Governor Kim Reynolds proposed that the Iowans pay a fixed income tax rate of 4% and that the state no longer tax their pension income. The condition of the state address Tuesday.
Reynolds set his 2022 agenda in a speech to Iowa law, broadcast in prime time. It includes the tax cuts, the third round of reductions she hopes to sign as governor; cuts in the state’s unemployment system; $ 1,000 retention bonuses for teachers, law enforcement, and detectives; and scholarships to enable parents to pay for their students to attend private schools.
Reynolds, a Republican, is expected to seek re-election for another full term this year. She formulated her policy proposals, from tax cuts to transparency in schools, as a means of getting the government out of the way and giving Ioweans the opportunity to make more choices for themselves.
“We are strong because we have been ruled by the light of common sense, justice and freedom,” Reynolds said. “Knowing that courageous action is not always governmental action. It is Iowans who make their own decisions for their own family and future.”
Reynolds’ speech included few mentions of the COVID-19 pandemic, which has killed more than 8,000 Iowans. She referred briefly to the “pandemic” when she mentioned keeping Iowa’s economy open, teachers’ salaries, the state’s shortage of workers and Iowa’s results over the past year.
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Democrats, meanwhile, said Reynolds and her political agenda are responsible for exacerbating the state’s shortage of workers.
“When you look at our state from the outside and at everything the Iowa Republicans have done, would you like to move here?” Iowa Democratic Party chairman and state representative Ross Wilburn said after Reynolds’ speech in comments streamed live on Facebook. “If we want to make Iowa a place where people want to live, work and start a family, we have a lot of work to do. Because we’re facing a labor crisis and it’s directly at the feet of you, Kim Reynolds.”
Reynolds calls 4% income tax rate ‘flat and fair’
Reynolds’ tax relief proposal would phase Iowa to a 4% flat income tax rate over four years – a rate she called “flat and fair.”
“Around kitchen tables, in the fields and in the back offices, Iowans understand that we in this building are not financing anything. They do,” Reynolds said. “And right now they’re paying too much.”
By 2023, the first year the plan would be in effect, Iowa’s highest income tax rate would fall from 6.5% to 6% and gradually fall until all income taxpayers pay 4% by 2026.
Reynolds’ office estimates that the tax cut will reduce government revenue by about $ 500 million by 2023 and by nearly $ 1.6 billion by 2026, the first year it is fully phased in. Her staff said they believe the state will be able to afford the tax cuts if state revenues continue to grow at an average rate of 4% and government spending continues to grow at an average 2% rate that it has below republican control.
An average Iowa family will pay $ 1,300 less in taxes by 2026, on top of an additional $ 1,000 that is being phased in from a previous tax cut, according to estimates provided by Reynolds’ staff.
But Senate Minority Leader Zach Wahls, D-Coralville, said the tax plan would leave some low-income Iowans worse off.
“It will be a tax increase for many Iowans,” he said. “If you work part-time and you currently do not pay the 4% rate, it will actually be an increase for many people.”
Reynolds’ plan would also exempt pension income – such as from a 401K, IRA or pension – from state taxes. That measure is expected to reduce state revenue by about $ 400 million, according to Reynolds staff. Retiring farmers will also be exempt from state taxes on cash rent payments they receive when they retire.
“You’ve worked hard all your life, saved up for retirement and paid your fair share of taxes,” Reynolds said. “It’s time you got a break from the tax collector. You have deserved it.”
Republicans in both chambers have said they are fully behind a push for more tax cuts this session, pointing out what they are saying is an over-collection of taxpayer dollars that has helped lead to a $ 1.2 billion profit and an additional $ 1 billion in cash reserves.
“That’s definitely the direction we want to go,” Senate Majority Leader Jack Whitver R-Ankeny said of Reynolds’ proposal after her speech. “Getting to a flat tax is a big step, and so (I am) very happy with the tax proposal and can not wait to get started with it.”
Democrats have said Iowa is taking in more money this year because of the influx of federal emergency money during the coronavirus pandemic, and they fear cuts could hurt state services in the future. But they have also said they are open to discussions about tax cuts that focus on the middle and lower classes of the Iowans.
Reynolds has already signed two rounds of tax cuts as governor, including a law from 2018 proclaimed as the largest tax cut in the state’s history and legislation last year which cuts income and property taxes and phases out the state inheritance tax.
Reynolds focuses on the workforce; proposes cuts in unemployment benefits
The workforce was a central theme in Reynolds’ speech Monday, as she proposed several initiatives that she said would attract and retain workers in the state. These include cuts in unemployment and $ 1,000 salary bonuses for teachers and law enforcement agencies. She also proposes changes aimed at facilitating the operation of childcare providers and expanding funding.
Reynolds said Iowa has the ninth highest labor force participation rate in the country, but needs to take “bold action” not to fall behind.
