Capitol Update Week 2

              Week 2 at the Capitol has been very busy. Last week the Governor laid out her comprehensive tax plan for the 2022 legislative session during her speech. This week more details and fiscal information are available as House Study Bill 551 was released publicly. The bill has landed in the Ways and Means committee of which I am the chair, so we are taking an extensive look at how to implement her ideas. The following is a division by division explanation:

Division I—Sale of Certain Qualified Stock—Net Capital Gain Exclusion

This division provides an employee-owner one lifetime election to exclude from income tax their net capital gains from the sale or exchange of capital stock (ESOPs). This exclusion is phased in over three years starting tax year 2023.

Division II—Retired Farmer Lease Income Exclusion

This division provides that a retired farmer’s income from rental of their property is exempt from tax. The farmer must be 55/farmed for at least 10 years. If the farmer choses this exemption, they are not eligible for the capital gains exclusion provided by Division III. This change begins tax year 2023.

Division III—Retired Farmer Capital Gain Exclusion

This division provides a single lifetime exclusion of capital gain on the sale of a retired farmer’s land or livestock. This change begins in tax year 2023.   

Division IV—Individual Income Tax Rates—Tax Years 2023-2025

This division strikes the tax brackets and rates that would go into effect in tax year 2023 and reduces them further in tax years 2023, 2024, and 2025.

Division V—Individual Income Tax—Flat Rate

This division picks up where Division IV left off. It provides for a flat tax of 4.0 percent on all taxable income. This begins in tax year 2026.

Division VI—Corporate Income Tax Rates—Adjustments

This division provides for the corporate tax rates to be reduced based on a revenue trigger. It provides that in a year where corporate tax revenue exceeds $700 million, the excess is used to reduce the corporate rates the following year. This change begins in tax year 2023.

Division VII—Corporate Income Tax—Flat Rate

This division provides that when the corporate rates are reduced (by Division VI) to a point where all rates equal 5.5 percent, the corporate tax rate is codified at a flat 5.5 percent.  

Division VIII—Retirement Income

Currently, Iowa Code provides for an income tax exclusion for the first $6,000 of retirement income. This division provides that all retirement income would be excluded from tax. The change begins in tax year 2023.

The total fiscal impact of the proposal is -$245.13 million in FY23, -$594.29 million in FY24, and -$833.61 million in FY25. Years beyond that do go above one billion.  A subcommittee has been assigned to the bill.

On a personal note, my mother in-law Mary Morgan Squires turns 100 on Friday.  Congratulations and Happy Birthday to her.  That’s quite an accomplishment.

If you have any concerns or comments on these or any other issues, feel free to contact me at my legislative email which is lee.hein@legis.iowa.gov or call me at 319.480-1997. I look forward to hearing from you.

Meeting where we discussed the Governor’s Tax Bill

Upcoming Forums:

Friday, January 28th I will be in Monticello with the Jones County Economic Development Reform from 12:00-1:00 pm

Friday, February 4th, I will be in Manchester at the Delaware County farm bureau from 10:00-11:30 am

Capitol Update Week 13

Iowa House Passes Support for Hoover Presidential Library Renovation
House File 588 passed the Iowa House this week with nearly unanimous support. The bill creates a Hoover Presidential Library Tax Credit. The 31st President of the United States was born in Iowa and his presidential library is located in West Branch. The library’s foundation is currently planning a $20.0 million renovation of the library, museum, and associated grounds.
The amount of the credit is 25 percent of a person’s donation to the Hoover presidential foundation for the Hoover presidential library and museum renovation project fund. Additionally, the credit is not refundable or transferable, but the excess may be carried forward five years or until depleted, whichever occurs first. The tax credit cannot be carried back to a tax year prior to the tax year in which the person claims the tax credit.
The Hoover Presidential Library Tax Credit has a program cap of $5 million. The maximum amount of tax credits granted to a person shall not exceed five percent of the aggregate amount of tax credits authorized under the cap. Additionally, 10 percent of the aggregate amount of tax credits authorized shall be reserved for those donations in amounts of $30,000 or less. If any portion of the reserved tax credits have not been distributed by September 1, 2023, the remaining reserved tax credits can be available to any other eligible person.
House File 588 requires the economic development authority to develop a system for authorization and distribution of tax credits. The tax credit is available in tax years beginning on or after January 1, 2021, but before January 1, 2024 and is repealed December 31, 2029, to account for the carryforward of any excess credit that may be credited to the person’s tax liability for up to five years. The bill will now move to the Senate for further consideration.
If you have further interest in these or any other bill in the House please contact me and I will do my best to try and keep you up to date. You can also follow bills on the legislative website once you know the bill number http://www.legis.iowa.gov.

