Gov. Kim Reynolds won’t push tax-swap plan in 2021 session

DES MOINES - Gov. Kim Reynolds said Thursday she has 'paused” her Invest in Iowa tax-swap plan due to economic uncertainty caused by the COVID-19 pandemic, but her budget plan will include a 'sustainable” money source to meet commitments to adult and children's mental health programs.

Speaking to an Iowa Capitol Press Association forum, the governor also said she wants to give parents and students the option to receive 100 percent in-person instruction 'safely and responsibly” in K-12 schools, given concerns that student achievement is dropping with the pandemic forcing more remote and 'hybrid” learning situations.

And, on another topic, Reynolds expressed concern that efforts to distribute COVID-19 vaccines to nursing homes in the state - while among the country's best at 60 percent - is lagging, and more pharmacies may have to be enlisted to speed up vaccinations being bolstered by the arrival of more federal aid.

Reynolds said her administration is working through details of a new $1.25 billion allotment of federal money to help in areas of education, rental assistance, mental health, health care, child care, transportation and COVID-19 vaccination efforts. She said the money should be enough to sustain the vaccination effort but she is hearing concerns in Iowa and across the nation with the rollout to nursing home via Walgreens and CVS pharmacies.

'I'm not happy with it either, to be honest. I don't think the allotment is anywhere near what it needs to be,” said Reynolds, who planned to speak with the company chief executives later Thursday. 'None of us is happy with the way that this is being executed.

'We stand ready to go. If they can't meet threshold, they should pass it on to other pharmacies,” the governor told reporters. 'About 60 percent of the vaccines we have received have been administered. We're leading the country. We have a really good plan in place.”

Reynolds said there is at least $50 million that can be applied to the vaccine distribution effort, so she is not inclined to consider using surplus state money for that.

She said state government is in a strong financial position, but much of the Iowa economy still is recovering from the ongoing pandemic.

'We're not out of COVID yet and we're still not 100 percent sure of the impact that it will have on our economy going forward,” she said. 'So, at this point, I'm going to pause the Invest in Iowa initiative. I won't be proposing that again this year.”

That plan would increase the state sales tax, but decrease other taxes.

At the same time, the governor said Republicans 'are always looking for ways that Iowans can keep their hard-earned money” so she expects to move forward with triggers included in a 2018 tax reform package.

Supporters of the overhaul said it would simplify the Iowa income tax system, reducing rates and tax brackets by eliminating federal deductibility by fiscal 2023.

Iowa Senate Majority Leader Jack Whitver, R-Ankeny, said majority GOP legislators are still interested in providing tax relief this session, which could mean the state taking over a share of county mental health costs as a way of lowering property taxes.

Reynolds said she was not prepared to provide details of the fiscal 2022 state budget plan she will present to legislators next week, but she expects to include an ongoing sustainable source that's a mix of federal CARES Act money and state appropriations to fund adult and children's mental health care.

'That's the next step,” she said.

Reynolds also said she expects to direct federal relief money to aid K-12 and higher education in Iowa as well as adjusting state policy to focus efforts to provide in-school instruction as more Iowans are vaccinated for COVID-19 can shift away from remote learning.

'I believe that our kids need that option,” she said, pointing to data indicating Iowa's coronavirus spread is not occurring in the classroom for the most part and educational assessments indicating that student achievement is slipping.

'We've got kids that were A students failing - it's just not working,” the governor said.

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