House and Senate compromise on taxes, move late-night budget bills

By: - May 17, 2021 10:25 pm
he State Capital of Iowa is reflected by the Henry A Wallace Building

The State Capitol of Iowa is reflected by the Henry A Wallace Building on Nov, 6, 2018 in Des Moines. (Photo by David Greedy/Getty Images)

The Iowa Senate passed a major tax bill Monday evening that will accelerate income tax cuts and change the way the state funds mental health services.

The proposal has been under negotiation for several weeks among Republican leaders in the Legislature and Gov. Kim Reynolds. House leadership signed off on the proposal Monday, clearing the way for its passage and for consideration of state budget bills.

“Over the course of implementing this bill, we are delivering Iowans over a $1 billion tax cut through accelerating income tax cuts and providing relief to property tax increases for a vast, vast majority of hardworking Iowans,” Sen. Dan Dawson, R-Council Bluffs, said.

The $1 billion tax cut counts savings over the course of eight years, according to a Senate press release.

House Republicans were initially skeptical of the Senate’s plan to pay for mental health and disability services through state appropriations, rather than property taxes. House Speaker Pat Grassley said Friday his caucus wasn’t opposed to the new funding model — so long as there were “guardrails” and assurance that services would be equally accessible across the state.

Under the Senate File 619, the mental health property taxes will be phased out over the course of two years. The proposal would create performance-based contracts between the state and the mental health and disability services regions, allowing for additional legislative oversight.

“Because of the disciplined budgeting practices of Iowa House Republicans over the last decade, Iowa is in a strong fiscal position to further reduce the tax burden on Iowans,” Grassley said in a Monday evening press release announcing the compromise.

Democrats in the Senate argued that the new system of mental health funding could create issues if future legislatures decided not to give an adequate state allocation. They pointed to the decision to phase out the property tax backfill as evidence that the state cannot be trusted to fund ongoing programs. The so-called “backfill,” totaling about $152 million, was a state payment to replace local government revenues as part of a 2013 law that eliminated the property tax on industrial machinery and equipment. Republicans responded that the backfill was not meant to be a promise in perpetuity.

“There is no guarantee — none — that this state will make good on its promise to adequately fund mental health and disability services,” Sen. Pam Jochum, D-Dubuque, said

The bill passed the Senate by a vote of 29-15. 

Lawmakers begin to pass budget compromises

With the tax bill unstopped, the rest of the state budget process flowed forth. House and Senate lawmakers on Monday passed several coordinated budget proposals. The Legislature must send a complete state budget to the governor before adjourning for the year.

This is where the budget stands:

Health and Human Services: The House and Senate passed a Health and Human Services budget Monday. Overall, the bill appropriates $2.04 billion from the state’s general fund to the Department of Public Health, Department on Aging, Department of Human Services, Department of Veteran’s Affairs and the Iowa Veteran’s Home. 

The funding for the state to take over the appropriation for mental health services is not present in this budget bill, but rather in the tax bill. An additional $50 million will be appropriated to the Department of Human Services to begin the buyout of the mental health and disability services system.

Bill leader Rep. Joel Fry, R-Osceola, said some parts of the bill, including language on the child care “cliff” and telehealth parity, had been removed from the budget because Senate lawmakers agreed to pass them in other pieces of legislation or as part of the tax bill.

The Senate sent a bill providing for a graduated phaseout of child care assistance, House File 302, to the governor’s desk Monday.

Agriculture: The Senate passed an amended version of the House agriculture budget bill Monday evening. The proposal would appropriate $48.8 million from the general fund to the Department of Agriculture and Land Stewardship and the Department of Natural Resources. It also appropriates over $90 million from sources other than the general fund.

The amended bill includes increased funding for park operations and for the renewable fuels and infrastructure program, said bill leader Sen. Ken Rozenboom, R-Oskaloosa. It also extends funding for water quality for an additional 10 years to 2039.

The Senate voted 28-17 to pass the bill, sending it back to the House for consideration.

Judicial branch: The House passed a $193 million budget for the Judicial Branch late Monday. That’s an increase of over $9 million for the upcoming fiscal year.

“If we don’t have law enforcement, our courts, our public defender system, our prosecutor system, we have nothing,” said Rep. Gary Worthan, R-Storm Lake, who led debate on both the judicial and justice system bills.

The House voted 53-36 to pass the bill, which heads to the Senate for consideration.

Justice system: The House passed a justice system budget early Tuesday. The proposal includes increased funding for the Department of Corrections.

After two inmates attacked staff members at Anamosa State Penitentiary, the justice system budget became a flash point. The House and Senate both proposed budget increases, but Democrats and union representatives asked for significantly more. Under the compromise between the House and the Senate, the Department of Corrections will receive an additional $20.4 million over fiscal year 2020.

House Democrats attempted to pass an amendment that would require the Department of Corrections to fill current correctional officer vacancies and introduce new positions. It failed along party lines.

“Our number one priority should be funding and filling the positions that keep our inmates safe, our personnel safe and the state of Iowa safe,” said Rep. Bruce Hunter, D-Des Moines.

The House unanimously passed an amendment to provide additional revenue for the Department of Corrections survivor benefits fund from the Iowa Lottery. The amendment also allows families of department employees who are killed in the line of duty to continue with that individual’s health coverage plan.

Worthan also amended the bill to introduce a new Bureau of Cyber-crime to help track and prosecute child pornography and other digital crimes in Iowa.

“I’ve waited 11 years to be able to write a budget that does the fantastic things that this budget will do for every department under our purview,” Worthan said.

The bill passed the House 52-36.

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Katie Akin
Katie Akin

Katie Akin is a former Iowa Capital Dispatch reporter. Katie began her career as an intern at PolitiFact, debunking viral fake news and fact-checking state and national politicians. She moved to Iowa in 2019 for a politics internship at the Des Moines Register, where she assisted with Iowa Caucus coverage, multimedia projects and the Register’s Iowa Poll. She became the Register’s retail reporter in early 2020, chronicling the impact of the COVID-19 pandemic on Central Iowa’s restaurants and retailers.