Capitol Update Week 12

Legislative Update
This week marked the second funnel here in the Iowa legislature. This means that any bill that has not already passed out of the House or Senate, and passed out of a committee in the opposite chamber is considered to be done for the session. Unless they are assigned to the Ways and Means or Appropriations committee. This helps to narrow our focus to the budget and bills with the best chance of becoming law.


Iowa Tax Due Date Extended-Automatic Unemployment Fix
This week the Iowa Department of Revenue officially extended the filing and payment deadline to June 1, 2021 for 2020 individual income tax returns and first quarter estimated income tax payments for individuals. The extension does not include business filers and other tax types for individuals.
No late-filing or underpayment penalties shall be due for qualifying taxpayers who comply with the extended filing and payment deadline. Interest on unpaid taxes shall be due beginning on June 2, 2021.
Additionally, because Iowa is a state that automatically conforms with the Internal Revenue Code, certain unemployment compensation will not be included in Iowa income. Based on the federal legislation, the first $10,200 of unemployment compensation income is excluded from taxation for qualifying taxpayers.
Because the federal legislation was enacted after many taxpayers filed their returns, taxpayers were unable to take advantage of this change. To assist these taxpayers, the Department will begin making unemployment compensation related automatic adjustments. The adjustment process may take up to 90 days due to cross-checking these amounts against 1099s and validating eligibility to ensure accuracy and eliminate fraud.
Taxpayers will not need to file an amended Iowa tax return if their only adjustment pertains to unemployment compensation. The Department currently is processing state income tax refunds in 28 days, slightly under the Department’s goal of 30 days. Taxpayers can check the status of their refunds online at the Department’s website Where’s My Refund

Capitol Update Week 11

Expansion of Beginning Farmer Tax Credit
This week we passed HF 694 also known as the Beginning Farmer Tax Credit Expansion. The goal of this bill is to expand eligibility for the Beginning Farmer Tax Credit program to reach even more owner and operators. Since its creation in 2007 the program has issued over 77 million dollars in tax credits across the State. The program was designed to provide an Iowa tax credit incentive for agriculture asset owners to lease their land, equipment and/or buildings to beginning farmers in order to transfer farming to the next generation.
Currently, beginning farmers can participate in the tax credit program for ten years and the proposed legislation will extend this cap to 15 years. The Legislation also removes the $50,000 tax credit cap that landowners can receive. As the program exists, farm land must be part the lease. If signed by the governor, the program will allow standalone buildings, livestock facilities and grain storage to qualify. It also allows the landowner to enter into multiple agreements with different beginning farmers. This piece of legislation has been a priority of the Governor’s and was a recommendation from the Empower Rural Iowa Initiative.
HF 694 is now on its way to the Senate to be considered and if passed will head to the Governor’s office for her signature to become law. If you are interested in the legislation becoming law please contact your senator to bring HF 694 to the Senate floor for consideration.
The program operated on a first come first serve basis. Applications are accepted until August 1 or until all the tax credit allocation has been awarded (there is an annual 12-million-dollar cap) If you are interested in applying for the Beginning Farmer Tax Credit program you can learn more about the qualifications at https://www.iowafinance.com/beginning-farming-programs/beginning-farmer-tax-credit-program/.

