Members,

The first day of the second session of the 91^st General Assembly convened at 10:00am on January 12^th and featured opening speeches from leadership in both parties, highlighting their goals and priorities for the upcoming session.

Senate President Amy Sinclair welcomed the body back to the Senate for the 2026 session and focused her opening remarks on encouraging members to maintain civility in discourse and to work together to tone down political rhetoric. In addition, Senator Sinclair reminded members that the vast majority of legislative work is bipartisan and that all members are working for the common good of Iowa.

Senator Mike Klimesh delivered his first opening remarks as the new Senate Majority Leader, urging the body to pass legislation that promotes investment and growth in Iowa, supports Iowa’s agriculture industry, and addresses energy costs. In addition, Senator Klimesh outlined the Senate Republican property tax proposal. "It will bring relief to Iowans facing rising costs and help restore Iowa's aging roads and bridges," Klimesh said. "Perhaps most importantly, this proposal builds on the idea that once you pay off your home, it is truly yours. Our proposal implements reforms and restrictions to help protect Iowa families from relentless property price inflation."

In the House, Speaker Grassley also outlined his party's agenda for the year, with property tax reform a top priority to “put the taxpayers first once again.” In addition, Speaker Grassley said the House would take a narrower approach to addressing eminent domain concerns after Governor Reynolds vetoed the bill passed last session. Finally, Speaker Grassley said the House would seek solutions to reduce crime and make Iowa safer.

Finally, Representative Bobby Kaufmann delivered his first opening remarks as House Majority Leader after being elected by his caucus in August. In addition to reiterating support for property tax reform and eminent domain, Representative Kaufmann said he would support legislation to increase legislators’ salaries, stating, "If we do not do this, there are going to be two qualifiers to serve in the legislature: Are you retired and are you wealthy?" Iowa has a part-time citizen legislature with an annual salary of $25,000 plus per diem payments.

 

Condition of the State

During the Condition of the State address, Governor Kim Reynolds highlighted the legislation the Republican trifecta in Iowa state government has accomplished, including reducing income taxes, consolidating state government, and reforming Iowa’s education system. Reynolds shared her list of priorities for the legislative session, including incentivizing counties to increase veteran benefits provided, addressing Iowa’s cancer rates, ensuring per-pupil funding follows the student, and allowing concurrent enrollment for charter school students.

Governor Reynolds highlighted property tax reform as a top priority for the 2026 session and proposed capping overall revenue growth for local governments, moving assessments to every 3 years, shifting the burden of proof from the property tax owner to the assessor, and establishing a fixed property tax rate for seniors on fixed incomes with homes valued at less than $350k. In addition, Governor Reynolds proposed creating a tax-deductible savings account for first-time homebuyers modeled after Iowa’s 529 program and expanding the existing beginner farmers tax credit to include land sales.

A full transcript of the speech is available here.

In addition to the Condition of the State, legislators also heard from Major General Stephen Osborn on the Condition of the National Guard and from Iowa Supreme Court Chief Justice Susan Christensen on the Condition of the Judiciary.

 

Property Tax

On Monday, Senate Study Bill 3001 was introduced following Senate Majority Leader Mike Klimesh’s opening remarks. SSB 3001 offers multiple changes to the property tax system and other areas of taxation. The bill includes:

• A limitation on property tax growth through a budget adjustment factor attached to CPI and language for new valuation to include a budget limitation outlet for new construction.
• Shifting from local to state funding for the regular education foundation cost per pupil and special education foundation costs along with buy down of the school foundation levy from $5.40 to $4.48662.
• New agricultural buildings removed from productivity valuation system.
• Removal of rollbacks for residential, commercial and industrial classifications.
• New homestead exemption that transitions over a ten-year period to eventually set at a $50% exemption capped at $350,000.
• Prohibition on bonding for general operations.
• Allowing local governments to increase local option sales tax from 1 cent to 1.5 cents.
• Reduction of the regional transit district levy.
• Gas tax indexed to CPI.
• Removal of school foundation levy from TIF deals for on datacenters.

On Wednesday, Governor Reynolds introduced her own property tax bill with Senate Study Bill 3034 and House Study Bill 563. She stated, “The rate at which property taxes are rising is unacceptable, and Iowans expect legislation that delivers meaningful relief to be passed this year [s]pending drives taxes, and because property taxes are driven by local government, the most reliable way to protect taxpayers is to limit local spending.”

The Governor’s bill would:

• Limit the amount of general fund reserves to 10% of budgeted expenditures.
• Cap all local government revenue growth at 2%, but excluding new valuation connected to new construction, debt service, and school funding.
• Prohibit bonding for general operations.
• Create a new $10 million grant fund to assist and incentivize local governments to consolidate and share services.
• Move assessments from every 2 years to 3 years and shift the burden of proof from the taxpayer to the assessor when assessment increases are above 15%.
• Make significant changes to TIF districts, largely reducing allowable uses and limiting projects to public purposes for 20 years.
• Create a property tax freeze for Iowans ages 65 and older with homes valued at $350,000 or less.
• Establish a Firsthome Iowa Accounts Program.
• Allows counties to move from some county officer to appointment versus election.

House Republicans are expected to be introducing a separate property tax bill in the coming weeks.

 

Eminent Domain

On Monday, Representative Holt introduced HSB 507, a bill banning the use of eminent domain for the construction of carbon capture pipelines. The bill is a much-tightened version of the bill vetoed by Governor Reynolds in June. The House advanced the bill out of subcommittee on Tuesday, and the House Judiciary Committee passed it 19-2.

 

This Week 

The legislature convened again today to begin holding subcommittee and committee meetings.

House Schedule

Senate Schedule

 

Chris LaFerla
President & CEO
Council Bluffs Chamber