May 5, 2018
ABI Session Wrap-up Report
    Initial analysis of the 2018 Legislative Session
Tax Reform Bill Caps Off Pro-business General Assembly
The 2018 Iowa legislative session adjourned sine die Saturday evening at 5:25 p.m. The session went into overtime this year well past the scheduled 100th day, as legislators worked hard to come to an agreement on tax reform and the budget.

The Legislature, which is controlled by Republicans in both the House and Senate, followed up last year's historic session by passing additional pieces of pro-business legislation. ABI registered on over 300 bills this session and worked to ensure business maintained a strong voice at the Capitol.

Final Tax Agreement Passes Legislature
The Iowa House and Senate debated Saturday afternoon a comprehensive tax reform bill that will impact all Iowa taxpayers. The 148-page amendment adopted Saturday includes many provisions. You can see a fiscal analysis here . A few highlights include:
  • Lowers individual income tax rates
  • Phases in Qualified Business Income deduction from 25% in TY 2019 to 75% in 2022
  • Makes changes to definition of research for purposes of RAC
  • Changes definition of manufacturer. If you are both a manufacturer and retailer, the equipment in your retail locations will not be tax exempt.
  • Adds digital products, subscription services, online sellers, ride sharing/taxi to items subject to sales tax
  • Provides for Iowa to collect onlines sales tax if Quill is overturned
  • Lowers corporate rate beginning in TY 2021
  • Fully couples with federal income tax changes and eliminates federal deductibility in TY 2023--IF revenue triggers are met
  • Includes two revenue triggers that state the net General Fund revenue must total at least $8.3146 billion, and the General Fund revenue growth must exceed the prior year growth by at least 4%.
  • Changes voting requirement for local option sales tax
The Senate passed the bill by a vote of 28 to 20. The House then debated the legislation and passed the bill by a vote of 54 to 32. It now goes to the Governor. She is expected to sign the legislation as she mentioned tax reform as a priority in her Condition of the State address.   

ABI appreciated the opportunity to provide feedback during the development of this legislation. We are grateful to the House and Senate members and Governor's staff who worked tirelessly throughout this session to come up with an agreement. A special thank you to Sen. Feenstra, who has worked with the business community for two years on tax reform. We look forward to continued conversations about tax reform and addressing outstanding items in 2019.
ABI Priorities Accomplished in 2018
The 87th General Assembly has been historic for ABI members. Last year, all of ABI's priorities were accomplished. ABI's top legislative priority for the 2018 legislative session was workforce. ABI worked to ensure the passage of the Future Ready Iowa Act, which seeks to make sure 70% of Iowa's workforce has education beyond high school by 2025.

HF 2458 : The Future Ready Iowa Act. ABI supports does several things to help upskill and expand Iowa's workforce. It creates a registered apprenticeship program, a volunteer mentoring program, a pilot program for at-risk youth, an employer innovation fund, a last dollar scholarship program and a skilled workforce grant program. The bill passed the House and Senate unanimously and was signed by Gov. Reynolds on April 3.

ABI also successfully advocated for manufacturers on a specific piece of legislation that passed both chambers unanimous and was signed by Governor Reynolds:  SF 2262 . An ABI priority bill, the legislation will alleviate the regulatory burden on manufacturers of multi-stage work vehicles, like highway helper trucks, specialized utility trucks and ambulances, by allowing the manufacturers to cleanly transfer the title for the vehicle to the end consumer. The bill passed the Legislature unanimously, and the Governor signed it on March 15. The bill goes into effect July 1, 2018.

In addition to the workforce priority, below are some of the key bills ABI advocated for on behalf of members in 2018.

Employment and Workforce
HF 2383 : Alcohol testing.  ABI supported legislation that conforms Iowa's testing for alcohol to the federal motor safety carrier guidelines. Iowa has .04, and federal guidelines for transportation is .02. The bill states Iowa can't test for a level less than .02. The bill passed the House 96-2 and passed the Senate 44-5. It was signed into law on March 28.

HF 2377 : Prescription drug abuse. Comprehensive legislation that addresses opioid abuse. ABI supported the legislation to help address opioid addiction and overdoses. ABI's Workplace and Product Safety Committee added policy language last summer that speaks to this issue and recognizes the problems opioid addiction can cause in the workplace. The bill passed both chambers unanimously and was sent to the Governor's desk for her review.

SF 2405 : Medical marijuana. Adds more conditions to debilitating conditions list for marijuana use. Allows practitioners greater discretion to provide marijuana to patient. Eliminates 3 percent THC cap and exempts cannabidiol products from sales tax. As the Legislature considers expanding medicinal marijuana use in Iowa, ABI is ensuring that any expansion includes protections for employers. This bill passed a Senate committee, but did not advance past that point.

