Capitol Update: Week 10

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Misconceptions on Energy Equity Bill

HF 669 proposes an equitable change so utility infrastructure costs are not transferred from one electricity customer to another. This relieves end electric customers from subsidizing their neighbors. As simple as this concept is, opponents have looked for ways to confuse the issue.

For example, some have claimed HF 669 would effectively end net-metering in Iowa.  This is not accurate. This legislation grandfathers the status of current customers and preserves net metering at full retail rate for new private generation (e.g. solar or wind) customers. Net metering stays the same; the only change is that private generation customers pay for their use of the grid just as their non-generating neighbors do.

It has also been said that the increased cost will make the payback not worth the investment thus costing jobs in the solar industry. Similar concerns were raised in 2003 when legislation was passed regarding wind energy. In 2003, the wind industry impacted approximately 850 jobs. Over 15 years later, that number has increased to approximately 8,000.

Another claim is that private generation users already pay for their use of the grid. However, this is misguided at best. The basic service charge is a flat fee to cover administrative costs like billing and meter reading; it also covers the cost of connecting to the grid (like a driveway connects a garage to the street).

Others argue that private generation and solar in particular brings value to the grid by putting energy on the grid during peak times relieving demand during the most expensive time to purchase or create electricity. They forget that a rate-regulated utility is required to be prepared and able to serve the needs of all customers at the instant they demand it. This is the same for private generation owners and their neighbors who pull all their energy from the grid. In order to provide maximum reliability the utility must stand by and be ready to supply energy and grid services as though the private generation does not exist.

Motives have also been questioned. Some have suggested this is an effort by the utilities to increase their monopoly and profits. However, rate-regulated utilities will not see any additional income from this legislation. The IUB determines what costs are recoverable from customers and this legislation would simply allocate the grid costs across all customers, not just those who cannot afford or chose not to install a private generation system.

It is also important to remember HF 669 will have no effect on current customers who have invested in private generation (solar, wind, etc.). All current private generation owners will be grandfathered in at whatever arrangement they chose when they made the investment.  Nothing will change for them.

Sports Betting Bill Update

A version of sports betting has passed the House Ways & Means Committee on a bipartisan vote of 16-9. This bill had previously passed the House State Government Committee with bipartisan support on a vote of 13-10. This bill continues to allow for sports betting on professional and collegiate level through a licensed casino.  It also legalizes internet fantasy sports contests.

A limitation was placed on collegiate sports betting through an amendment.  House File 648 now places a ban on commercial sports betting on in-state collegiate individual bets.  Another amendment committed .25% of tax revenue from sports wagering to the Department of Public Health for problem gambling programs.

The last amendment also requires Prairie Meadows to use receipts from gambling games and sports betting to support the horse racing industry and to supplement purses for races particularly for Iowa-bred horses pursuant to an agreement. The amendment also expands what the horse purse money designated for quarter horses and thoroughbred horses can go to include benevolence, quarter horse aftercare, breeder promotions and awards, and improvements to the horse racetrack in Polk County.

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Capitol Update: Week 9

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House and Senate Pass Ag Protection Bill

On Tuesday, March 12, 2019, both Chambers of the Iowa Legislature approved Senate File 519 by bi-partisan votes.  41-aye to 8-nays in the Senate and 65-aye to 32-nay vote in the House.  SF 519 creates new agricultural production facility trespass provisions that specifies certain offenses relating to agricultural production operations that cause economic damage or other injury are illegal.  Those offenses include sabotage, adulterations, and destruction of property such as agricultural crops or animals.

The measure provides for a criminal offense of agricultural production facility trespass that involves the use of deception to obtain access to a facility not open to the public with an intent to cause physical or economic harm or other injury to the facility’s operation, property or persons.  The offense may include obtaining by deception with intent to harm the operation, property, person.

The legislation is similar to aspects of an Idaho law that has withstood a federal Court challenge.  This legislation is of great interest to Iowa’s livestock and food processing industry as fraudulent trespass could result in the introduction of catastrophic animal diseases such as foot and mouth, or African Swine Fever.  Either disease could cause billions of dollars of economic damage to Iowa farms, businesses and employees and would likely be ten to fifty larger impact than the avian influenza outbreak of a few years ago.