Vaccine Update
I have continued the dialogue with the Governor’s office about proposed vaccine allocation increases in Jones County. At this time, I remain optimistic that in the upcoming weeks we will see an increase in vaccine rollout across Iowa. On Tuesday of this week the vaccine was distributed to legislators who were eligible. While I am able to receive a vaccine here at the Capitol, I have made the decision to wait my turn back home. I believe that in the coming months everyone in Jones County that wants a vaccine will be able to receive one


Anamosa State Penitentiary
The news out of the Anamosa State Penitentiary was a tragedy. This correctional facility has been a staple in our community for over a century and the workers there are vital public servants. To think that two of these public servants lost their lives while on duty is devastating. I want to offer my most sincere condolences to the loved ones of the victims.
Corrections and the Governor have been keeping me informed about the situation and the investigation. I hope we will see justice brought to these assailants soon

Capitol Update Week 10

House Committees Tackle Busy Meat Locker Problem
House File 787 creates a butchery innovation and revitalization fund and program within the Iowa Economic Development Authority. The bill previously passed the House Economic Growth Committee with unanimous support and this week has cleared a House Appropriations subcommittee. The bill is now eligible for a full Appropriations committee hearing.
The fund created in the bill would consist of any appropriations received and any other money available to IEDA for placement in the fund. The fund must be used to provide financial assistance in the form of grants, low-interest loans, and forgivable loans. IEDA will administer the program for the purpose of awarding assistance to eligible businesses for projects that expand or create new small-scale meat processing businesses, licensed custom lockers, or mobile slaughter units. A mobile slaughter unit must operate in compliance with the most current mobile slaughter unit compliance guide issued by the United States department of agriculture food safety and inspection service.
IEDA will also be responsible for establishing eligibility criteria for the program by rule. After reviewing and scoring all applications received during the application period, IEDA will make the awards. IEDA will give priority to eligible businesses whose proposed project will create new jobs; create or expand opportunities for local small-scale farmers to market processed meat under private labels; or provide greater flexibility or convenience for local small-scale farmers to have animals processed. Currently, some local lockers across Iowa are scheduled out as far as 2023. The purpose of this legislation is to allow more facilities to increase their production number.


Iowa’s Unemployment Rate Drops Again
Iowa’s seasonally adjusted unemployment rate decreased to 3.5 percent from the revised December rate of 3.7 percent. The state’s jobless rate was 2.8 percent one year ago. The U.S. unemployment rate fell to 6.3 percent in January.
“Since last April, 2020, Iowa has grown its workforce by 45,400. In January, Iowa added 8,200 workers, which is a positive sign as we look to get more Iowans back into the workforce,” said Director Beth Townsend, Iowa Workforce Development. “As the weather continues to improve
and our seasonal layoffs come to an end, we are hopeful our unemployment rate will continue to decline and our labor participation rate will improve.”
The number of unemployed Iowans decreased to 57,400 in January from 59,900 in December. The current estimate is 132,800 lower than the COVID-19 revised peak in April of 190,200 and 8,100 higher than the year ago level of 49,300. The total number of working Iowans increased to 1,567,800 in January. This figure was 8,200 higher than December’s number of 1,559,600 and 45,400 higher than April 2020.
If you have interest in any particular bill or would like to know where it is in the process please contact me and I will do my best to try and keep you up to date. You can also follow bills on the legislative website once you know the bill number http://www.legis.iowa.gov

Capitol Update Week 9

House Passes Bill to Support Building More Child Care Centers
House File 712 passed the House this week with bipartisan support and provides for a child care incentive for developers (to construct more child care centers). The bill creates a workforce child care facility tax credit for the developer of a new or rehabilitated child care facility. This includes both income tax credits and sales and use tax refunds. The tax credit is not refundable but is transferable. The program cap is $3.0 million annually.
House File 712 provides that to qualify for a tax credit a project must include at least one of the following:
• Construction of a new child care facility or
• Rehabilitation, repair, or redevelopment of an existing structure to be used as a child care facility
The bill provides that a developer seeking a workforce child care facility tax credit must apply to IEDA. IEDA will prescribe the application process by rule however the application must include:
• A resolution in support of the child care facility by the community where it will be located and
• Documentation of local matching funds pledged for the facility equal to at least $50,000, or in the case of a small-city, $25,000 (could be cash, tax abatement, etc)
House File 712 also provides that applications will be reviewed and scored competitively and that an awarded project must be completed within three years. The bill provides that a developer is allowed a tax incentive of up to $200,000 per project. The tax credit amount can be no more than 10 percent of the project cost for big cities and no more than 20 percent for small cities. The tax credit can be carried forward for five years. The overall tax credit program is capped at $3.0 million per fiscal year with at least 60 percent going to small cities. The bill will now move to the Senate for further consideration.


