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Cedar Rapids, Iowa 52401
DES MOINES --- Republican Gov. Kim Reynolds said Tuesday she will present an agenda to the Iowa Legislature that includes state income tax cuts, plans to address workforce issues and reforms to K-12 education policy.
Legislative Republican leaders pledged to present a tax cut plan that will be both significant and, in their words, sustainable.
But anyone seeking details on any of those plans will have to stay tuned. Specifics were scarce Tuesday, when Reynolds and legislative leaders participated in the Iowa Capitol Press Association’s annual legislative preview forum at the Iowa Capitol.
Reynolds, who faces re-election in 2022, said she plans to unveil her self-described “bold and historic agenda” on Tuesday during her annual Condition of the State address to the Iowa Legislature.
“This is yet another opportunity for us to come together as one state,” Reynolds said. “Iowa is moving in the right direction.”
All Republican leaders stated their desire to lower state income tax rates. Democrats said they want to see income tax reductions targeted at what they called middle-class workers, while Republicans indicated their preference is to reduce income tax rates for all Iowans, regardless of income level.
Republicans are thinking big on tax cuts this year because of the current condition of the state budget. According to the state’s nonpartisan fiscal services agency, there is projected to be more than $1 billion in the state’s taxpayer relief fund, and the general budget fund is projected to contain an excess of $1.2 billion. In addition, the state’s reserve funds are flush with over $800 million.
Amy Sinclair, the Republican Senate majority whip from Allerton, said Senate Republicans’ ultimate goal is to eliminate the state income tax, but said that would be a long-term project “that doesn’t happen overnight.”
“We are looking at lowering rates for Iowans and for individual taxpayers who pay the bulk of the bill,” said Sinclair, who was filling in for Senate Majority Leader Jack Whitver, who was unavailable for the event. “That’s the ultimate goal (to eliminate the state income tax), but that doesn’t happen overnight.”
The state income tax produced half of total state revenue in the fiscal 2020 year, just shy of $4 billion, according to the state fiscal services agency. The most recent state budget overall spent just more than $8.1 billion.
Sinclair and Republican House Speaker Pat Grassley, from New Hartford, insisted any Republican tax cut plan will be sustainable.
“We’re going to be smart about how we do this,” Grassley said.
They did not say whether any plan they will consider will attempt to accommodate any reduction in state revenue by proposing other means of generating income, like an increase in the sales tax or a shift to higher user fees, or by requiring future legislators to reduce state spending.
“For five years Republicans have been in control of both the House and Senate, and for five years we’ve been working on sound budgeting,” Sinclair said. “We’ve proven beyond the shadow of a doubt that the policies we’ve been putting forward are good for Iowans. …
“For five years under Republican control, Iowa has become a more prosperous state, and for five years our policies have been frowned upon,” Sinclair added. “Every time we’ve made changes, we’ve had a plan and that plan has proven out.”
Democratic statehouse leaders at the forum said their focus for the upcoming legislative session will be on workforce issues.
In November 2021, the last month for which state workforce data is available, there were still 85,600 fewer Iowans in the workforce than in January 2020, just before the COVID-19 pandemic hit, and the share of Iowans working was down more than 3 percentage points, to 66.8 percent.
Zach Wahls, the Democratic Senate minority leader from Coralville, said he hopes for bipartisan legislative work on workforce issues, and that lawmakers take action to create more access to affordable child care and unpaid family leave.
Jennifer Konfrst, the Democratic House minority leader from Windsor Heights, said legislators need to address the worker shortage “in a meaningful way.”
“This needs to be addressed holistically, not with a Band-Aid or silver bullet that’s not really a silver bullet,” Konfrst said. “It’s not enough to just say we’re going to cut taxes and say we think that will solve all of the problems. We need to address issues that speak directly to the workforce crisis.”
The 2022 session of the Iowa Legislature begins Monday.