Members,

Both the House and the Senate held floor debate every day last week, primarily passing noncontroversial bills. On Tuesday, Senator Dawson chaired a subcommittee on the Senate’s proposed property tax reform package. During the subcommittee, stakeholders and local government officials expressed concerns about the proposed gas tax increase and the elimination of the rollbacks.

The bill includes the following provisions:

• 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 on residential primary residence 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 on datacenters.

 

Medicaid Funding

On Monday, the Senate introduced Senate File 2464. The bill proposes a one-time tax increase on health maintenance organizations and Iowa’s managed care organizations, 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 enable the state to receive matching federal funds before a provision in the One Big Beautiful Bill Act prohibits such increases from taking effect in November.

The bill moved forward from both the subcommittee and the committee this week with backing from the Governor. Governor Reynolds held a press conference on March 5^th about the bill and stated, "We have a Medicaid shortfall," she said. "I mean, that’s the main driver of this and that would help address that. It’s pretty significant. We said all along the bill was going to come due after COVID, and it has."

Lobbyists for Wellmark and the Federation of Iowa Insurers spoke against the bill at the subcommittee and expressed concerns that the proposed retroactive tax increase could affect premiums and affordability in Iowa.

The tax increase must take effect by March 31^st, 2026, to qualify for the federal matching funds. Senate Appropriations Committee Chair, Senator Tim Kraayenbrink, said, "We have a deadline that we’re kind of up against but it sounds like we have some ideas that might be out there that could be shared or worked on to lessen the blow or to share the blow or whatever has to happen."

He said the bill will see changes as it moves forward, but he expressed support for advancing it. "I don’t think this is something that we just want to ramrod full steam ahead without having all the people at the table," he said. "But I think we need to move it forward because we need a vehicle to continue the discussion at least."

 

Make America Healthy Again

On Tuesday, the House approved the Governor’s proposed “Make America Healthy Again” bill after adding multiple amendments. House File 2676 passed with a 65-30 vote, with one Republican joining every Democrat in voting against the bill. The bill includes the following provisions:

• Requires the state to renew its request for the federal waiver for SNAP restrictions that prevent the purchase of candy, pop, or other items considered unhealthy.
• Allows for the sale of ivermectin without a prescription .
• Prohibits schools from serving food or drinks that contain certain food dyes.
  • This provision was amended to allow foods containing prohibited dyes to be sold on campus after school hours.
• Requires students in elementary and middle school to receive at least 120 minutes of physical activity per week.
• Directs the state to seek federal permission to update the school nutrition guidelines to promote Iowa-based food sources.
• Limits K-5 students to 60 minutes of digital instruction per day.

 

Other Bills of Interest

Senate File 2400: Adds an employee or contractor of a public utility engaged in the performance of a public utility responsibility to the list of occupations that are protected by enhanced assault penalties. The bill passed the Senate unanimously on Tuesday.

House File 2231: Creates a seal of biliteracy program and a seal of civics excellence program for high school students, which may be affixed to a student’s diploma or transcript upon graduation. The bill passed both the House and Senate this week and was sent to the Governor.

House File 2667: Makes changes to the Statewide Urban Design and Specifications Board, requiring both public and private entities to sit on the board. The bill also requires a city that approves a plan that does not comply with SUDAS standards to bear any increased costs derived from the differing plan. The bill passed the House on Wednesday with a party-line vote.

 

This Week

Both chambers will continue holding floor debate on eligible policy bills. The second funnel deadline is in two weeks, on March 19^th. Bills must pass out of a policy committee in the opposite chamber than they originated in to remain eligible. Appropriation and Ways and Means bills are exempt from the second funnel deadline.

House Schedule

Senate Schedule

 

Take Care,

Chris LaFerla

President & CEO
Council Bluffs Chamber