2024 End of Session Summary

April 26, 2024

The Iowa Legislature adjourned the Second Session of the 90^th General Assembly on April 20th, just four days past the scheduled 100 days of session. Governor Reynolds and leadership in the House and Senate worked together in the final days to reach a compromise on key policy issues including the Fiscal Year 2025 budget, income tax reform, removing the statute of limitations for victims of child sexual abuse related to the Boy Scouts of America settlement, and minor driving licenses.

This year the legislature passed 147 bills, with Governor Reynolds signing 89 into law so far. The Governor has 30 days after the legislature adjourns sine die to approve or veto legislation sent to her in the last three days before adjournment or sent to her after the legislature adjourns.

The Revenue Estimating Conference projected at the March meeting that Fiscal Year 2025 would see $9.697.8 billion in revenues. A decrease of 2.2% from Fiscal Year 2024. Following the March REC meeting, the legislature agreed on an overall budget of $8.9 billion for FY25.

One of Governor Reynolds priorities introduced in January was legislation to expand work-based learning opportunities in the state. Senate File 2411 expanded the definition of work-based learning, allowed summer programs to be included, and created a Workforce Opportunity Fund to support equipment, instructional materials, stipends, and other training related costs. The legislation made changes to the Future Ready Last Dollar Scholarship Program and student teaching requirements for individuals with prior experience in a classroom. On the final day of session, both chambers advanced the bill and sent it to the Governor to be signed into law.

Placemaking and economic development tools continued to be a focus for the legislature. In 2023, the Iowa Economic Development Authority introduced Senate File 574, creating a new Major Economic Growth Attraction Program. The Senate passed the bill in 2023 and the House adopted the legislation during the 2024 session. The program provides IEDA with additional incentives for economic development deals that meet certain qualifications in certified sites. In addition, the Destination Iowa Program received a $10 million appropriation for FY25.

In the Senate, legislation was introduced to establish a new Major Events and Tourism program that would provide financial assistance for attracting large events that would generate economic development and tourism. The bill failed to pass, but $10 million was appropriated from the RIFF budget to a new tourism fund that could be used if the legislation passes in future years.

Tax reform continues to be a top priority for the Republican trifecta. In 2022, the legislature passed legislation that gradually phases-down the state income tax until a flat tax of 3.9% is reached, as well as lowing the corporate income tax to 5.5%. In 2023, focus shifted from income tax to addressing property taxes.

During the Condition of the State, Governor Reynolds unveiled a proposal to accelerate the 2022 law by phasing down the individual income taxes to a flat rate of 3.5% by TY25. The Senate introduced a separate tax proposal in January that would gradually eliminate income taxes entirely by directing IPERS to invest the Tax Payer Relief Fund into a trust with the revenues generated therefrom used to buy down the individual tax rate.

Senate File 2442 was agreed upon in the final weeks of session and includes both individual and property tax changes. The final compromise accelerates the phase down from the 2022 legislation to create a flat individual income tax rate of 3.8% for TY25, a summary of the current rates versus the new rates can be found below.

 

The legislature also took the first steps toward amending Iowa’s Constitution this legislative session related to income tax. Two resolutions passed both chambers requiring a two thirds majority approval for future legislators to raise individual income taxes and requires Iowa use a flat tax rate system. The legislature must adopt the same language during the next legislative session for the proposed amendments to be considered by the public for ratification.

The First Session of the 91^st General Assembly will convene on January 13^th, 2025. During the interim, legislators will begin their campaign work as the November 2024 election approaches. This year, 15 legislators will be retiring.