Welcome to the second half of the 2024 regular session of the Iowa General Assembly! Monday, March 4th will mark Session Day 57. We continue to inch closer to that April 16th 100th day of the session when per diems expire for the year.

The Iowa Legislature wrapped up its 8th week of session, having debated a combined 162 bills over the past two weeks.  That’s about 80 bills per week.  Despite a Senator boasting of its more efficient debate style in the Senate as they left the Capitol for the week, the House outpaced them 3:1. Of course, the 100-member House does have twice as many members to accommodate as the 50-member Senate.

Second Funnel

By March 15th, all policy bills will need to be approved by committee in the chamber opposite from the one in which they were introduced in order to stay alive for the rest of the session. (For example, a bill that started in the House Education Committee would need to have been passed by that committee, by the full House, and then by the Senate Education Committee in order to remain alive.) Bills dealing with taxes and appropriations are exempt from the funnel.

Bills that are voted on too close to the March 15 deadline may not have enough time to get through the second funnel. You will start to see a shift in the coming week away from all-day debate schedules back to committee and subcommittee work as the chambers try to keep priority bills alive.  There is still a lot of work to do in two weeks, so expect late nights and early mornings at the Capitol.

REC

In addition to being the second funnel deadline, March 15th is also the next meeting of the Revenue Estimating Conference (REC). While the broad strokes of the budget get worked on casually throughout the first part of the session, the budget process cannot start really heating up until that March REC meeting. In that meeting, the committee members will announce their revenue estimates for Iowa for the next two fiscal years. 

The Legislature will then take those numbers and start assembling budget targets and appropriation bills based on the LOWER of the two estimates made in the December and March REC meetings.

Land Redevelopment Trusts

Legislation SF 182 and HF 2246 to allow for the creation of land redevelopment trusts had a subcommittee scheduled and then cancelled this week due a scheduling conflict. We hope to be able to discuss this bill in a subcommittee in the days ahead. More details about the proposal are HERE. Be sure to talk with your legislators about how this tool would help efforts to focus on dilapidated areas within your community.

Infrastructure Revolving Fund

Legislation (SF 2133) to create an Infrastructure Revolving Fund for vertical infrastructure projects was passed by the Senate Commerce Committee, sent to the Senate Appropriations Committee, and was passed by a subcommittee in Appropriations. We now await further consideration by the Senate Appropriations Committee.

Rural Economic Development proposals in the House

The House Republicans introduced two bills – House Study Bills (HSB) 715 and 722 - over the past two weeks that contain changes aimed at rural economic development in Iowa. PDI is registered in favor of both of these proposals and has spoken in favor of them in subcommittee meetings. The bills would do the following:

• HSB 715 (now HF 2633) would require the Iowa Economic Development Authority (IEDA) to use up to $300,000 from its $11.7 million Iowa Skilled Worker and Job Creation Fund (SWJCF) allocation for certification costs of certifying sites in rural Iowa, or “Freedom Sites.” The funds would need to be directed toward certifying at least two sites in each of Iowa’s four congressional districts in counties with a population under 50,000. This bill can be debated at any time, but it is also expected to be amended on to the MEGA sites bill (SF 574). 
• HSB 722 would create a rural development tax credit aimed at encouraging investment into new or expanding businesses in Iowa’s 88 smallest counties. The bill would allow up to $27 million in tax credits for investors in projects. HSB 722 was approved by a subcommittee, and is currently awaiting action by the House Ways & Means Committee.

While PDI testified in support of both proposals, we did have two friendly amendments for both bills. First, we suggested that both proposals need to include new money, meaning HF 2633 should be accompanied by a $300,000 increase in the IEDA’s SWJCF allocation, and HSB 722 should be accompanied by a $27 million increase in the IEDA’s aggregate tax credit cap. 

The second suggestion was to urge legislators to look to the Workforce Housing Tax Credit program for how to direct the funds to rural areas. Over the years, PDI, the IEDA, and others have seen a number of ways to determine which communities qualify as rural vs. urban, and the WHTC’s current breakdown seems to work better than previous versions that left out cities split by county lines or small, rural cities that happen to exist within one of the largest 11 counties.

