2020 Legislative Preview

Iowa’s 2020 legislative session, which begins Jan. 13, will bring a mix of new and old. Republicans control the Iowa Senate, House of Representatives and governorship for the fourth straight year and plan to build on what they’ve accomplished in the past few sessions.

Front and center on both parties’ minds? Continuing to build up workforce, which is ABI’s No. 1 priority for 2020. ABI is encouraging the Legislature to propel Future Ready Iowa forward along with work-based learning opportunities, apprenticeship programs and other initiatives. This includes overcoming barriers to employment, such as child care and workforce housing.

Republicans and Democrats agree workforce is a key issue, but there are also a number of other items on the 2020 agenda.

WORKFORCE IS BIPARTISAN ISSUE

At an early December event in his home district of Black Hawk County, Republican Rep. Pat Grassley, grandson of U.S. Sen. Chuck Grassley and incoming speaker of the House, was slated to speak after a Democratic senator. Both touched on several similar issues, the biggest being workforce.

Grassley took that to mean workforce isn’t a partisan issue — it matters to both sides of the aisle.

“I think that shows that this is not a Republican or Democrat issue,” Grassley said. “How we arrived there may be a little different, but this is a step in the right direction that we’ve both identified this as an issue.”

Unemployment in Iowa has hovered around 2.5% the past few years — sometimes as low as 2% in rural areas — and businesses around the state are feeling the squeeze. The problem is exacerbated in rural counties, where population numbers are dwindling in favor of metropolitan areas.

Democratic Rep. Todd Prichard, the House minority leader, represents New Hampton and Charles City in north Iowa. Manufacturing has a heavy presence in New Hampton, representing about 1,800 jobs in a city of about 3,500 people, he said. Prichard believes funding programs that encourage job training in advanced manufacturing is essential.

“As manufacturing becomes more and more technology-based, we have to have training that meets that change,” he said. “I would hope that’s something that both sides agree on: job training.”

Future Ready Iowa, an initiative launched in 2018 by Gov. Kim Reynolds, has helped provide a road map for better job training. The goal of the plan is for 70% of Iowa workers to have education or training beyond high school by 2025.

ABI considers Future Ready Iowa critical to the state’s workforce efforts. Legislative leaders agree job training, which is offered through this program, is essential.

“It’s an important part of our workforce agenda,” said Republican Charles Schneider, Senate president. “We’ve worked closely with the governor, and we want to be very supportive of her efforts to move that forward.”

Democrat Janet Petersen, the Senate minority leader, said Future Ready Iowa is a bipartisan initiative.

“We believe we should be putting more resources toward job and apprenticeship programs to make sure that Iowans who want to elevate their ability to make a decent living have access to that through Future Ready Iowa,” she said.

Workforce is sure to come up during the 2020 session as an issue both sides want to tackle, but there are some disagreements. Republican Jack Whitver, the Senate majority leader, said it’s critical to get able-bodied workers off the sidelines. He believes moving people off of the state’s welfare system and into the workforce is an important next step.

“If you are able-bodied, and you are on welfare programs, you don’t have kids at home, there’s no reason you shouldn’t be working,” Whitver said. “There’s real dignity to work, and we want to try and find ways to encourage or incentivize people to get out of the welfare programs, and get them into the workforce. Our businesses need them, our economy needs them, and fellow taxpayers need them.

“The reality is over the last century, we’ve been at the same population level, and so I’m not going to sit around and hope that hundreds of thousands of people move to Iowa. We need to find ways to be aggressive about it.”

On the Democratic side, the workforce agenda focuses on helping Iowa workers receive more benefits, like paid time off, maternal accommodations, and child care accessibility and affordability. Increasing wages is also a priority. Peterson, who plans to address all these issues in the 2020 sessions, hopes improvements in these areas will help boost workforce numbers.

CHILD CARE ASSISTANCE GAINS TRACTION

Child care was brought up as one of the chief concerns by legislative leaders, and it goes hand in hand with workforce. Some individuals choose not to enter the workforce because child care costs are too high. Iowa’s government-run program pays for at least part of a child care bill, but to qualify, a family must make less than 145% of the federal poverty line. In 2019, that limit was $37,300 for a family of four.

Lawmakers refer to this limit as a fiscal "cliff effect," and it can make it hard for parents to enter or stay in the workforce.

“When you rise in the workforce and you lose that assistance, then it can become unaffordable,” said Republican Rep. Matt Windschitl, House majority leader. “We want to look at trying to see what we can do at a state level. Some of that is federal as well, but we want to try and address that so we have that workforce and opportunities are there for Iowans.”

