Here are some of the highlights of Gov. Kim Reynolds’ budget proposal and priorities she addressed in Tuesday’s Condition of the State speech.
Overall spending: Reynolds’ budget proposal increases general fund spending from the current year’s $7.7 billion to about $8.1 billion for the 2022 fiscal year, a 3.7% increase. The increase proposed for fiscal year 2023 is 2.3%, for $8.3 billion in general fund spending. The rise is higher in 2022 because of increased federal aid, particularly for Medicaid.
Taxes: Reynolds is proposing to accelerate implementation of the income tax plan approved in 2018. She wants the state to implement provisions that current law would only put into effect if state revenue growth reached 4%. The revenue will not reach that level, but Reynolds is proposing to move ahead with the following, beginning Jan. 1, 2023: Reduce the number of individual income tax brackets to four with the top rate reduced to 6.5%. Federal deductibility would be repealed.
Universal broadband: This has long been a priority, with numerous past initiatives by the state and federal government. “I’m done taking small steps and hoping for big change,” Reynolds said. She called for spending $450 million to “plant a stake in the ground and declare that every part of Iowa will have affordable, high-speed broadband by 2025.” She said about a third of Iowa counties are “broadband deserts” and the state has the second-lowest broadband speeds in the country.
The proposal would allocate $150 million a year from the state general fund for three years. Reynolds said the program would “leverage millions more in private investment, giving Iowa the biggest buildout of high-speed internet in the country.”
Child care: Iowa’s lack of affordable child care has been a chronic problem. Addressing that issue has been a priority for the business community. Last year, the Iowa House passed five bills in one day to address the issue, but only one received Senate approval. Reynolds’ approach would funnel $3 million of state money, plus $25 million in child care development block grant money, to “jump start” public-private partnerships for communities to develop child care programs. Reynolds is also putting together a task force to recommend how to spend federal pandemic aid directly to child care and proposing to eligibility for Iowa’s child care tax credits.
State aid: Reynolds’ budget proposal would increase state aid for K-12 schools by 2.5% or about $27 million in the fiscal year that begins July 1, 2022. The increase for fiscal year 2023 would be about $143 million, assuming enrollment recovers. Currently, districts have reported losing about 6,000 students as parents kept them home or found other arrangements during the pandemic.
In-person instruction: Republican legislative leaders said Monday they would make it a priority to end schools’ ability to move all students to virtual learning due to COVID-19. Reynolds underscored that plan Tuesday: “… tonight, I am asking the Legislature to immediately send a bill to my desk that gives parents the choice to send their child back to school full time,” she said. “We can’t wait any longer. Our kids can’t wait any longer.”
Reynolds also proposes to make an additional $20 million available to help districts that were providing in-person learning during the pandemic with costs not being covered by federal assistance.
School choice: While Republicans have long hoped to spread tax dollars to non-public school options, the pandemic has restarted the debate. Reynolds said parents who tried to open-enroll their children to neighboring districts or move them to private school to avoid virtual instruction met legal and financial barriers. “School choice shouldn’t be limited to those who have the financial means or are lucky to live in a district that’s confident enough to allow open enrollment,” she said. “So let’s make choice an option for everyone.”
Reynolds proposed requiring all districts to allow open enrollment and “allowing our communities more flexibility to create public charter schools.” She also called for the creation of education savings accounts for students who are “trapped in a failing school.”
Work-based learning: Reynolds also called for “work-based learning opportunities” to be available to all Iowa students.
Housing: Reynolds called on lawmakers to expand initiatives that “address pent-up demand for affordable housing, helping our communities thrive and our families move where opportunities await them.” Among her proposals is doubling workforce housing tax credits from $25 million to $50 million.
Licensing boards: Last year, Iowa lawmakers agreed to recognize professional licenses and certifications from other states, making it easier for people moving into the state to more quickly fill jobs. “Iowa now has the most flexible licensing reciprocity and recognition laws in the nation, which sends a signal to the country that Iowa is open for business,” Reynolds said. “This year,” she said, “we’ll begin the task of reviewing each of our licensing boards and commissions to make sure they are serving their purpose.”
Racial justice: Last year, lawmakers unanimously approved a bill addressing police misconduct and training. This year, Reynolds said she will introduce legislation to outlaw racial profiling by police — but the bill also will take aim at “rioters” who clash with police.
“The bill will make clear that if you riot or attack our men and women in uniform, you will be punished,” she said.
Reynolds’ bill is also expected to allow collection of racial data on traffic stops and other interactions with police. She is also calling on lawmakers again to advance a constitutional amendment to ensure automatic voting rights for felons, which she provided last year through executive order when lawmakers did not act.
Health care: The most significant spending initiative is $15 million for each of the next two years for the adult and children’s mental health system. In her speech, Reynolds also proposed $1 million to align rural physicians with specialists and improving rural emergency medical services. Other initiatives will be included in her budget plan.