News

March 20, 2021

2021 Legislative News

Two weeks ago, the Iowa Legislature hit its first big deadline of the 110-day legislative session, the so-called "first funnel." This first deadline meant about half of the nearly 2,000 bills introduced this year are no longer up for debate. Since then, legislators spent most of their days (and nights) in debate. That means hours in caucus before lengthy debates, including controversial bills that "back the blue," allow permit-less carrying of guns in Iowa, protect free speech on campuses and in schools, and stop schools from talking about racism and sexism in ways that are divisive (a reaction to the inclusive curricula used in Ames). There are several bills that are moving through the process that take the "local" out of "local control," including a bill (SF252) on its way to the Governor that prohibits cities and counties from passing ordinances to ban landlord discrimination against individuals who use housing vouchers to pay their rent (nationally 1:3 people using these vouchers are non-elderly people with disabilities).

The Senate also passed its tax bill to end federal deductibility and allow other tax changes passed two years ago to go into effect in 2023 (current law requires state revenues to hit 4% growth before becoming effective, a target the state would have met were it not for the pandemic). The overall result is a reduction in the number of tax brackets and an overall tax cut for most Iowans. Since the revenue estimates from Friday are hovering around the 4% growth rate, legislators will feel confident in moving forward with this bill.

As the Legislature approaches its second funnel deadline, legislators will shift to more subcommittee and committee work ahead of the April 2 deadline. Another shift is ahead as well; budgets will start forming in the coming weeks. Legislators have been waiting for the new March revenue estimates before they begin work on budgets, and those estimates were received yesterday (Friday, March 19). The new estimates show the state recovering from COVID-19, with an estimated 3-4% increase in revenues each year. Here's a quick overview:

The current fiscal year estimate (FY 2021) was adjusted to reflect 1.9% growth over FY 2020. That equates to $8.079 billion in revenues, a figure that is $109.6 million higher than the REC's December estimate and $148.3 million higher than FY 2020.

Because of this revision, the state will have extra money left unspent at the end of the fiscal year on June 30. Those funds could be spent by legislators, but they will probably want to make sure they are used for one-time projects or short-term needs.

For the upcoming FY 2022 budget year, the REC projects revenues to increase by 3.8% over FY 2021 for a total collection of $8.386 billion. That is an increase of $119.9 million over the December estimate and $306.7 million over FY 2021.

Legislators took a first look at FY 2023 and settled on a preliminary projection of $8.763 billion, an increase of 4.5% over FY 2022. This projection shows the state is well on its way to hitting "normal" increases, including hitting the 4% trigger for tax reforms to go into effect.

As a reminder, the Legislature is required to use the lower of the REC's December and March estimates (so they will use the December estimates when putting together budget targets). Because the March estimates are showing a steady comeback, this should give legislators the confidence in spending up to the December estimates and moving forward with tax reforms (eliminating the triggers, making them effective 2023).

As a reminder, the December estimates were $8.266 billion, of which legislators can spend 99% (about $8.183 billion). That is an estimated $358 million more than the current fiscal year's spending and is close to the Governor's recommendation of $8,114 billion. Both levels will result in unspent dollars at the end of the fiscal year. That should mean no cuts, and some options to increase funding for priority programs. Which programs and services get these extra funds is yet to be determined, but childcare and broadband have nearly unanimous support amongst lobbying organizations and legislators.

There continue to be a lot of unknowns about the recently passed American Recovery Plan Act and its potential impacts on state programs. For instance, the extra enhanced match rate for Medicaid is temporary and if that is to be sustained after that, it will require more state dollars. Legislators will probably take a careful approach to ensure they do not overspend, particularly in areas like education and Medicaid, which combined make up almost 75% of the state's budget.

For those that love spreadsheets and accounting, you can read the details of the REC estimates here.

IPA Issue Highlights

Telehealth: The Senate continues to be the main stumbling block on telehealth payment parity; if anything passes it will be a part of the end-of-session trades. We have heard that the HF 294 subcommittee members (Sen. Jeff Edler, Sen. Mark Costello, Sen. Liz Mathis) have been flooded with emails and calls; this is the bill that requires insurers to pay equally for mental health services whether provided via telehealth or in-person. The broader bill (HF 784) that mandates this for all services has not yet passed the House. On the other hand, HF 431 was approved by a Senate subcommittee last week and is likely to be on the Senate Human Resources Committee agenda sometime next week. It directs professional licensing boards to recognize audio-only telehealth delivery as an effective modality in the delivery of health care. Your advocacy team (Ascheman-Lonning-Cooper) put together some great tools should you ever need information on the efficacy of telehealth in general and audio-only specifically (Audio Only Evidence Chart, APA Telephone Therapy Summary, APA Efficacy Summary).

Medicaid Recoupments: HF 736, which limits Medicaid recoupments to a three-year window (two years to identify the overpayment and one year to collect), is on the House debate calendar for Monday (March 22)! The bill also allows providers to refile their claim with Medicaid. There is an amendment (H-1235); it simply states that this does not apply to the cost settlement process for Medicaid and Medicare (since the Feds typically "drag their feet" in their cost reporting process). One issue that has been highlighted is the failure of the DHS database to interact with the Department of Corrections, resulting in a number of claims being kicked out when someone's benefits were not restored following incarceration or while in a corrections-owned halfway house.

School Sport Concussions/Provider Expansion: Despite input from psychologists with expertise in the area, a House committee did not change a bill (HF 736) that added OTs to the list of providers who can determine if a student is able to continue to return to play after getting a concussion or brain injury. IPA had asked to add psychologists; OTs and the supporters of this bill didn't want to slow down the bill's progress (which was halted last year because of COVID-19). There appears to be a lot of confusion on this bill with legislators, so this will be on our list to discuss over the interim to determine if it should be part of the IPA legislative agenda in 2022.

Professional Licensing Reform Part II: Last year's legislation to weaken Iowa's professional licensing laws were not enough for legislators; the Senate passed SF 487 this week, requiring a review and sunset of all professional licensing boards and establishing "guidance" for future legislators to follow when considering changes to scope of practice, continuing education requirements, regulating new professions, and licensing/certification changes. In a nutshell, they want the Legislature to always go with the lest restrictive requirements needed to ensure the safety of Iowans. It is now in the House State Government Committee, which in the past has killed the bill but may be showing signs it will consider it. More to come on this.

Other Updates: I may need to knock on wood before saying this, but it appears music therapists will not get their certification this year (HF 285), professors will still be able to get tenure (HF 496), and public assistance programs will not have to hire a duplicative service to verify program participants' income and assets (HF 389). These bills have stalled and have appeared to have lost steam. Also dead is a bill (SF 528) that would have made significant changes to Iowa's commitment laws (Chapters 229 & 125) to allow Access Centers developed by MH/DS Regions to forcibly hold and detain individuals. They are currently not locked and do not usually have security on site as they are intended to de-escalate, assess, and connect people to the right level of treatment. It's a fight between sheriffs and MH/DS regions. Instead, legislators plan to review the continuum of care to determine if another level of service is missing and if funding for the deployment of more mobile crisis units is the answer. They'll do this as a part of their review of the psychiatric inpatient bed tracking system (SF 524), which advanced out of a House subcommittee last week and will be on the House Human Resources Committee agenda soon.

NOTE ABOUT BILL TRACKER: You can read more about these bills and more in the IPA Bill Tracker. Remember it is updated daily, sometimes several times a day. Things move very quickly this time of year, so you'll want to check back on the status of bills you care about.