Kim Reynolds offers glimpse of 2018 Iowa legislative agenda

DES MOINES — Two days after bleary-eyed lawmakers adjourned their 2017 session and headed home, governor-in-waiting Kim Reynolds offered a partial agenda for an election-year session in 2018.

Water quality, tax reform and a study of the Iowa Public Employees' Retirement System are among the issues the lieutenant governor talked about at Gov. Terry Branstad's weekly news conferences on Monday.

Reynolds is poised to move into the governor's office when Branstad is confirmed by the U.S. Senate to be ambassador to China. He'll be in Washington, D.C., again this week to meet with members of the Foreign Relations Committee and indicated his confirmation hearing could be next month. Branstad expects to be in office for at least the 30 days the governor has to deal with bills recently approved by the Legislature.

Water Quality

Water quality is going to continue to be a priority, Reynolds said, and she hopes to work with lawmakers to build consensus based on separate bills approved in the House and Senate. While programs in those bills are similar, the funding mechanisms are different. The Senate plan would have raised $744 million over 13 years, funneling the funds into pots for specific programs.

The House plan would raise $513 million over 13 years and give the Iowa Finance Authority the ability to sell bonds to provide additional funds for water quality projects. The House plan would give preference to collaborative projects involving cities, rural landowners, industry and other entities.

'We had a bill pass both chambers, Reynolds said. ' ... It has been a priority of our administration and will continue to be a priority of mine.'

She wouldn't speculate on the possibility of calling a special session of the Legislature to deal with water quality, but didn't rule it out.

'First of all, let's get this session wrapped up,' she said.

She believes the state has the right strategy — the Nutrient Reduction Strategy — in place. The goal now is a long-term, sustainable source of funding 'so we can put some money behind best practices so we can reach our goal,' Reynolds said. 'I feel confident we'll figure out a path forward.'

Neither of the bills lawmakers passed included a sales tax increase for natural resources and Reynolds showed no interest in going in that direction.

The Senate rejected a sales tax increase for water quality 34-16, 'so I don't think there is support for that in the Legislature. There never has been (including) the time when Democrats controlled the Senate,' Branstad said.

Tax Reform

Tax reform again is going to be a priority, Reynolds said, adding, 'We didn't have the revenue this year to implement comprehensive tax reform.'

She didn't endorse proposals by Senate Ways and Means Committee Chairman Randy Feenstra, R-Hull, to cut taxes by $500 million or Rep. Pat Grassley, R-New Hartford, to rein in tax credits. Specifically, she advised caution on Grassley's plan to make changes to the refundable research and development tax credit, which results in the state writing checks to large corporations.

She wants to put everything on the table, bring in stakeholders, the Department of Revenue and others with expertise to look at what's possible.

'As we work over the interim to implement comprehensive tax reform we need to take a look at everything,' Reynolds said. 'That means maybe tweaking. That means making some changes. We need to look at what makes Iowa more competitive and how can we utilize not only a lower and more competitive tax rate, but some of the incentives we have in place to encourage companies to invest in Iowa?'

She also called on working with existing companies 'so they can grow and expand, and most importantly ... hire Iowans for quality careers so we can continue to grow the economy.'

Retirement system

Reynolds promised action on studying IPERS, the state public employee retirement system, but didn't offer a timetable. Branstad has promised a study of the pension program to make sure that it is sustainable over the long-term.

'I want to start with saying any talk of pension reform moving forward means that we honor the commitments already made,' Reynolds said. 'That's the place we start from.'

She doesn't know what pension reform is going to look like, but it could be a 'hybrid or going from a defined benefit to defined contribution.'

'We don't know what that looks like. It means bringing all stakeholders to the table and talking about what's possible,' she said.

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