Iowa Legislature Continues to Expand Access to Telehealth and Mental Health Care
This week, the Iowa House passed House File 294, which will require health insurers to pay for mental health services delivered through telehealth at the same rate as they pay for in-person mental health treatment. Additionally, the legislature is considering House File 731 which would require insurers to accept out-of-state telehealth providers in their network if they meet all requirements for in-state health care providers. These bills are extremely important as Iowa has a shortage of mental health providers. Iowa ranks 44th in the nation for psychiatrists per capita.
Throughout the public health emergency, Governor Reynolds has included these same telehealth requirements on insurers in her proclamations. This expansion of telehealth during the public health emergency has helped Iowans get the care they need in their communities, where specialty care is often not available, especially in rural areas.
Iowa has seen its Medicaid population reflect that increase in telehealth use with only 9,386 uses of telehealth in the quarter preceding the public health emergency, and 185,205 uses of telehealth in the next quarter (an almost 2000% increase!). DHS has said that the largest increases in telehealth utilization have been in behavioral testing/assessment, alcohol and drug abuse treatment, vision and hearing, and evaluation and management.
If you have interest in any particular bill or would like to know where it is in the process please contact me and I will do my best to try and keep you up to date. You can also follow bills on the legislative website once you know the bill number http://www.legis.iowa.gov.

Capitol Update Week 8

The Legislature’s first funnel was this week, which means our focus has been narrowed to bills that have a better chance of being debated on the floor and signed into law.
What is the funnel? It’s a deadline when House bills are required to pass at least one House committee to remain eligible for discussion and vice versa for the Senate. If a bill fails to advance through a committee, it is considered “dead” for the session and is tabled. Oftentimes, a bill is not moved forward because it lacks support or needs improvement over the interim. The funnel does not apply to Appropriations or Ways & Means bills.
Also, this week the House passed Senate File 364 that provides three very important pandemic related tax exemptions.
First, Senate File 364 fully conforms with federal law for those fiscal-year filers who previously were excluded from such conformity and allows such filers to take business expense deductions using federal paycheck protection program loan proceeds that were forgiven. With this provision, all businesses who received PPP loans that were forgiven will be able to take expense deductions without regard to whether they are a calendar or fiscal filer.
Second, the bill exempts any qualifying COVID-19 grant issued to an individual by the economic development authority, the Iowa finance authority, or the department of agriculture and land stewardship from income tax. A “qualifying COVID-19 grant” includes any grant identified by the department of revenue by rule that was issued under a grant program administered by the economic development authority, Iowa finance authority, or the department of agriculture and land stewardship to provide financial assistance to individuals or businesses economically impacted by the COVID-19 pandemic.
Finally, the bill excludes the additional pandemic-related federal unemployment benefits from Iowa taxable income. This is only applicable to the additional $600 in federal unemployment that Americans received. The changes are retroactive to January 1, 2020, and apply to tax year (TY) 2020Al.
The funds to pay for the bill with amendment come from the Taxpayer Relief Fund, which has $90.2 million currently in its account in FY 2021. The additional funds will come from the ending balance. After the December 2020 Revenue Estimating Conference, the FY 21 ending balance was projected to be $443.4 million.
Since it was government that forced shutdowns which led to job and income loss, the I firmly believe that taxing pandemic relief money is not the right thing for Iowa. As your representative I will consistently support measures to help schools, families, and businesses return to normal.
If you have interest in any particular bill or would like to know where it is in the process please contact me and I will do my best to try and keep you up to date. You can also follow bills on the legislative website once you know the bill number http://www.legis.iowa.gov.