Under the Radar Bipartisan Work

While the press likes to focus on divisive issues and controversial topics, the truth is that the vast majority of the Legislature’s work is either unanimous or bipartisan. Through the first funnel, 91% of the bills passed out of House committees had bipartisan support (217 out of 238).

Here are a couple examples of bipartisan bills that that flew under the radar and passed this week but weren’t covered by the press:

Keeping roads safe from drunk drivers: Senate File 113 holds repeat drunk drivers accountable and keeps them off the roads to make our highways safer. This bill clarifies that a person convicted with three or more OWIs can be charged as a habitual offender and face stiffer penalties. Drunk driving is not only irresponsible, but it puts those who wish to travel safely on our roads and highways at risk.

Combatting opioid dependence: House File 623 requires the Iowa Medicaid program to offer at least one form of medication-assisted treatment without prior authorization. This legislation increases access to medication-assisted treatment which has shown to be an effective way to reduce opioid abuse and dependence.

Capitol Update: Week 8

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Private Electric Generation Equity Bill Passes House Commerce Committee

This week the House Commerce committee considered HSB 185, which proposes an equitable change to how customer use utility infrastructure and the costs associated with that use.  The goal is to make sure costs are not inequitably transferred from one customer to another. The bill moved out of committee ahead of the funnel deadline and will be eligible next week.

At its core, HSB 185 is about equity and fairness. The bill simply allows electric companies to do what RECs and municipal utilities currently have the ability to do: charge customers based on their energy usage and the demands placed on the system.  Currently, rate regulated electric companies (Mid-American and Alliant) are not able to charge all customers for their use of the infrastructure used to provide electricity to their home or business.  Private generation customers (e.g. customers who generate solar energy) do not pay for these infrastructure costs, even though they use it more than traditional customers. These customers take energy off the grid and send energy back to the grid using the distribution infrastructure more than a regular customer.

Utilities must ensure the electric grid has reliable service 24/7 for all of their customers, including private generation customers.  Private generation customers are really “super-users” because they both receive and send energy through the grid.  Private solar customers use the grid for all but about 40 seconds of an average day because they’re almost always either receiving or sending energy. This means they are not off the grid.  And since they are not off the grid it seems reasonable to expect all customers to equitably share the costs of it – whether they receive energy, send it, or both.

Many have expressed concern that HSB 185 will completely change the current structure and system. However, this legislation does not eliminate net metering.  With net metering, a customer that owns private solar can “bank” excess energy and use it to offset their bill when their energy needs are greater than the energy they produce.  Under the proposed legislation, net metering is still one of a menu of billing options solar customers could choose.  In addition, HSB 185 “grandfathers in” current solar energy customers with their existing status, maintaining the pricing and payment structure they currently have.

The Solar Industry will remain highly subsidized – over 50% of the installation cost for solar is covered by federal and state tax credits.  HSB 185 does not affect the federal, state or local tax subsidies that solar customers currently receive and which cover at least half of the cost of a typical residential solar installation.

HSB 185 is an equitable and fair solution because it stops the transference of costs from one customer onto another while making sure everyone pays their share.  Often those stuck subsidizing solar installations are customers on fixed income/low income and renters.   This bill eliminates the shifting of electric grid costs from those who can afford private solar to all other customers and gives customers more options for connecting solar to the electric grid.

Budget Priorities for FY2020

 

Children’s Mental Health

Last session, with complete bipartisan support, the legislature passed a comprehensive mental health bill to fill gaps in Iowa’s adult mental health system. House File 2456 increased access to mental health services and created new services for urban and rural communities in Iowa. By removing the statewide sub-acute bed cap and adding new services to the core list required by Iowa’s 14 Mental Health and Disability Service (MHDS) Regions, this bill helps deescalate mental health patients before crisis and wraps services around them when they are prepared to return home.

Building off of last year’s comprehensive mental health bill for adults, the legislature is now focusing on building the foundation for a children’s mental health system. This week, the House Human Resources unanimously passed House Study Bill 206. This bill develops Iowa’s first coordinated children’s mental health system. This bill ensures that there is local access and coordination to mental health services for children, and that parents have a place to turn when seeking treatment for their child.

