We’ve passed March 15th!
March 15th was a big day for the 2024 Legislative Session with four deadlines converging on this single day. Those include:

First, The End of the Second Funnel – All policy bills needed to be approved by a committee in the chamber opposite from where it was introduced in order to stay alive. Tax and spending bills are exempt from the deadline. As a result of the end of the second funnel, all committees except Appropriations, Ways & Means, and Government Oversight are done meeting for the year, unless it’s a Senate policy committee meeting to discuss the Governor’s appointees that require Senate confirmation. At this point, the Senate has passed 51 bills out of the chamber, while the House has passed 150 bills.

Second, the Revenue Estimating Conference (REC) met Friday to revise their revenue expenditures for the current (FY 2024) and upcoming fiscal year (FY 2025). The Legislature must assemble their budget using the LOWER of the two estimates from the December and March REC meetings. The REC looks at a lot of data in determining their revenue forecast. You can view their latest spreadsheet HERE. The bottom line numbers are these:

• For current Fiscal Year (FY) 2024, the REC predicts revenues will be about $9.6265 billion, which is 2.2% lower than FY 2023. This is about $120 million below December’s REC estimate and $218 million below FY 2023.
• For FY 2025 revenues (the budget the Legislature will soon begin to put together), the REC estimates revenues will be about $9.6978 billion, which is 0.7% higher than the FY 2024 estimate.
• The REC also does a prediction for FY 2026, which is much harder to estimate. The three members of the REC were pretty far apart on the FY 2026 estimate before agreeing to meet in the middle and predict a reduction of 1% in FY 2026 (to $9.6008 billion). 
• Remember that the Governor and Legislature have predicted that revenues should tighten as previously enacted tax cuts are phased in. 
• The REC also noted that the State has amassed roughly $5.46 billion in various savings accounts. Those include $224 million in the Economic Emergency Fund, $671 million in the Cash Reserve Fund, $1.83 billion in revenues from the current fiscal year which are unallocated, and $2.74 billion in the Taxpayer Relief Fund. 

The Third Deadline - Congressional and legislative candidates had to file their paperwork for the June 4th primary election by Friday. You can view a current list of candidates HERE, but we’ll break it down further in a story below. Legislators will no doubt spend some time this week looking at whether or not they will have a primary election opponent in June and a general election opponent in November.

Finally, a deadline we did not initially intend on mentioning (since it’s usually not an issue) was the March 15th deadline for school districts in Iowa to set their tax rate for the upcoming school year. Since the percentage increase in state supplemental aid (SSA) to school has not yet been determined, school districts will need to assemble their numbers without knowing yet what level of state support to expect. Typically, SSA is one of the first bills completed every year, but this year, it is delayed by the ongoing discussions surrounding teacher pay and reform of the Area Education Agencies (AEAs).

---------------------------

Priorities We Continue to Push

As the legislative session begins to enter its final phase, we are continuing to push a few key bills that would be great for economic development in Iowa. We'll be watching these and others as the door closes on the 2024 session in the next month or so. We invite you to weigh in on these issues.

Land Redevelopment Trusts

Legislation SF 182 and HF 2246 to allow for the creation of land redevelopment trusts has had productive subcommittee meetings in both chambers, much as it has for the past couple years. Still, if history is any guide, this bill will continue to wither on the vine unless we can get some more legislators to understand how vital this legislation could be for communities wanting to address their dilapidated areas. More details about the proposal are HERE.

Infrastructure Revolving Fund

Legislation (SF 2133) to create an Infrastructure Revolving Fund for vertical infrastructure projects still awaits further consideration by the Senate Appropriations Committee. This bill could provide a way for communities to cover infrastructure costs with developing housing projects. This issue was brought up by PDI members at multiple roundtables last Fall.

Workforce Housing Cap Increase

Legislation (HF 2420) to increase the overall cap on the Workforce Housing Tax Credit (WHTC) program from $35 million to $50 million, as well as the rural setaside from $17.5 million to $25 million, is awaiting consideration by the House Ways & Means Committee.

Rural Economic Development Tax Credit

We introduced you in the last edition to HSB 722, legislation aimed at encouraging investment into new or expanding businesses in Iowa's 88 smallest counties. The bill awaits further consideration in the House Ways & Means Committee.

PDI is registered in favor of this bill, but if we want to have any chance of moving it forward, WE NEED YOUR HELP:

If you have had projects that fell through because they were short on capital, and if this bill would have made a difference, please get those stories to PDI's lobbyist ([email protected]) so we can share those with members of the House Ways & Means Committee.

This bill will be much more real to legislators if we are able to point to specific examples where a little more investment would have moved the needle on a project in their backyard.

---------------------------

Why Has SSA Not Been Set? What’s the Holdup at the Statehouse?

In the previous story, we noted that school districts needed to determine by last Friday what their tax levy will need to be next year, even though State Supplemental Aid (SSA) has not yet been set. SSA is the percentage increase in funding that the Legislature and the Governor establish every year. This year, the Governor suggested an increase of 2.5%, the House passed a 3% increase, and the bill sits in the Senate awaiting a final negotiated percentage.  

SSA is typically one of the first bills signed into law. This year, the hold-up on reaching consensus on the AEA Reform bill is holding up both SSA and resolution on how much to increase teacher pay. All three have a major effect on the State’s budget, so it’s difficult for the Legislature to move one without knowing how to resolve the other two. Once the AEA Reform legislation is finalized, that should open the door to quickly passing both SSA and a teacher pay increase. 

Resolution of those three education issues will, in turn, pave the way for the Legislature to determine first how much revenue (if any) they want to devote to tax reform, and then the budget bills will start being assembled. Since we’re already more than 70 days into session and it happens to be an election year, we anticipate legislators will want to wrap up the budget and the session as quickly as they can.