Reynolds’ proposal would cut unemployment benefits by reducing the length of benefits from 26 weeks to 16 weeks. She also suggested demanding that recipients potentially take jobs with lower pay than they would need under Iowa’s current system.
“There are many reasons for the shortage of labor, but we have to recognize that in some cases it is because the government has removed the need or desire to work,” she said. “The safety net has become a hammock.”
Reynolds said a new re-employment department in Iowa Workforce Development will have “the sole purpose” of helping Iowans find work.
Democrats have tried to use the state’s labor shortages against Reynolds, calling it “Reynolds’ labor force crisis.” They point to a 1.6% decline in Iowa’s workforce since Reynolds took office in May 2017, while the national workforce grew by 1.3% over the same period.
“I do not think the problem we have in this pandemic is that people do not want to work. As we saw, when the governor cut off bonus unemployment over the summer, it did not solve the labor crisis,” Wahls said. citing Reynolds’ decision to end Iowa’s early participation in several federal pandemic unemployment programs.
Reynolds has already announced significant investments in key areas, which she says affect Iowa’s ability to attract workers, including affordable housing, water quality, broadband and childcare. She uses federal emergency aid to do so, and Democrats have accused her of taking credit for money included in legislation she was against. Reynolds exclaimed some of these features in his prepared remarks.
To reward them in law enforcement and corrections, she announced that employees would receive a $ 1,000 retention bonus. She also promised a $ 1,000 retention bonus to teachers who stayed on the job through the pandemic and will continue teaching next year.
“Your work is important and we want you to know that,” she said.
But House Minority Leader Jennifer Konfrst, D-Windsor Heights, said Republicans have not done enough for teachers.
“I’m not sure the $ 1,000 bonus will really make them feel better or more welcome in the state when they are already exhausted and tired after two years of pandemic education and being demonized at the Capitol,” she said.
Reynolds calls for more ‘school choice’, transparency; Democrats urge her to condemn Senate President’s comments on ‘scary agenda’
On Tuesday, Reynolds presented a series of proposals aimed at increasing parents’ choices in education.
Reynolds said she will introduce legislation that allows middle- and low-income families and students with an individualized education plan to receive state aid to move their child into the education system of their choice.
About 70% of the money the state allocates per. child, or about $ 5,300, will “go directly into an account where families can customize their child’s education,” Reynolds said. The remaining 30% will be distributed by the state to smaller school districts. School districts can still receive local property taxes for these students, her staff said.
“School choice is not a zero-sum game,” she said. “It has the potential to raise the quality of all schools.”
The proposal comes a year after Reynolds issued a similar scholarship program, as did not have enough support to pass House of Representatives.
House Speaker Pat Grassley, R-New Hartford, said it sounds like Reynolds has taken into account input she has received from Republicans, but he still wants to review the text of the bill.
“We will see how it is received,” he said. “But remember, it’s a different plan than last year, and I think she’s been trying to resolve some concerns that she heard from us.”
Reynolds also spoke about the need to increase transparency for parents who are concerned about the materials available to their students at the school, and she accused some school administrators of pushing their worldview onto the students.
She referred to the debates over library books that have ravaged school districts across Iowa and the country, and questioned books that “contain vulgar and sexually explicit material.”
“These books are so explicit that they would be X-rated if they were movies,” she said. “We live in a free country with freedom of speech. But there is a difference between shouting vulgarities from a street corner and assigning them as required class reading. There is a difference between cable TV late at night and the school library. ”
Democrats have criticized some of the Republicans’ past “school choice” efforts and parenting proposals to limit local control over school boards and remove funds from public education.
Before her speech, Democrats called on Reynolds to condemn comments made by Iowa’s Republican Senate president on the issue on Monday.
Late. Jake Chapman, R-Nobility, in his opening speech Monday claimed that there is an “eerie agenda” to normalize deviant behavior toward children. Chapman has attended school board meetings in the Des Moines metro to advocate against certain books at school libraries and have called for legislation it would make it a crime for teachers to distribute what he refers to as “obscene” books.
Wahls, who had called on Reynolds to “reject” Chapman’s comments, said Tuesday night that he was disappointed she did not.
“Basically, we heard Governor Reynolds tonight support Senator Chapman’s speech from yesterday, which is obviously very disappointing,” he said.
Stephen Gruber-Miller covers Iowa Statehouse and registry policy. He can be reached by email at sgrubermil@registermedia.com or by phone at 515-284-8169. Follow him on Twitter at @sgrubermiller.
Ian Richardson covers the Iowa Statehouse for the Des Moines Register. Reach him at irichardson@registermedia.com, at 515-284-8254 or on Twitter at @DMRIanR.
Brianne Pfannenstiel is the chief political reporter for the Register. Reach her at bpfann@dmreg.com or 515-284-8244. Follow her on Twitter at @brianneDMR.
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