 

Future Ready Iowa

Ensuring that Iowans have the job skills needed by Iowa’s employers is one of the biggest issues facing this state.  The House Majority has committed to fund implementation of the Future Ready Iowa program that was created last year.  This will include $15 million for assisting community college students with the Last Dollar Scholar program and $1 million for helping those who started four-year degrees in certain fields to go back to college and finish them.

 

Additional Medicaid Funding for Nursing Homes

With the growing number of nursing home residents whose care is covered by Medicaid, nursing homes are facing tighter operating budgets.  To help ensure Iowans have access to this important level of care in their local communities, the House Majority is planning to provide an additional $19 million of General Fund dollars to Iowa’s Medicaid program to increase the daily nursing home payment rate.  These funds will also help control the growth of private pay rates in nursing homes.

 

Protecting Iowan’s Safety

Iowa’s safe communities are a big drawing card for this state.  The House Majority budget will build on this by providing an additional $3.8 million for the Department of Public Safety in FY 2020.  These commitments will allow DPS to bring on additional troopers and DCI agents in the next year.

 

Expanding Access to Health Care in Rural Iowa

Having trained health care providers is necessary to having functioning hospitals and nursing homes across Iowa.  And to attract health care providers to rural communities sometimes requires additional steps to make this appealing to new practitioners.  To help more communities attract doctors, the House Majority will be taking two steps.  First, we will provide an additional $400,000 for medical residency programs and dedicating these funds to those who will practice in rural Iowa.  Also, the House Majority will increase funding for the Rural Primary Loan Repayment program by $300,000.  This program helps communities attract and retain newly-licensed doctors.

 

Continuing Iowa’s Investment in Higher Education

Increasing support for Iowans seeking higher education will be part of the FY 2020 budget beyond what is included in Future Ready Iowa.  Increases for all three legs of Iowa’s higher education system will be part of the House Majority budget.   Community Colleges will receive an additional $7 million in FY 2020 under the House Majority plan.

Capitol Update: Week 7

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House Ag Committee Approves Beginning Farmer Tax Credit

On Tuesday, February 26, 2019, the Iowa House Agriculture Committee approved House Study Bill 173 by a unanimous 21-aye vote (2-absent).  The bill will now move to the House Ways & Means Committee for its consideration as it contains tax credits provisions.

The measure increases the annual amount of beginning farmer tax credits from $6-million to $12-million, which will restore the ability to issue new tax credits for agricultural asset transfers that has been lost since January 1, 2018, when the prior cap of $12-million expired and reverted back to a $6-million level that existed prior to January 1, 2013.  Because many of the tax credits are multi-year based on multi-year contracts, there is an excess of ongoing already authorized tax credits above the $6-million amount.  HSB 173 further restores significant autonomy of the Agricultural Development Board to approve beginning farmer loans and tax credits without also requiring the Iowa Finance Authority Board to also approve such actions and allows the Agricultural Development Board to once again promulgate administrative rules for its programs on its own accord rather than having the IFA board do so.  The Agricultural Development Division will remain under IFA oversight umbrella and will continue to be housed in that state agency.

As Chairman of the House Ways and Means Committee I look forward to taking up this important piece of legislation in the coming weeks.  It was a priority of my last session as the Ag Chair.  We need to continue to find ways to get our younger generation involved in agriculture.

Business Coupling for Section 179 Passes Ways and Means

Senate File 220 provides section 179 expensing with a maximum deduction of $70,000 for corporations, financial institutions, and partnerships and limited liability companies taxed as corporations. The investment limitation in the bill is set at $280,000.

Currently, for tax year 2018, the maximum expensing allowance deduction and investment limitations on section 179 property for such entities is limited to $25,000 and $200,000, respectively. Last year’s tax reform bill set the limit to $70,000 for individuals. With the passage of Senate File 220—these entities would be allowed the same deductions and subject to the same limits as individuals.

The bill provides that the change is effective upon enactment and applies retroactively to January 1, 2018, for tax years beginning on or after that date. The fiscal impact of Senate File 220 will be a general fund reduction of $620,000 in fiscal year 2019 and a reduction of $430,000 in fiscal year 2020.