SF 2353 : WIOA conformity. Conforms State workforce development and local workforce boards to federal law in the Workforce Innovation and Opportunity Act (WIOA). Expands the membership of the State board. Also requires the chair to be a business representative and for the makeup of the board to be over 50 percent business representation. ABI supported the changes to ensure federal compliance. Passed the House 88-7 and passed the Senate 46-2. It's been sent to the Governor for her review.

Competitive Business Climate/Regulatory Reform
HF 2343 : Agency discretion. The ABI-supported legislation would restrict agencies from implementing a standard, requirement or threshold without clear federal or state authority. The bill passed the House 95-2 and passed the Senate 46-3. It was signed on March 28.

SF 2349 : Expansion of employer health plans. Legislation could allow employers to form association health plans to provide employees with more affordable healthcare plans. Legislation also provides for association health plans for Farm Bureau and Wellmark insurance. The legislation will allow for additional options in the health insurance marketplace for small businesses. The bill passed the House 69-30 and passed the Senate 37-11. The governor signed the bill on April 2.

SF 2311 : Energy omnibus. This bill makes several changes to public utilities regarding how they are governed and how they serve their customers. Includes changes to energy efficiency and demand response programs for industrial users. It passed the House 52-42 and passed the Senate 28-20. The Governor signed the bill on May 4.
By the Numbers: ABI's 2018 Legislative Session
ABI lobbyists: 3
Number of bills registered: 320
Number of bills supported: 51
Number of bills opposed: 27
Number of bills passed by both chambers: 12
30-day Veto Window
Now that session is over, Gov. Reynolds has 30 days to veto or approve bills received in the last three days of session. She can veto a whole bill or item-veto specific appropriations or policy language in an appropriations bill. During this time, the Governor and her staff will carefully review the language to ensure it fits within the state's budget targets. Groups who want items signed or vetoed typically use that time to send letters of support or opposition to the Governor. If she vetoes or item-vetoes an appropriations bill, she provides an explanation of the reason for the veto. Bills have enactment dates of July 1, unless otherwise specified. Here is an overview of budget bills from the business perspective.

Appropriations Bills
ABI follows the appropriations process, watching for policy or appropriations that affect businesses and the agencies with which they interact. ABI weighed in on several appropriations bills this session. Below are the appropriations bills and the issues they contain that ABI followed.

Standing Appropriations (HF 2502 ): Typically, the final bill of the legislative session is the standings bill. This year was no exception. The legislation contains a large part of the budget and sometimes holds policy measures. The bill included policy to allow non-driving convicted drug offenders to receive their license once released from jail and addresses wind energy assessments regarding property tax.

Education Appropriations (SF 2415) : The bill contains appropriations to implement programs for the Future Ready Iowa initiative.The two appropriations are funding for a statewide clearinghouse to expand work-based learning and funding to allow high school students to take post-secondary summer classes through a community college.

Economic Development Appropriations (HF 2493) : The budget contains funding for pieces of the Future Ready Iowa Act-Apprenticeship funding for small businesses and a summer youth intern pilot program, as well as funding for a Future Ready Iowa Coordinator. The Workforce Development portion of the legislation contains a $39.2 million authorization from federal REED Act dollars for modernization of the unemployment trust fund. The bill also allows $1.6 million off the UI reserve fund to be used to help fund IWD field offices. From a policy perspective the bill contains language to ensure self-insured companies are covered by Iowa's insurance fraud statute. Originally, the Senate included a new Prison Industries manufactured housing program. ABI opposed the creation of the program and the appropriation without additional IPI oversight. The language was ultimately removed from the final bill.

Rebuild Iowa Infrastructure Fund Appropriations (SF 2414 ): Funding for several key projects across Iowa was included in the bill. Also included was an ABI-supported provision that appropriates $954,000 to the Air Quality Bureau under the DNR. The appropriation will allow the bureau to replace antiquated equipment and software, as well as create a modern electronic online application that will help expedite the air quality permitting process.
Regional Public Policy Meetings to Begin Soon
In the coming weeks, the ABI public policy team will be traveling the state to present the results of the session and preview the upcoming elections to ABI member companies. The high-value briefings are an excellent opportunity to provide feedback to the policy team, and they include a meal. You can find out more information about the meetings by going to the  ABI events calendar .

Final Legislative Update Teleconference
Another way to get the latest information on this year's legislative session and what it means for Iowa businesses is to participate in ABI's final legislative teleconference. Look for more information in next week's legislative news for a date and time of the wrap-up legislative call.