March 16, 2026 Legislative Update
The Council Bluffs Area Chamber of Commerce continues to monitor legislative activity at the Iowa State Capitol to keep Southwest Iowa businesses informed on policy decisions that may impact economic growth, workforce development, and regional competitiveness.
Members,
Last Week
Both the House and the Senate held more subcommittee and committee meetings last week before the second funnel deadline, which this Friday, March 20. In order to survive the second funnel and continue to be eligible for consideration, bills must pass out of a chamber as well as the committee of jurisdiction in the other chamber by the end of the week. Bills referred to the Ways and Means or Appropriations committees are exempt from this deadline.
On Wednesday, the Senate Ways and Means Committee approved its property tax proposal, Senate Study Bill 3001, with an amendment that modifies how some of the divisions will be implemented.
Budget
On Thursday, the Revenue Estimating Conference met to deliver the final projections for FY26 and the initial projections for FY28 to the legislature. The Revenue Estimating Conference (REC) is responsible for determining revenue estimates and assessing the fiscal and policy effects of program and budget proposals. The REC consists of three members:
Jennifer Acton -Â Fiscal Division Director, Legislative Services Agency
Kraig Paulsen – Director, Department of Management
Jeff Plagge – Public Member
During the meeting, the REC shared that the state is projected to end FY26 with $8.11 billion, a roughly 9.3% decrease from FY25. For FY27, starting July 1, 2026, the state expects revenues to increase by 4.4%, reaching a total of $8.47 billion. Revenues are also expected to grow again in FY28 by 2.9%. The March REC projections are available here.
The Governor has proposed a FY27 budget of $9.67 billion, which is about $1.2 billion more than the projected revenues. In FY25, the state ended with a $1.9 billion surplus and approximately $4 billion in the Taxpayer Relief Fund. The Governor’s budget proposal can be found here.
Medicaid Funding
The Senate introduced Senate File 2464, proposes a one-time tax increase on health maintenance organizations and Iowa’s managed care organizations, retroactively raising the tax rate from 0.925% to 3.5% between January 1 and September 30, 2026. This increased tax would generate $123 million and allow the state to receive matching federal funds before a provision in the One Big Beautiful Bill Act prevents such increases from taking effect in November.
The bill moved forward out of both the Appropriations and Ways and Means committees in the Senate. Governor Reynolds held a press conference on March 5th about the bill and said, "We have a Medicaid shortfall," she explained. "I mean that’s the main driver of this and that would help address it. It’s pretty significant. We said all along the bill was going to come due after COVID, and it has."
The House introduced a companion bill and passed House Study Bill 762 out of the Ways and Means Committee on Thursday. Lobbyists for the Federation of Iowa Insurers, Wellmark, the Iowa Business Council, the Iowa Taxpayers Association and Iowans for Affordable Healthcare all voiced opposition to the bill, citing concerns that the tax increase will raise healthcare costs for Iowans, and that tax increases and retroactive taxation were bad tax policy.
This Week
Both chambers will mainly hold subcommittee and committee meetings. After the second funnel deadline, the Senate will only consider House bills, joint resolutions, and bills on the unfinished business calendar, and the House will only consider Senate bills, joint resolutions, and bills on the unfinished business calendar.
Take Care,
Chris LaFerla
President & CEO
Council Bluffs Chamber