Senate File 220 is ready for consideration on the House floor.  If it passes the floor it will head to the Governor’s desk for a signature.

Capitol Update: Week 6

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The SAVE Fund, Infrastructure Dollars, Property Tax Relief

Last week the House Education Committee approved a bill, on a bipartisan vote, extending the sunset date on the statewide penny sales tax that provides funding for school infrastructure.  The fund, in which the penny is deposited, is called the SAVE (Secure an Advanced Vision for Education) fund.

This has been a priority for schools for several years now, making sure the dollars that are used by our schools to maintain and build safe, high-quality learning environments that keep pace with changes in technology and student needs.

The original intent of SAVE was to not only save property tax payers money by providing a steady stream of revenue for infrastructure that otherwise would have fallen on property taxes through general obligation bonds, but also to provide direct property tax relief by sending 2.1% of the SAVE dollars to lower the rates for property tax payers in low-property value districts.  The bill took steps forward on this point by increasing the amount from 2.1% to 12%.  The impact of this move will be an estimated $2.4 billion in direct property tax relief over the next 30 years.  Most of the aid will go to low-value, high-rate districts, but some will go to all districts across the state for relief.

The bill also created a Career Academy Fund which will provide dollars to districts through competitive grants to create regional career academies meant to get high school students in the pipeline to high-quality, high-paying jobs through classes and experiences related to those careers.

New language this year that was not in last year’s bill is intent language to provide some measures of security in school buildings.  Before districts are allowed to use their funds for athletic facilities, the district must ensure that all school buildings are secured with locked entrances, cameras, and other security features.

Lastly, the bill also put some accountability on the use of SAVE funds.  Both the building of athletic facilities and the district use of SAVE dollars to back bonding projects will see more transparency as the school board must adopt a resolution and hold a public hearing on these two uses of SAVE funds.  Voters will then have the opportunity to petition and stop such projects if they choose.

The Senate is moving a similar bill, concurrently, which has passed their Education Committee as well.  Next up for both chambers is action through the Ways and Means committees.

House Announces Responsible Budget Plan

This week, the House Majority announced targets for the FY20 budget. The House budget plan for FY2020 spends $7.668 billion, accounting for 97.45% of on-going revenue. This is $9.5 million higher than Governor Reynolds’ FY2020 budget proposal of $7.658 billion.

The House budget plan increases spending by .63% compared to the adjusted FY2019 budget. Additionally, the budget fills all reserve accounts to the statutory requirements and leaves a healthy ending balance of $298.6 million.

This is a responsible budget plan that funds our priorities, limits spending, and puts taxpayers first. This budget plan also allows us to invest in key priorities like education, career training, health care, and public safety.

Capitol Update: Week 5

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Sports Betting Discussion Ongoing

One of the biggest issues that the Legislature is considering this session is whether the state should legalize sports betting.  This conversation became a possibility last year after the United States Supreme Court struck down a federal law that prohibited gambling on professional and college sports.

There are many factors to consider in this debate so it is important that we take our time and give all interested parties a chance to weigh in.  This is a new topic for the Legislature to consider and the House Majority wants to hear from their constituents and communities.

To thoroughly vet this topic, the House is using a transparent process and listening to all Iowans interested in the discussion.

Last week, the House State Government Committee held a two-hour subcommittee meeting on sports betting and heard arguments from Iowa’s casinos, the religious community, the Iowa Lottery, the horse racing industry, and concerned Iowa citizens, among many others.

Subcommittee members are now taking information they heard at the meeting to develop and propose legislation for the House to consider.

What have we learned so far?

Sports betting is going on regardless of whether or not it is legal.  Nationwide, it is estimated that legal and illegal gambling on sports is a $150 billion industry.  It is up to the Legislature to decide if and how they want to regulate this type of activity, bring it out of the shadows, and help those who may suffer from addiction get treatment.

Sports betting will not create a tax windfall for the state.  In the states that have already legalized this type of gaming, actual tax receipts have fallen far behind estimates.  Banking on this revenue to fund something substantial or long-term is premature.

The House Majority will continue listening to Iowans as we move forward on the issue of sports betting.