There are a few ideas on how to fix the so-called cliff. At the moment, if a family makes more than the threshold, they lose all assistance. Schneider wants to implement a sliding-scale system that would see benefits reduce as income goes up. That way families can gradually adjust as they improve their earning power — “there’s not that sudden cutoff at a certain level that disincentivizes people from wanting to take a promotion,” Schneider said.

For Democrats, Prichard said he’d like to take a multipronged approach to child care. In addition to pushing the fiscal cliff further out, he suggested funding existing child care centers so they can make capital improvements, like renovations or expansions. The goal would be to improve quality of care and capacity.

Petersen wants to push the fiscal cliff out while adding funds into the child care system. She added that Iowa needs to ensure its providers are safe. A 2019 Des Moines Register investigation found at least eight children have died in Iowa child care settings since 2018. At least half of those deaths involved providers warned by the state for taking care of too many children.

“It is shameful how many children have died in child care settings,” Petersen said. “The Legislature should look at ways that we can ensure kids are safe when parents are at work.”

TAX REFORM HIGH ON REPUBLICAN AGENDA

In 2018, the Republican-majority Legislature passed a major tax reform bill aiming to improve Iowa’s business climate. The bill laid out a five-year plan to gradually lower a variety of tax rates, including income and corporate taxes.

For 2020, more plans to address the tax climate are in the cards. Whitver said Iowa businesses are dealing with an antiquated tax code, and what he calls one of the worst tax environments in the country.

“As long as I’m leader in the Senate, we’re going to push tax reforms,” Whitver said. “We passed a significant tax reform bill in 2018, and we need to find ways to continue
to build upon that as we go forward. We have a very messy tax code because for 20-plus years [the Legislature] didn’t have the political courage or will to implement good tax policy. So now we’re cleaning that up.”

Iowa ranks No. 42 in the country on the Tax Foundation’s 2020 State Business Tax Climate Index, which measures how well states structure their tax systems. Iowa also ranks No. 42 in individual income tax.

“If we want to be competitive long term, we need to continue to work on that,” Whitver said. “That’s one thing that our caucus has always done is we’ve tried to look long term, look past the next election and look toward the next 10 to 15 years. And fixing our tax code is a top priority.”

Petersen, Whitver’s Democratic counterpart in the Senate, said Democrats hadn’t been invited into any discussions on tax reform as of early December.

In the House, Windschitl wants to carefully evaluate potential tax reform to ensure the budget doesn’t flip into a deficit. Iowa finished the 2019 fiscal year with a $289 million surplus, but because the farm economy could continue to take hits in 2020, Windschitl is cautiously approaching tax cuts.

“I’m not opposed to looking at all the options out there, but it comes down to sound budgeting practices,” he said. “If you start decreasing revenue, is that going to affect us with the farm economy? Twelve months from now, we don’t know how these trade deals and tariff wars are going to affect us. We need to make sure we have a buffer there, so that we don’t end up in the hole when we come into the session in 2021.”

Grassley hopes in his first year as speaker of the House, his party can pass something that enacts meaningful change in Iowa’s tax climate.

“I want to make sure that we don’t pass something just so we have something to run on,” Grassley said. “I want to pass something that actually makes a difference, something we can fully implement, and something that doesn’t devastate our state’s budget. I think we’ve done that in a very responsible way.

“When I think of what we displayed as a caucus was our ability to manage the budget in a responsible manner and pass responsible tax reform at the same time. That’s something we should be proud of.”

Other issues on lawmakers’ 2020 agendas:

JACK WHITVER (R-Ankeny), Senate majority leader: “A lot of the problems that businesses have are created by over regulation. We are always trying to find a good balance between a safe workplace and one that’s just overburdened by the tax or regulatory environment.”

JANET PETERSEN (D-Des Moines), Senate minority leader: “Mental health will be an issue that I think will have good bipartisan support. ... We want to make sure that we have sustainable, adequate funding to help regions truly get children’s mental health care underway.”

CHARLES SCHNEIDER (R-West Des Moines), Senate president: “We need to do what we can to make Iowa a more attractive place so people want to come here. We need to do what we can to make sure that we’re getting people into the workforce who are currently sitting on the sidelines.”

MATT WINDSCHITL (R-Missouri Valley), House majority leader: “We’ve always done this, and we will continue to do it. We’re always looking for the opportunity to return the taxpayers’ dollars to them.”

TODD PRICHARD (D-Charles City), House minority leader: “We want to make sure that Iowa is a good place to live and work and raise a family. The things at the top of our list are health care and education. We’re seeing a lack of services for people outside of urban areas, particularly in rural areas.”

PAT GRASSLEY (R-New Hartford), speaker of the House: “Broadband internet is another issue. Our caucus has been in conversations about how we could have a system in this state where you would have an employee being able to work from home.”