This Week in the Iowa Legislature
Activity at the Capitol picked up again this week as legislators spent much of their time in floor debate and advancing budget bills. Lawmakers in both chambers moved bills on a range of issues, including investments of public funds (SF 2286), English language requirements for commercial driver’s licenses (SF 2426), banning local or community IDs (HF 2296), magistrate appointments and judicial salaries (HF 2706), the Iowa Farm Act (HF 2748), and we finally saw the first floor action on the long awaited property tax reform.
The Senate moved all of their budget bills out of subcommittee and the full Appropriations Committee making them floor eligible, however these bills are using the Governor’s recommendations and are not reflective of any budget agreement. The House introduced and moved their Agriculture and Natural Resources and Economic Development budgets through subcommittee as well. Budget negotiations between the chambers and Governor are ongoing, but all three budget targets are reportedly within $50 million of each other. As reported in the Gazette Friday morning, the Senate’s overall target is $47.8 million below the Governor’s, while the House’s target is roughly $39 million above the Senate’s. The Governor has the budget set at $9.666 billion, the Senate at $9.623 billion, and the House at about $9.662 billion.
On Thursday, Governor Reynolds signed 25 bills into law. Up to this point she had only signed three bills and another 40 are waiting to be messaged. She held a bill signing on Thursday morning with Childcare advocates signing HF 2514, a bill codifying childcare assistance for childcare workers. Previously a pilot program which made parents eligible for childcare assistance if the parent worked 32 hours a week as a childcare provider at a childcare facility with an agreement with HHS. The program has helped stabilize provider turnover and establish consistent quality care.
Iowa Senate Passes Property Tax Proposal First
The Iowa Senate advanced a comprehensive property tax overhaul (SF 2472) this week on a strong bipartisan 41-4 vote, making several structural changes to the current system. The proposal modifies the rollback system and repeals the 2023 property tax law, replacing it with a new framework that includes a “soft cap” on local government levies. It limits revenue growth by requiring tax rates to decrease if property valuations rise by more than 2%, preventing automatic increases. The bill also expands property tax relief by increasing the homestead tax credit to 50% for all homeowners, with additional age-based increases beginning at 60 and expanded credits for elderly and disabled residents and includes changes to Tax Increment Financing (TIF). The bill also includes an automatic gas tax increase indexed to inflation and a reclassification of apartments from residential to multiresidential increasing property tax assessments on apartments.
The House and Governor are still pushing their own property tax reform proposals. The final version of the legislation will likely be shaped by efforts to balance taxpayer relief with the financial stability of local governments. Senate Ways and Means Chair Dawson noted the current Senate proposal will not be the final version, but rather a significant step toward reaching a broader agreement on the issue. Senator Tony Bisignano gave Dawson credit for collaborating with the minority party on legislation aimed at providing relief for residential homeowners, noting that while the bill is not perfect, it is the best proposal he has seen thus far.
It is still very unclear if an agreement on a substantial property tax reform bill can be reached this session.
Looking Ahead
Expectations moving forward remain similar to recent weeks, as Ways and Means and Appropriations Committees continue meeting while leaders try to breakthrough barriers between the chambers to resolve the final issues. Individual budget targets have not yet been released but are expected next week, which will allow more substantive progress on final budget negotiations. As those targets come into focus, attention inside the Capitol will increasingly shift toward aligning spending priorities and advancing budget agreements ahead of adjournment.