Week four brought more bill introductions and the continued rapid pace of committee work. We are four weeks from the first funnel deadline and expect committee work to continue moving bills through full committees to become funnel-proof and remain eligible for consideration after March 3. The House introduced more than 61 bills this week, and the Senate introduced more than 57.
Non-Economic Damages HF 161
The bill caps non-economic damages against health care providers at $1 million for substantial or permanent loss of bodily function, substantial disfigurement, or death. It was amended to add provisions to increase the caps in future years. Proponents of the bill say a cap is needed to protect health care providers against damage awards they see as excessive. On Monday the bill was amended and passed in the House Health and Human Services committee. The amendment created a 2.1% increase in the damage caps after 2028 and required an annual update.
The Senate companion (SF 148) passed the Judiciary committee and is on the Senate calendar for consideration. Several amendments were filed, and both bills are expected to receive floor time soon. This type of tort reform is a main priority of the Governor and both chambers. We are also watching non-economic damages caps for lawsuits involving commercial vehicle companies and trucking companies.
Property tax reform is a major priority for both chambers and the Governor this session, with the goal of lowering property taxes and making the system more transparent for taxpayers. However, before legislators were able to engage in discussions about reforms, they needed to turn their attention to a legislative fix regarding residential valuations.
In 2021, legislators combined valuations for multi-residential property and residential property when calculating the “rollback” rate. The rollback is an adjustment the state makes to limit increases in the aggregate taxable value of Iowa residential property. It is set by the Department of Revenue for the upcoming year and limits how much property tax costs can rise in a given year.
The residential rollback rate was at 56.49% for the combined property class. It would have been 54.65% if the categories remained distinct. An example from LSA: For a $200,000 home, the assessed value would be $3,684 higher under the combined property class than it would be if multi-residential properties had not been included. (See Fiscal Note for SF181).
The Department of Revenue was notified of the error in November. The Department calculated that the error would cost Iowans between $126 million to $133 million more in property taxes for the upcoming year. A majority of local governments have already engaged in their budgeting process for the upcoming year, utilizing this erroneous information.
As proposed by the Governor, SF181 (formerly SSB1056) would address this error by ending the combination of valuations for multi-residential property and residential property when calculating the “rollback” rate. The bill would decrease valuations used by local governments for property taxes; meaning local governments will need to raise their levy rate cap or cut spending to align with the incoming revenue. The Senate made quick work of SF181, passing the bill through the subcommittee on Monday, through the full Ways and Means committee on Tuesday, and through the full chamber (with an amendment delaying local government budget certification to April 30) on Thursday with unanimous approval. The House will take up the bill next week, there is a Ways and Means subcommittee scheduled for Monday morning. It is anticipated the bill will pass the full chamber next week and be signed by the Governor by the end of the week.
The property tax discussion will not end there. The Senate introduced two Property Tax Reform bills on Thursday. This two-phased approach, as outlined by Senator Dawson, relates to Property Taxes (SSB1124) and Sales Tax (SSB1125). These bills are very different from the bill introduced by the House; HF 1 is a property tax assessment limit, restricting the amount a property’s taxable assessed value can increase each year. There will be many discussions ahead about transformational property tax reform in Iowa.
Both the House and Senate Education Committees introduced bills raising the School Supplemental Aid amount. On Monday, the House introduced its SSA bill (HF 171) which includes a 3% increase. This bill passed the House Education Committee on a 14-4 vote, and the House Appropriations Committee on a 16-9 vote. The Senate Education Committee amended their SSA bill (SF 192) to match the 3% rate, which is higher than the Governor’s proposed rate (2.5%). On Thursday the bill was debated and approved by the full Senate on a 34-15 vote.
The SSA bill is typically provided to the Governor for her signature within the first 30 days of the legislative session. Other Education legislation has taken priority early in the session, including the Students First Act that passed in Week 2. Republican lawmakers also introduced a few bills to limit or eliminate conversations around gender identity in schools (HF 8, HF 9, HF 180, SF 83). These proposals face strong opposition from Democrats and groups around the state supporting the interest of LGBTQ+ students and their families.
Democrats proposed a $267 million increase in funding for public schools for the 2023-24 school year, hoping to bolster mental health programs, reduce class sizes, and increase teacher pay.
Representative Steckman, the ranking member on House Education, said, “Iowa Democrats believe every kid deserves a quality education, regardless of where they live. If there is anything we’ve heard in the first weeks of session, it’s that Iowans want strong public schools. It’s time for the Governor and Republican lawmakers to stop playing politics and put our kids in public schools before corporate tax cuts and private schools.”
Democratic Party Chair
Democrats selected Rita Hart to serve as the next state party chair. Senator Wahls said, “We are deeply fortunate to have a visionary, collaborative leader in IDP Chair Rita Hart – and I would also like to reiterate my gratitude to Brittany Ruland and Bob Krause for stepping up to run for chair and being willing to serve, and to Ross Wilburn and the IDP staff for their years of tireless service.”
Democrats also created a new steering committee consisting of Wahls and Representative Konfrst, State Auditor Sand and Hart, along with five members of the state central committee who will be selected later, to guide the party. This group intends to align state party politics with priorities at the Capitol.
Executive Branch Update
Veterans Trust Grants
Governor Reynolds announced Tuesday that she has approved more than $440,000 to cover grants from the Veterans Trust Fund. The grant program was suspended in November 2022 due to a shortage of funds. Reynolds will use federal funds made available through the American Rescue Plan Act. The DVA will begin processing payments immediately to fulfill any outstanding grants that were approved before the suspension.
Letter to Biden
Governor Reynolds joined 24 Governors in a joint letter to President Biden opposing a new definition of “Water of the United States” under the Clean Water Act (CWA). They urged the President to wait for the Supreme Court ruling in Sackett v. EPA before implementing the new definition.
As predicted last week, much of the conversation in Week 5 and the coming weeks will be related to the passage of two major session priorities outlined above: Tort Reform and Property Tax Reform. The legislature will also be tackling the realigning of state government. SSB1123 was introduced on Thursday, the bill completely reorganizes the executive branch structure, operations, and personnel to reduce the total number of cabinet-level departments from 37 to 16. Aligning Government to Better Serve Iowans is a priority Governor Reynolds announced in her Vision for Iowa.