The House Ways and Means Committee unanimously passed a tax proposal last Thursday (HF 893)—the day after the Senate and Governor Kim Reynolds introduced their own compromise bill (SSB 1276).
Mental health funding is one of the main differences between the two proposals. Reynolds and the Senate are calling to phase out the mental health property tax levy and shift the cost of mental health services from counties to the state. Both House Republicans and Democrats said restructuring the system should be part of a larger discussion, rather than a tax bill item. The Senate proposal also calls for phasing out annual “backfill” payments to local governments to compensate for statewide commercial property tax cuts passed in 2013. The House measure would not cut backfill.
Both proposals would remove the revenue benchmarks, or “triggers” the state is required to hit before personal income tax cuts passed in 2018 go into effect. While the Senate would also phase out the inheritance tax over two years, the House would do so over 10 years. But unlike the Senate version, the House bill would also cap the state’s end balance carry-over, with the extra funds going back to taxpayers through the Taxpayer Relief Fund. The House bill is now eligible for debate on the floor. The Senate is set to consider its own bill this week.
Meanwhile, the House and Senate have agreed on the Transportation and Infrastructure Capitals (SF 592) budget bill. Both chambers passed it last week, and it now goes to the governor for consideration. It is the second spending measure to go to Reynolds. Late last month the House and Senate approved the Administration and Regulation budget (HF 867), which included $100 million in funding for Reynolds’ broadband expansion initiative.
Last Thursday the House also passed four of its own budget bills: Agriculture and Natural Resources (HF 860), Rebuild Iowa Infrastructure Fund, or RIIF (HF 862), Education (HF 868), and Economic Development (HF 871). The House and Senate have yet to reach an agreement on those measures. Although the Senate versions of the bills have passed committee, the chamber has yet to debate them on the floor.
To view additional summaries from the 2021 Iowa Legislative session or to learn more about BrownWinick’s Government Relations Team, click here.