Capitol Update Week 7

House of Representatives Passes Election Integrity Law

This week the Iowa House of Representatives passed a robust election integrity and security bill. The election in 2020 saw record breaking turnout in the State of Iowa and with smooth administration due to Iowa’s strong election system. House File 590 (HF590) builds on Iowa’s strong track record of integrity and security when it comes to elections.

HF590 ensures the integrity of the election in several ways, but one of the most important is confirming that election officials are held to a high standard of performance and establishing recourse for when an elected official defies the laws of the state or does not act in the best interest of the voter. HF590 creates and strengthens election misconduct penalties for any elected official or person who willfully fails to conduct their election duties, fails to perform proper voter registration list maintenance, or interferes with a voter or authorized person at a polling location.

During the pandemic and as more and more Iowans are voting by absentee ballots, it is important that the accuracy and validity of each absentee ballot is secured. Each county auditor’s office will have a secure drop box that will be emptied and recorded at least 4 times a day. The drop boxes will be on county property, video surveillance will monitor all activity at the drop box.

The bill also changes the period for early absentee voting, early satellite voting, and early in person voting to 20 days before election day, giving Iowans 21 days to be able to cast their ballots in elections. With that change, Iowa will still have a longer early voting period than 26 other states. Additionally, the bill will conform poll closing times to 8pm for all elections/previously some elections had a close of 9pm while others had 8pm. Even while closing polls at 8pm, Iowa’s polls will stay open later than the national average of 7:30pm.

To ensure uniformity throughout Iowa, this bill will apply in law that only absentee ballots received by the county auditor before 8pm on election night will be counted. This will not affect military absentee ballots, anyone oversees, or who participates in the Secretary of State’s Safe at Home program.

If a voter arrives to a polling location after polls are closed they are not allowed to vote, this bill applies the same to absentee voters. There are plenty of ways for a voter to plan to deliver their ballot with 21 days to vote and a multitude of options of for returning an absentee ballot. By enforcing a strict deadline for the absentee ballots, it guarantees that every county has the same standard for counting ballots. This policy is not unique, in fact 3 states who do mail voting only (Colorado, Hawaii, and Oregon) use this standard for counting ballots.

The 2020 elections were extremely successful and saw record turnout, but that doesn’t mean that the Iowa Legislature should not continue to work hard to ensure that every Iowan’s vote counts in a fair and uniformed matter. This bill goes a long way to put best election practices into law to ensure the integrity of future elections.

House Unanimously Passes Emergency Medical Services Funding

On Tuesday of this week the House passed out HF 562. This bill is another tool that will allow our local governments to fund emergency medical services. Currently EMS district trustees are permitted to levy taxes based on the assessed value of all taxable land. The tax must be voted on and passed with a 60% majority. HF 562 will allow underfunded EMS districts to increase the amount leveed beyond what is currently allowed to better serve the community. The increase must be passed by a majority vote of the public. This legislation also requires that If the EMS district trustees are going to ask for additional tax they must create a district advisory council to assist in researching and assessing the service needs of the district. I think that this bill will be able to provide some much-needed financial relief for our local EMS.

 If you have further interest in these or any other bill in the House please contact me and I will do my best to try and keep you up to date. You can also follow bills on the legislative website once you know the bill number www.legis.iowa.gov.
 
Jones County Economic Development will be hosting a forum on Friday, February 26th at 12pm in the Anamosa Library. If you are interested in attending in person or online please reach out to Derek Lumsden at: director@jonescountydevelopment.com

Capitol Update Week 6

COVID-19 Vaccine Update

Recently the state launched updates to Iowa’s coronavirus dashboard to include information on COVID-19 vaccine administration and locations eligible Iowans can receive the vaccine. The vaccine information can be found at the link below. On the dashboard, you can pull up each county and see the vaccine distribution and locations where you can get the vaccine in your area.

https://coronavirus.iowa.gov/pages/vaccineinformation#VaccineInformation

Even as demand has far exceeded supply, Iowa continues to vaccinate at record rates. Iowa should be receiving a 5% increase from the federal government, meaning now 49,900 doses of vaccine are being delivered to Iowa each week. As of Wednesday, 496,981 doses have been administered. This includes 125,558 Iowans that have completed both doses of the vaccine, and 245,865 Iowans that have received their first dose.