High-Profile Education bills on the Move

While the Legislature must wait for the REC numbers every year, they typically have a clearer picture at this point about the budget than they do this year, or at least an idea of how big of a tax cut they can pursue. This year, however, the hang-up over a few key education issues – AEA Reform, Teacher Pay and Allowable Growth - is forcing the Governor and legislative leaders to wait until they can resolve those pieces of the puzzle, since they affect the amount of revenue that can be allocated.  

The percentage increase in school funding (often referred to as Allowable Growth or SSA) is typically one of the first bills enacted by the Legislature. This year, the Governor included the School Foundation Aid (with a proposed increase of 2.5%) in her bill that proposed reforms to the AEA system as well as increases in teacher pay. Both chambers immediately became uneasy with the scope of the AEA reforms, so the issues have been divided into multiple bills as the Governor and legislative leaders try to find consensus on these issues. 

The House passed their AEA reform bill (HF 2612) this week, 53-41, with 9 Republicans voting with Democrats against the bill. According to the bill’s floor manager, Rep. Wheeler, the House’s version did incorporate many of the changes to the bill that were suggested by the AEAs. The House also passed their own SSA funding bill (HF 2613) that proposes increasing school funding by 3% for the upcoming school year. 

The House has a teacher pay increase bill (HF 2630) that is ready for debate. Their proposal would increase teacher salaries to $47,500 for the 2024-25 school year and to $50,000 by the 2026-27 school year (from the current minimum of $33,000).

The Senate has an SSA bill (SF 2258) ready to debate whenever the House, Senate and Governor settle on that percentage increase. They are likely to end up at the Governor’s 2.5%, the House’s 3%, or somewhere in between. 

The Senate also has a bill (SF 2386) ready for debate that contains their AEA Reform package along with their teacher pay proposal. Their AEA language is largely viewed as closer to the Governor’s proposal than the House’s language. SF 2386 would raise the minimum salary for teachers to $46,251.

Since both chambers have bills out of committee on these issues, the funnel deadline has been met and the chambers are free to keep working on these through the end of session. However, we anticipate they’ll want to lock down these decisions soon in order to pave the way for any tax bill they might pursue as well as to begin putting together the Fiscal Year (FY) 2025 budget.

More High-Profile legislation

The House granted final approval this week to the Governor’s Foreign Land Ownership bill (SF 2204), legislation to strengthen Iowa’s already strong restrictions on the foreign ownership of farmland. The bill now goes to the Governor for a signature.

There has been no movement on the Governor's boards & commissions review committee recommendations. The House version takes out all controversial professional licensing board mergers while still removing 40+ boards. The Senate version is more closely aligned with the Governor's recommendations, with a few tweaks to address concerns of electricians and massage therapists. Since both bills deal with the same subject and are on their respective calendars, they are considered "funnel-proof."

One part of the boards & commissions review passed the Legislature last week. Senate File 2096, which ends the requirement for gender balanced local and state boards and commissions, is on its way to the Governor. The bill passed on near party line votes; 62-33 in the House and 32-15 in the Senate.

The House also passed the Religious Freedom Restoration Act (SF 2095) on Thursday, sending it to the Governor. She has already announced she will sign the bill. RFRA sets a higher legal standard to be used in cases where a person feels government has interfered with their ability to freely practice a religion.

DNR Purchases At Auctions

In the last report, we mentioned that the Senate Natural Resources Committee had advanced SSB 3129 (now SF 2324) from committee to the Senate floor. The bill would prevent the Department of Natural Resources from both acquiring land at an auction and acquiring land from a not-for-profit organization that won the land at an auction. This week, the Senate did debate and pass this bill over to the House, by a vote of 30-17 with Senator Zaun joining all Senate Democrats in voting against the bill. 

As of Sunday, March 2nd, SF 2324 has not yet been assigned to a House committee. Once that assignment occurs, the bill will need to be approved by a subcommittee and a full committee before the March 15th funnel deadline in order to stay alive for the session.