Snow Days Hitting Schools Hard – Shat are the options?

After a mild beginning to the winter season, January hit the state hard with successive snow storms that blanketed the state in snow and cold.  And with it came schools closings statewide.  At a forum last week I was asked about the state waving days missed this school year.  In the past few years, we have passed legislation that gives the school districts some options to address this issue.

The Department of Education doesn’t keep track of days called off school for weather, so hard numbers don’t exist.  In District 96 our schools have had to cancel 10-12 days to date depending on the district.

School calendars are set locally by the school board with a few parameters from the state.  Specifically those parameters are starting after August 23rd and counting the school year in either hours (1080) or days (180).

The Department of Education did put out a refresher on what options schools have now that they’re faced with longer school years because of weather-related closures.

Some of the more common ones are:

  • Can the Governor pardon or the Department waive snow days?  No, neither the Governor nor the Department have that authority.  The number of days or hours is set in state law and can’t be side-stepped.
  • Can schools use “e-learning” wherein a student accesses lessons or other school work from home through digital means?  No, this wouldn’t count as instruction.  Instruction must take place under the guidance and instruction of instructional staff at school.  E-learning can also present equity of access concerns for students without proper equipment or connections, those with disabilities, or younger students who can’t self-guide.

How can districts make up those days without going to far into the beginning of summer?  There are a few options, each depending on how the district’s calendar is currently setup and other local factors:

  • They can add time to end of the remaining school days to make up any hours missed if they are using an hours-based calendar
  • They can add weekend days, regardless of calendar type
  • They can shorten or eliminate previously planned breaks, regardless of calendar type

Keeping in mind, districts must have a public hearing to change calendar, just as they do to set the calendar before the year.

Snow and cold in Iowa are not new concepts and many districts plan their calendars accordingly.  They often build in extra days or hours to ensure that should closures occur, they can still meet the minimum requirements in law.  For those that are extended, there are other options that can be taken to ensure all students are given equal opportunity for obtaining a good education in our schools.

Capitol Update: Week 4

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Judicial Nominating Reforms

A top priority this session is bringing more fairness and accountability to Iowa’s judicial selection process.  Under the current process, nominating commissions interview candidates for open judge positions and recommend three individuals for the Governor to choose from.  These commissions are made up of people appointed by the Governor and lawyers who are elected by other lawyers.

Under the proposed reforms, the Governor will continue to select half of the members on the nominating commissions.  Legislative leaders from both parties will select the other half.  Additionally, judges will no longer serve on nominating commissions, thus eliminating any sort of perceived undue influence based on their powerful positions.

By including more elected leaders everyday Iowans will have a larger voice in the process thereby creating more accountability in the system.  These reforms will ensure a merit-based judicial selection process and that the best people become judges.

Education Funding Discussion Upcoming

The House will debate education funding in the upcoming days; therefore, I wanted to look back at the progress we have made so far on behalf of our students and our schools.

Since the 2011-12 school year, investment in K-12 education has increased by $765 million, or about 30%.  Over that same time, the rate of inflation is 10.96% according to the Midwest Consumer Price Index.  Funding for schools has increased at nearly triple the rate of inflation!

This has resulted in:

  • More teachers: 3,100 new full-time teachers hired to staff Iowa classrooms
  • Smaller class sizes: A lower student-teacher ratio every year, even while enrollment has increased
  • Competitive teacher pay: Average teacher pay has increased to almost $59,000 statewide which is among the highest in the country when adjusted for cost-of-living

Building on our past commitment, this week House and Senate leaders announced an agreement on a K-12 funding package for the 2019-20 school year.

The agreement includes an additional $89.3 million in new funding for Iowa’s K-12 schools.

  • $7.8 million to reduce transportation costs for rural schools. This will ensure more dollars make their way into the classroom.
  • $2.9 million to reduce the cost per pupil gap by $5 per student. This continues to reduce a long-time inequity that has existed in the school funding formula since the 1970s.

Once this package is passed, state investment in K-12 education will top $3.3 billion per year.  The House majority will continue to look at additional opportunities for education such as extending the school infrastructure tax (SAVE), improving school safety efforts, and greater flexibility for school boards and administrators.