Iowa GOP legislator plans to tweak plan for filling long-empty environmental trust fund

Iowa voters approved a trust fund in 2010 to support statewide water quality and outdoor recreation, yet it has remained empty ever since.

During the legislative session that begins Monday, will legislators consider filling it — like they tried before without coming to agreement? As of now, it’s unclear — but a lawmaker says he’ll try again.

The Natural Resources and Outdoor Recreation Trust Fund — also known as Iowa's Water and Land Legacy, or IWILL — is dedicated to improving the state's water quality, protecting and conserving Iowa's farmland, expanding natural areas and providing recreation. To trigger funding for the state natural resources, outdoors and recreation trust fund, legislators must increase the state sales tax.

Last year, Senate Republicans broached a proposal that would eliminate all local-option sales taxes and increase the state sales tax by 1 cent, reserving 3/8 of that cent for the trust fund. But that proposal never got off the ground.

Republican Sen. Dan Dawson of Council Bluffs, who chairs the Iowa Senate’s committee on tax policy and introduced the proposal last year, told The Gazette he plans to try again this year — but with a slightly modified route through the state’s tax policies.

Dawson said he wants to streamline existing taxes: Instead of local jurisdictions having their own optional sales tax — which are approved by voters — the tax would be standardized for all local governments across Iowa. The state would collect the local sales tax and then remit it back to the local jurisdictions.

Also under Dawson’s proposal would be a 1-cent increase to the base sales tax rate — meaning that the sales tax in Iowa would be 7 percent, even in communities that previously voted for a local-option sales tax. The state would absorb costs for the Natural Resources and Outdoor Recreation Trust Fund out of its new sales tax base.

“I live in Council Bluffs, right? My sales tax here is 7 percent,” Dawson said. “We want to try to find a way to work within that 7 percent sales tax as opposed to just raising people’s sales tax all across the board.”

He said he plans to bundle his IWILL plans into a larger discussion on property taxes, which will be the focus of his committee this session.

“We would streamline our sales tax policy and be able to fund our natural resource fund, so it's kind of the best of both worlds,” he said, adding that most Iowans and local governments would see no net changes in their sales tax.

If the funding stream for IWILL is activated, it would commit 23 percent to natural resources, 20 percent to soil conservation and water protection, 14 percent to watershed protection, 13 percent to the resource enhancement and protection program known as REAP, 13 percent for local conservation partnerships, 10 percent for outdoor recreational trails and 7 percent for lake restoration.

What went wrong last year?

Last year, Dawson included his original proposal in an overall plan to reduce state income taxes, but it was not included in the finalized income tax bill passed into law. He took another crack at filling the trust fund by introducing it in another bill, which also proved fruitless.

“The reality is that increasing the sales tax 3/8 a penny statewide is just not something that's going to gain political support, which is why we wanted to marry good tax policy with funding some of our priorities last year inside the proposal,” Dawson said.

Leaders from both parties shared their doubts about how another attempt to fill the Natural Resources and Outdoor Recreation Trust Fund would be received this session, particularly amid high inflation.

“Whatever tax plan it is … one thing that we've been very firm about over the last six years is we're not here to increase taxes,” said Republican Senate Majority Leader Jack Whitver of Grimes. “So any plan, whether it's with what (Dawson is) working on or with property tax or with income tax, it has to be a substantial tax decrease or else it's not going to have a lot of legs.”

Democratic legislators, who are in the minority in both chambers, echoed the uncertainty surrounding any proposal’s success.

“Funding the trust? Yeah, I don't have a lot of confidence that will happen this legislative session,” said Democratic House Minority Leader Rep. Jennifer Konfrst of Windsor Heights. “If there's legislation about addressing water quality, obviously we're going to take a look at it. I want to make sure that we are truly addressing the issue. A lot of the things we do up here tend to be window dressing.”

Dawson said he hopes to receive more support for his updated plans this year.

“The irony wasn't lost on me that some people that were leading the charge on IWILL back in the first part of the 2000s now feel that any kind of sales tax is regressive,” he said. “Well, you can't have it multiple ways. I think this policy is going to work better than maybe some efforts in the past.”

What else may pop up?

Other water quality-related bills will be introduced during the session, lawmakers said.

Senate Democratic leader Sen. Zach Wahls of Coralville said several smaller communities are reaching out for help paying off new water treatment systems needed to keep up with state and federal regulations. He said he hopes to see some federal infrastructure funds allocated for financial support.

Democratic Rep. Chuck Isenhart of Dubuque will introduce a bill to create a “No Child Left Inside” initiative for Iowa, which would expand programs that connect kids to the outdoors and encourage investment in state parks and natural resources. He will also once again pursue the expansion of proper drinking water well testing.

However, he said he didn’t have much faith that progress would come out of the House Environmental Protection Committee this year, of which he used to be a ranking member.

“My unfortunate outlook … is that past performance predicts future results,” he said. “I don't have high hopes that there's going to be a lot of proactive activity coming out of that committee.”

Republican Rep. Tom Jeneary of Le Mars, chair of the House Natural Resources Committee, said the Iowa Legislature has continued to invest in water quality through funding for programs like the On-Stream Impoundment Restoration Fund and the Iowa Water Quality Initiative.

“I believe this session you will see Iowa House Republicans continue to responsibly invest in the quality of the state’s water, as well as land and air,” Jeneary said in an email.

Other legislators say that Iowa still has a long way to go in terms of its investments into water quality.

“The majority passes something and then says they fixed the problem,” Konfrst said. “That is what we have to make sure we don’t do anymore.”

Legislative preview series

The Iowa Legislature begins its 2023 session on Monday. The Gazette will examine these state issues in the days leading up to the session:

Sunday: Tax policy and the state budget

Monday: Abortion policy

Tuesday: Health and Human Services merger

Wednesday: K-12 and higher education policy

Today: Water quality

Friday: Elections and recounts laws

Saturday: Carbon capture pipelines

Sunday: Private school tuition assistance

Monday: Demographics of the new Legislature

Tom Barton and Erin Murphy of The Gazette Des Moines Bureau contributed to this report.

Brittney J. Miller is the Energy & Environment reporter for The Gazette and a corps member with Report for America, a national service program that places journalists in local newsrooms to report on under-covered issues.

Comments: (319) 398-8370; brittney.miller@thegazette.com