2022 Iowa Legislative Session - Week 2 Summary

With the Martin Luther King, Jr. holiday on Monday, this was a short week for lawmakers. On Tuesday, House Resources Chairperson Representative Ann Meyer announced her focus for the 2022 session will continue to be on expansion of mental health care in Iowa.   Meyer has introduced bills to fund additional psychiatric residencies in Iowa, allocate additional dollars to a loan repayment program for Iowa mental health providers, expand the number of beds at the Cherokee and Independence State Mental Health Institutes and require the Department of Human Services to raise the Medicaid reimbursement rate for patients whose psychiatric care requires a higher level of service.   Senate Human Resources Chair, Senator Jeff Edler has also indicated a strong interest in continuing to further access to mental health care in the state.  

Veterans from across the state descended upon the Capitol Wednesday to participate in the 2022 Iowa Veterans Day on the Hill. Governor Reynolds, Lieutenant Governor Gregg, and the Chairs and Ranking Members of the Veterans Affairs Committees addressed the crowd to honor our veterans.

In the weeks leading to the 2022 session, Governor Reynolds and GOP legislative leaders have identified tax reform as one of their top priorities. To begin that process, the Governor’s tax bills were filed Wednesday and sent to their respective Ways and Means Committees. The companion bills - HSB 551 and SSB 3044 - are comprehensive and include the roadmap to the 4% flat income tax rate. In total, there are eight divisions of the bill:

• Division I:  Net Capital Gain Exclusion for Sale of Qualified Stock - employee/owner gets one lifetime election to exclude capital gains for the sale or exchange of capital stock.  Phased in over three years beginning tax year 2023. 
• Division II:  Retired Farmer Lease Income Exclusion - retired farmer income from rental exempt from tax if farmer is 55 and over and has farmed for at least 10 years.   
• Division III:  Retired Farmer Capital Gain Exclusion - starting tax year 2023, Iowa farmers age 55 and over get a single lifetime exclusion from capital gain on the sale of land or livestock. 
• Division IV:  Individual Income Tax Rates - reduces number of brackets and rates for tax Years 2023-2025.
• Division V:  Individual Income Tax - implements 4% flat rate by 2026 on all taxable income.
• Division VI:  Corporate Income Tax Rates - Adjustments - if revenue exceeds $700 million, excess used to reduce corporate income tax rates the next year.
• Division VII:  Corporate Income Tax Rates - Flat Rate - codified corporate tax rate at flat 5.5% when operation of Division VI reaches that point.
• Division VIII:  Retirement Income - beginning in tax year 2023, all retirement income is exempt from state tax.

In other news, subcommittees assigned to delve into various aspects of the state budget began to meet this week. Administrative and Regulation, Agriculture and Natural Resources, Economic Development, Education, Justice Systems and Transportation and Infrastructure subs meet to review the Governor’s FY 2023 Budget Recommendations.  These meetings usually begin after the first major funnel deadline but this session, at least so far, the legislature would appear to be moving faster.

This week included an important filing deadline with the Iowa Ethics & Campaign Disclosure Board. Any candidate who raised or spent more than $1,000 in a calendar year (of the candidate’s election) is required to submit a campaign disclosure report. Governor Reynolds set a new state record for cash on hand with approximately $4.8 million after raising almost $3.8 million. The leading Democratic challenger, Deidre DeJear, raised $279,000 after forming an exploratory committee this past July. Governor Reynolds is widely expected to announce she is running for Governor again, but has not yet done so.  

In other candidate news, former House Democratic House Majority Leader Kevin McCarthy announced he was running to Polk County Attorney on Thursday. McCarthy served in the House from 2003 until 2013. More recently, he served as an Iowa assistant attorney general until last year when he started working for the North Central States Regional Council of Carpenters union. Two other Democrats have announced their candidacy for Polk County Attorney. Kimberly Graham is an attorney and advocate for neglected/abused children. Graham unsuccessfully ran for the Democratic nomination for U.S. Senate in 2020. Laura Roan is an assistant Polk County attorney. Previously she has worked for the Iowa Attorney General’s Office and the United State Attorney’s Office in the Southern District of Iowa.

Additionally, the Iowa Economic Development Authority announced investments of $16.6 million from the Community Development Block Grant Program. The funds have been awarded to communities to improve water and sewer systems and assist housing and other revitalization projects. Grants were aimed to help benefit low- and moderate-income Iowans. The program is federally funded via the U.S. Department of Housing and Urban Development.

BrownWinick Government Relations:

To view additional summaries from the 2022 Iowa Legislative session or to learn more about BrownWinick’s Government Relations Team, visit our Lobbying and Public Policy team page.