As a State, we have focused on protecting vulnerable Iowans and maintaining important societal needs throughout the pandemic.  This has continued with the rollout of eligible populations receiving the vaccine. Iowa’s nursing homes have been hit hardest by COVID and within the first 1.5 months of vaccines being available, Iowa’s nursing home residents have already been vaccinated.

Current Legislation

This week we passed over 50 bills out of the Iowa House. Often times when the legislature makes the news it is over issues that are partisan in nature. In reality, a majority of the bills that pass through our state government are common sense and often times make me wonder how they did not already exist. These bills are just good policy and usually pass unanimously through the House. Here are a few such bills that if passed by the Senate and signed by the Governor will become law.

-HF 435 will allow people to provide emergency contact information when applying for or renewing their driver’s license or non-operator identification. This will allow law enforcement to reach family members more quickly in case of a serious accident.

-HF 313 also known as the Lemonade Stand Bill, will prohibit cities and counties from requiring minors from obtaining licenses, permits or paying fees is cases such as lemonade stands. This has actually been a problem in some areas which has triggered a bill to not allow this to occur.

-HF 499 which will allow students participating in the All Iowa Opportunity Scholarship Program to suspend participation in the program for up to two years if the are called up for military service. I am glad this issue was brought to our attention. Many of our friends and neighbors have served this country, and it is a great mistake to punish them for their service by revoking their scholarships.

-HF 490 will apply the same regulations on placement of campaign signs to federal campaign signs as are already in place for state campaign signs. There were no existing rules regarding federal election signs prior to this.

These are just a few of the many issues we deal with at the State House. If you have further interest in these or any other bill in the House please contact me and I will do my best to try and keep you up to date. You can also follow bills on the legislative website once you know the bill number www.legis.iowa.gov.

Jones County Economic Development will be hosting a forum on Friday, February 26th at 12pm in the Anamosa Library. If you are interested in attending in person or online please reach out to Derek Lumsden at: director@jonescountydevelopment.com

Capitol Update Week 5

This week in the Iowa House we voted to advance multiple pieces of legislation that aim to address Iowa’s current child care crisis. I am particularly familiar with this issue due to the fact that several of these bills passed through my Ways and Means committee prior to coming to the floor.  The recent pandemic has exposed the importance of accessible affordable quality child care here in Iowa. Access to affordable child care is an issue many of us heard about repeatedly on the campaign trail and it has been a priority of the Governor’s for several years. Now is the time to take action, and that is exactly what the House did this week.  
Aside from a general lack of child care providers in Iowa, another childcare hurdle that the legislature has aimed to address is something called the cliff effect. This occurs when families are receiving financial assistance for child care and their income increases beyond the income threshold for assistance causing them lose all child care assistance. House File 302 aims to provide an “off-ramp” from Child Care Assistance, which will allow state assistance to taper off rather than dropping off at a specific income level. The goal of this legislation is to allow parents to grow in their career without losing their childcare assistance all at once.
The bills in the childcare package passed this week aim to:  
– Increase the income threshold for a Child Care Tax Credit from $45,000 to $90,000.
– Create an incentive for employers to provide child care for their employees by providing a tax credit up to $150,000.  
– Allow individuals providing child care in their homes to take care of 6 or fewer children, an increase from 5 or fewer.  
– Raise Iowa’s child care rates to the 50th percentile according to the Market Rate Survey. – Create an “off-ramp” from Child Care Assistance program so parents can continue to grow in their career without losing their all of their child care assistance at once.
– Create a fund to provide child care workforce grants on a dollar for dollar matching basis from communities. These programs will help move child care providers up the pay scale and the education pathway.
As we all know every Iowan has unique needs when it comes to child care. This package of bills aims to address as many of those needs as possible. This childcare package will now move to the Senate for their approval. Please contact the Senate if you would like to see these issues move to the Governor’s desk.  
If you have interest in any particular bill or would like to know where it is in the process please contact me and I will do my best to try to keep you up to date. You can also follow bills on the legislative website once you know the bill number http://www.legis.iowa.gov.