The last two weeks have been filled with floor debate and lots of behind-the-scenes negotiating about taxes, budget and any remaining policy issues. While we are still technically at an impasse on taxes, there has been a lot of activity between the Chambers, which is a good sign.
Legislative per diems officially run out after the 100th day of the session on Tuesday, April 17th. At that point, legislators will largely lose their clerks for the rest of the session, so there will be added incentive to wrap up for the year.
On top of that, some legislators are affected by the June 5 Primary Election, so the longer the session continues, the fewer days they have to campaign. Additionally, gubernatorial candi
dates are prohibited from taking PAC checks until 30 days after the legislative session (when the Governor's veto period ends), so if session goes until Sunday, May 6, the Democratic candidates for Governor will be shut out of those large checks before their June 5 primary. That impacts Senator Nate Boulton and Cathy Glasson the most, as they have been endorsed by most of the groups that own those PACs. Governor Reynolds is also unable to accept those checks, but she does not have a primary opponent, so it's not an issue on the Republican side.
- This is most likely the last regularly scheduled update that will be published until the Legislature adjourns for the year. Keep an eye out for timely alerts requesting you to take action.
What do we need to do to close down the session?
The one thing legislators and the Governor HAVE to do is enact a Fiscal Year (FY) 2019 budget for the State. This will require the following:
Determining an overall number that can be spent (in the neighborhood of $7.5 billion),
Dividing those funds up (targets) between the seven appropriations subcommittees for allocation into the ten Appropriations bills, and
Passing all ten in identical form to the Governor which she then signs into law.
There are a number of smaller steps along the way, but that is the general outline.
Since the 100 day scheduled session is almost up, why have we not begun this Appropriation process?
Because in addition to the budget, the Governor, House and Senate ALL agree that they need to enact tax cuts. Why? As Speaker Linda Upmeyer explained in her latest newsletter, the recently enacted federal tax cuts will reduce taxes on Iowans by an estimated $1.8 billion per year. However, because Iowa is one of three states that have federal deductibility, a decrease in federal taxes means that state taxes on Iowans will rise by $107 million in 2018 (and $153 million in 2019) if the Legislature makes no changes in tax policy.
The tax plans
The Governor has a tax plan she released in February. Her plan is summarized HERE and was introduced in the Legislature as HSB 671 and SSB 3195. The House has recently released their plan, summarized HERE and in legislation as HF 2489. HF 2489 could be passed by the House this week. The Senate has introduced two plans, the first of which (SF 2383) was by far the largest of all the tax cut proposals and was passed by the Senate over to the House on February 28. The most recent Senate plan was announced on Thursday; the language is not yet available but a one pager is available HERE.
All of the tax reform plans have cuts to personal income taxes and an expansion of the sales tax to cover online purchases. The biggest differences are the size of the tax cuts, whether to include corporate cuts, whether to include getting rid of federal deductibility and whether to include a tax increase on credit unions. With the House backing down completely on getting rid of deductibility while the Senate has doubled down on it, we may be waiting around for a while for resolution of the tax reform issue.
FY 2019 Budget Status
The House and Senate were reportedly waiting on moving any budget bills until the tax reform issue was resolved. However, in the wake of the two chambers moving vastly different tax bills, the House has gone ahead and scheduled four appropriations subcommittee meetings for Monday. They look to bring the following four spending bills out of subcommittee - Transportation, Economic Development, Justice, and Agriculture and Natural Resources. This will constitute the "House version" of those bills, and should not be assumed to be "signed off on" by the Governor and Senate.
Given all that, when will we finish for the year?
We all wish we had the answer to that question. Everyone is making guesses, ranging from Cinco de Mayo to mid June. One thing to keep in mind - Once they reach agreement on taxes and budget, it will still take a solid week to draft the bills, draft amendments, make edits, discuss everything in caucus, debate the bills, and close down. While rank-and-file members wait for all that to happen, we often see them taking up other issues and trying to tinker with new policy ideas, which then adds even more time to closing down the session. So buckle in, we'll be here a while.