DES MOINES, Iowa – Gov. Kim Reynolds gave her third Condition of the State address on Tuesday morning before a joint session of the Iowa Legislature.
Reynolds, in her address, reflected upon the last decade and projected a vision for the next decade and beyond.
“Opportunity lives here” was the theme of her remarks.
“But we cannot take it for granted. If we do, if we become complacent, then the condition of the state will not be strong when this body gathers ten years from now,” Reynolds warned.
“That’s why this year, 2020, we need to plan for 2030 for 2040. We need to seize the opportunities that exist so that years from now, the next generation of Iowans will inherit an Iowa whose greatness comes as no surprise to anyone,” she added.
Reynolds first proposed a bill entitled the Invest in Iowa Act. The proposal, she says, will cut income taxes, create a sustainable funding source for Iowa’s mental health system, reduce Iowans’ property tax burden, and fund the Natural Resources and Outdoor Recreation Trust approved by voters in 2010.
The Natural Resources and Outdoor Recreation Trust proposal required that the next time the Iowa Legislature approved a sales tax increase, 3/8th of one cent of that increase would establish permanent revenue for the trust.
Reynolds said that the Iowa Legislature needs to revisit the funding formula for the trust that initially passed to address water quality issues in the state.
She said that under her bill, almost 58 percent of the Trust Fund, an estimated $100 million, would be directed to water-quality efforts in the state on an annual basis. The change, Reynolds said, represents a nearly 31 percent increase in the current funding.
Another $52 million would be committed to other conservation and outdoor recreation efforts that she says represents a 14.6 percent increase in the current funding.
“These investments will not only aid our conservation efforts; they will improve our quality of life and help us retain and recruit a new generation of Iowans,” Reynolds said.
The proposal would raise Iowa’s sales tax but offset it with an income tax cut.
“I have no interest in raising taxes, so any increase in revenue from a sales tax must be more than offset by additional tax cuts. That starts with continuing to reduce our uncompetitive income-tax rates,” Reynolds stated.
She said the last income tax cut, passed and signed into law in 2018, was not a “one and done,” and there have been calls to revisit income tax reform as it is unlikely that the state will meet the revenue triggers required for additional cuts.
“I intend to make good on that promise, which is why I’m proposing to cut income taxes by an additional 10 percent for almost every Iowan, with lower-income Iowans receiving as much as a 25 percent cut next year,” Reynolds explained.
She said that with the new round of cuts, Iowa’s income tax top rate would drop to 5.5 percent by 2023, down from 8.98 percent from one year ago.
In the Invest in Iowa Act, Reynolds proposes funding the mental health system, primarily funded through local property taxes, through the state’s general fund instead to lower property tax levies and provide predictable funding for mental health.
She also called for a funding increase for Iowa’s renewable fuels infrastructure program of $2 million and an expansion of the state’s E-15 Plus Promotion Tax Credit.
Reynolds also called for the Iowa Legislature to pass the Life Amendment (SJR 9) an amendment to the Iowa Constitution that would state that there is no right to abortion or taxpayer funding for abortion in the Iowa Constitution.
The amendment is in response to the Iowa Supreme Court ruling in 2018 that the law requiring a 72-hour waiting period before an abortion violated Iowa’s due process clause (Iowa Constitution, Article I, Section 9) and equal protection clause (Iowa Constitution, Article I, Section 6).
“As we begin 2020, I’m focused on the overall wellness of all Iowans, in every part of the State, in all stages of life,” Reynolds said. “And when I say all stages of life, I mean to include the unborn. We must protect life by making clear, through an amendment, that our constitution does not grant a right to abortion. It’s time, and unfortunately, it’s necessary.”
She also introduced proposals to expand the number of obstetricians in the state through a new fellowship and telementoring program.
Reynolds also wanted to build on the efforts to expand broadband access in the state and increase the level of funding set in the Empower Rural Iowa Act last year. She requested an additional $15 million to adjust the state’s match to continue to leverage private and federal funding to expand broadband everywhere in Iowa.
“Broadband is not a luxury; it’s critical infrastructure. From the farmer checking crop conditions to the Main Street business participating in the 24/7 marketplace, connectivity should be the expectation no matter where you live,” she said.
Reynolds also proposed $103 million in new funding for K-12 education “so that Iowa schools can maintain the best teachers and classrooms in the world.”
She also called for expanding the Last Dollar Scholarship and the Employer Innovation Fund by $2.8 million each that would bring the total state investment to over $20 million. These programs help provide training for Iowans seeking to learn new skills to become employable.
Reynolds also called for the expansion of Early Childhood tax credits to include all families whose household income is $90,000 and less, up from the $45,000 household income cap.
She also renewed her endorsement of a constitutional amendment returning the voting rights to felons after their release from prison.
“I am grateful to the House for starting this process last year by approving the constitutional amendment with a strong bipartisan vote of 95 to two. I also appreciate the productive conversations we are having with Senators, and I look forward to continuing to work with you to pass the amendment and craft an implementing statute that lets us avoid the confusion and lawsuits that have plagued other states’ restoration efforts,” Reynolds said.
She also called for professional licensing reform that includes universal licensing recognition, waiving licensing fees for low-income Iowans, creating a uniform standard in considering criminal convictions, and provides better oversight of the process.
“Licensing reform is a topic that has bipartisan support, but that doesn’t mean it will be easy. There will always be entrenched interests who benefit from overly burdensome regulations. But we can’t let those interests stand in the way of opportunity. These reforms are long overdue, and this is the year we will begin to fix a broken system,” Reynolds stated.
Social conservatives applauded Reynolds’ call for a Life Amendment.
“The vast majority of Iowans support commonsense regulations that would protect mothers and children from efforts to expand abortion even to the day of birth, or designs to make Iowa taxpayers fund abortions,” commented The FAMiLY Leader President and CEO Bob Vander Plaats. “But in 2018, unelected judges stripped the right from all Iowans to determine for ourselves commonsense abortion law.”
“So the governor is right to call on legislators to correct the courts and give We the People of Iowa our voice back,” he continued. “I sincerely hope our elected representatives will respond to her leadership by advancing the Protect Life Amendment.”
Reynolds’ call for income tax reform and professional licensing reform also received applause.
“It is encouraging to hear that Governor Reynolds, as well as leadership from both the House and Senate, are committed to improving our state’s tax code. The income tax bill passed by the legislature during the 2018 session was a great step toward rate reduction. It makes sense that legislators should evaluate if the long timeline and high threshold for enacting the larger tax cuts still work for Iowans,” Victoria Sinclair, Government Relations Director for Iowans for Tax Relief, said in a released statement.
“Two years ago, lawmakers started income tax rate reductions. Last year, they increased property tax transparency. This year, policymakers have the opportunity to build on earlier tax reforms, make it easier to enter new careers, and guarantee support is given to those who are genuinely in need,” Chris Ingstad, president of Iowans for Tax Relief, added.
Matt Everson, NFIB’s state director in Iowa, who represents more than 10,000 small business owners, thanked Reynolds for her continued investment in small business.
“Iowa is the 2nd most licensed state in the country, we applaud the Governor for addressing this issue. The state’s current rigorous and burdensome licensing system leads to financial and time-consuming barriers for people who want to move, live, work, and contribute to Iowa’s economy,” he said.
Watch Reynolds’ full remarks below: