Capitol Notebook: Senate Republicans plan $8.5B state budget

DES MOINES — Senate Republicans are proposing an $8.5 billion state budget for the upcoming fiscal year, an increase of 3.3 percent over the current budget, they announced Thursday.

The proposed spending level also matches Republican Gov. Kim Reynolds’ proposed budget.

State lawmakers set an $8.2 billion spending plan for the current budget year, which ends June 30.

Reynolds and legislative leaders eventually will have to agree on state spending for the next budget year, which begins July 1.

Iowa Senate Majority Leader Jack Whitver, R-Grimes, said the Senate Republicans’ budget proposal takes into account state income tax rate reductions that are being phased in, thanks to legislation passed in 2022.

“This budget target ensures the tax cuts implemented last year are sustainable,” Whitver said in a statement, adding his list of budgeting accomplishments, including a nearly $2 billion general fund budget surplus.

He also said the budget’s status enables Republicans to advance further state tax reductions.

“All of these accomplishments are possible because Senate Republicans have led on conservative budgets and tax relief for hardworking Iowans,” Whitver said. “Our tax reforms are working.”

House Republicans have not yet declared a spending target. House Speaker Pat Grassley, R-New Hartford, said Thursday the caucus has not yet started those discussions.

The state’s nonpartisan Revenue Estimating Conference at its quarterly meeting last week projected the state will have roughly $9.6 billion in revenue for the next budget year. By state law, legislators can appropriate no more than 99 percent of that, which comes to roughly $9.5 billion.

Pumping brakes on further income tax cuts

House Republicans are not quite as anxious to accelerate state income tax cuts as their colleagues in the Senate, House Speaker Pat Grassley, R-New Hartford, said.

In 2022, Republican state lawmakers and Gov. Kim Reynolds spearheaded legislation that is gradually reducing Iowa’s state income tax rates over multiple years until most Iowa workers will pay the same 3.9 percent state income tax rate.

Sen. Dan Dawson, R-Council Bluffs, has proposed legislation that would accelerate those reductions, drop the eventual state income tax rate to 2.55 percent, and provide a mechanism to eventually eliminate the tax.

Grassley told reporters Thursday that House Republicans want to see how the current reductions work before diving into further cuts.

“I don’t think our caucus has a problem with that — at the right time,” Grassley said. “We’ve seen revenues continue to grow. But as this thing phases in, we want to show Iowans that our plan works. So I think you will see a conversation on income tax continue. But I don’t think, from the House’s perspective, it’s probably going to be this session.”

House Republicans, however, are fully on board with addressing Iowa’s property taxes this session, Grassley said.

Pregnant assault victims

The Iowa House has voted to increase the penalties in criminal cases where a pregnant woman is assaulted.

Under House File 570, penalties for assault and domestic abuse convictions, when the defendant was aware or should have been aware that the victim was pregnant, would be increased from an aggravated misdemeanor to a Class D felony.

The proposal passed with a 95-1 vote and is now eligible for consideration in the Senate.