This week in the Iowa Legislature
The legislature was slow to start this week with little work taking place on Monday. Things picked up Tuesday and Wednesday with floor debate in both the House and Senate. Only the House debated on Thursday, notably sending a bill that requires K-12 school students to use the bathroom that corresponds to their biological sex to the Governor. Each chamber also passed several noncontroversial items across the rotunda with the 2nd Funnel Deadline just two weeks away. Last Friday the Revenue Estimating Conference (REC) released their March 2023 estimates which the Legislature will utilize, as well as the Governor’s budget proposal, to craft their own budget recommendations. After the conclusion of the next funnel on March 31, there will be a noticeable shift in conversations from policy priorities to focus on the budget.
House Sends Massive Government Reorganization Bill to Governor
The House passed the Governor’s state reorganization bill on Wednesday on a vote of 58-39, with Republican Representatives Sexton, Cisneros, Dieken, Thomson, and Mark Thompson breaking party lines to vote against the 1,500-page bill. The House conformed its bill to the Senate’s version passed last week on a vote of 34-15, rejecting the 16 amendments offered by Democrats. Representative Bloomingdale, who managed the bill, argued changes were long overdue and will streamline state government. She closed by stating the bill will save the state money while allowing agencies to improve services. Governor Reynolds has stated the reorganization, once effective, is projected to save over $200 million over four years. Democrats opposed the bill arguing it was rushed through the legislative process and was done without consulting those Iowans most impacted. They called the bill a power grab and said the reorganization gives the Governor and Attorney General too much power and some agencies, such as the Department of the Blind, have special needs that are not well served by the reorganization. The bill now awaits the Governor’s signature which could come as early as next week.
Senate Approves Over-the-Counter Birth Control
During floor debate on a bill that would expand the list of items pharmacists can dispense without a prescription to include epi-pens, Senator Edler offered an amendment that would include self-administered hormonal birth control. The language specifies medications that can induce abortion are not included. The bill passed with strong bipartisan support and the House has passed a similar measure in prior sessions.
March 10 REC Budget Projections
The Revenue Estimating Conference (REC) panel met last Friday (3/10/23) to estimate future state revenues and provide fiscal data used to prepare the State budget. Fiscal year 2023 and 2024 estimated revenues grew more than expected from the December REC meeting. However, based on last year’s tax reform law the overall revenues for FY23 are estimated to decrease from the FY22 reported numbers by $53 million. The estimated changes include a decrease of 2.5% in gross personal income tax, a decrease of 3.5% in gross sales/use tax, and an increase of 4.6% in gross corporate income tax receipts. The FY24 revenue is estimated to be $9.6 billion, which is a decrease of over $100 million as compared to the revised FY23 estimates. The estimated changes include a decrease of 8.8% in gross personal income tax and a decrease of 7.0% in gross corporate income tax receipts.
The estimate of total funds available for the General Fund in FY 2023 is $9.9 billion, which includes the March REC estimate of $9.7 billion and a $197.3 million carryforward from FY 2022. The 2022 General Assembly passed a $8.2 billion budget for FY 2023. The appropriations have been adjusted to reflect a net increase of $5.7 million to standing appropriations.
Governor Reynolds used the December estimate to prepare her budget for 2024 and the Legislature must use the lower of the December or the March estimates for the upcoming fiscal year budgeting. Since the estimated revenues grew more than expected from December 2022, the Legislature will have to use the December estimates for its upcoming FY24 appropriation process which totals $9.6 billion. However, the Governor’s budget recommendations sit at just $8.5 billion, leaving the potential for another large budget surplus this coming year.
Looking Ahead
As the second funnel deadline approaches, legislators are scrambling to schedule last-minute subcommittee meetings to prepare to move their final priorities through one of the scheduled policy committee blocks this coming week. Leaders have also scheduled limited floor debate, but we anticipate this will be less of a focus as the workload shifts back to committees. Now that the Revenue Estimating Conference (REC) has set its final budget projections, budget chairs are anxious to get their targets and put their budgets together. We have heard the Legislative Services Agency (LSA) will take a week or so to update budgets based on the passage of the government reorganization bill. Following the funnel deadline in just two weeks, the chambers will be ready to start moving budget bills through the process as they prepare for adjournment. To stay up to date on scheduled committees and subcommittees and their virtual access information, follow this link.