Workforce Boosts, Tort, Regulatory, Tax Reforms Top 2023 Accomplishments

Coming off a legislative session they describe as “historic” in its accomplishments for business, Iowa legislative leaders are looking to continue the momentum in 2024. “We won’t rest on our laurels,” said House Ways and Means Chair Bobby Kaufmann (R-Wilton). “We have the trifecta and plan to continue with the agenda.”

That’s an agenda that includes further tax cuts, said Sen. Dan Dawson, (R-Council Bluffs). Going into 2024 with a “$1 billion structural surplus” and $3.5 billion in the taxpayer’s relief fund, legislators will be working to put Iowa on the path to elimination of the state’s personal income tax, he said.

Recapping the 2023 Session

"Last session was successful in all our priority areas,” said ABI Executive Vice President Nicole Crain, lauding gains in tort, tax and regulatory reform and workforce development. “Workforce is an ongoing priority for ABI and all of our members, to make sure we have qualified workers for years to come,” she said.

A Mix of Workforce Solutions

Workforce measures approved involved “dozens of funding streams,” said Rep. Kaufmann. “We had a lot of money invested, incentives for business, retraining, working with community colleges, to get individuals ready for 2- or 4-year degrees to give business and folks the best chance possible.” The legislature approved a wide mix of grants, business incentives, and direct investments in what Rep. Kaufmann termed “a historic session.”

In the Senate, the Workforce Committee “did a lot of good work updating the labor code, giving more people opportunity to seek employment, clean up regulatory environment,” said Sen. Dawson.

Among the workforce-related measures signed into law by Gov. Kim Reynolds were those allowing Iowa employers to apply for a waiver for 16- and 17-yearolds to participate in approved workbased learning or work-related programs, establishing a state office of apprenticeship and apprenticeship council, and revising workforce housing tax credits and childcare reimbursement rates.

Medical, Trucking Tort Reform

It was also a historic session for tort reform, said Rep. Kaufmann, with major legislation enacted limiting damages for medical malpractice and jury awards in accident lawsuits against commercial vehicles.

House File 161 caps noneconomic damages to $1 million for clinics and individual doctors, and $2 million for hospitals, in lawsuits over medical incidents that result in the loss or impairment of bodily function, disfigurement or death. In signing the bill into law, Gov. Reynolds said, “Protecting our health care system from out-of-control verdicts promotes access to care in communities across our state and better positions us to recruit the best and brightest physicians to Iowa.” 

Senate File 228 caps noneconomic damages at $5 million in suits against trucking companies whose employees were responsible for injury, death or other damages.

Sen. Dawson says the two laws represent “some large strides in trying to find that balance between those persons providing those services and the persons adversely impacted.”

“When I came into office in 2017, our tort picture was lopsided. Job producers in state were having to shoulder an unfair burden in comparison to those in other states. The costs people must pay in those areas is part of your overall business climate picture. You can’t focus on other areas and ignore that piece of the pie,” he said. “It’s a positive move for the state to attract businesses and make sure those impacted have a voice.

Rep. Kaufmann predicts Iowa’s tort law changes “will be a model that other states will look at.”

Property Tax Reform

House File 718, a compromise between House and Senate Republicans, that drew bipartisan support and was inked by Gov. Reynolds in May, is expected to save taxpayers $100 million, according to legislative estimates. The bill caps city levies at $8.10 per $1,000 in taxable value and counties at $3.50 per $1,000 for general services and $3.95 per $1,000 for rural services, while enacting a new $6,500 homestead exemption for senior citizens and an $8,000 exemption for veterans.

Sen. Dawson, who led discussion on property tax reform in the Senate, said the house-senate agreement was “historic, not just in terms of price tag, but the manner in which we’re trying to make policy.”

“In the past four decades, all we’ve really done is make a complicated system even worse,” he said. In this case, however, the legislature voted to fund its priorities and “take a little bit of excess property tax revenue and return it back to payers in the form of lower rates.”

Rep. Kaufmann agreed. “We didn’t pick winners and losers. It’s just straight up property tax relief” that gives “predictability to businesses and individuals employed by those businesses.”

Regulatory Reform

While many bills passed both chambers tweaking the myriad laws and regulations covering how Iowa businesses operate, the biggest pieces of regulatory reform in 2023 were Executive Order Number 10, signed by Gov. Reynolds on Jan. 10, putting a moratorium on administrative rulemaking and instituting a comprehensive review of all existing administrative rules, and

Senate File 514, signed into law in April, requiring a restructuring and consolidation of state government. The law will also winnow the state’s 37 executive-level cabinet agencies down to 16 and change some powers of the governor and attorney general, according to The Des Moines Register.

Among the initial impacts: A committee established under SF 514 has reviewed Iowa’s 256 boards and commissions and recommended eliminating or merging 111 of them.

“The governor’s realignment of state government was something we felt was needed. It’s rare in the private sector to go 30 years without looking at those things,” said Ms. Crain. “A lot of work has been done in the interim to implement some of those changes.”

“Iowa’s Administrative Code contains over 20,000 pages and 190,000 restrictive terms, putting undue burden on Iowans and the state’s economy, increasing costs for employers, slowing job growth, and impacting private sector investments,” Gov. Reynolds commented on issuing her executive order. “In Iowa, we’re taking a commonsense approach that gets government out of the way and leads to a more robust economy in every community.” 

Gov. Reynolds’ order directs a comprehensive evaluation and cost benefit analysis of existing rules to evaluate their public benefits, whether the benefits justify the cost, and whether there are less restrictive alternatives to achieve their intended goal, according to the Iowa Department of Management website.

Rep. Kaufmann estimates a dozen bills passed the House “that relieved the load on business. It was substantial in that it provided relief on overburdensome regulation,” he said.

Outlook for 2024

As year-end nears and the start of the 2024 legislative session approaches, Rep. Kaufmann says Republicans will be “stepping on the accelerator” to boost Iowa’s business climate. “We have an open-door policy with all business. Let us know what needs done and we’ll most likely do it,” he said.

Sen. Dawson noted that since he came into office in 2017, Iowa has passed two of the largest tax cuts in its history and moved from 46th to 33rd in the nation for overall tax climate. “The tax code isn’t the only thing but it sure as hell does matter,” he said.

A $1 billion surplus and healthy reserves position Iowa to move toward elimination of personal income taxes. “We can’t do it overnight, but we have a strategic opportunity. With thoughtful policy and responsible budgeting, we can put Iowa on the pathway,” said Sen. Dawson.

Another issue for Sen. Dawson is locking in changes. “How do we make sure the gains we have made in our tax code are for future generations as opposed to being rolled back by any general assembly?” he asked.

Workforce, taxes, and regulatory reform will continue to be ABI priorities for the 2024 session, said Ms. Crain. Those priorities reflect the views of more than 300 members participating in the policy development process.

ABI works behind the scenes on parts of regulatory reform that don’t get a lot of visibility, she noted. “One of the things we do for ABI members is to be that connector between companies and state government. We look at all these regulations coming down from the federal government couple with what the state has on the books; and we work with regulatory partners to see if there’s a way to refine them, establish new ones or remove some if they no longer meet today’s economic, environmental, or technological realities.”

The “big chunks” of tort reform have been accomplished “but there are always things around the edges” so the issue is still in ABI’s broader policy book, said Ms. Crain.

Taxes and workforce will remain front burner issues, she said, advising legislators to “keep doing what you’ve been doing. Keep supporting those programs that keep talent in the state and bring new talent to state.”

Iowa’s corporate and personal income tax structure are becoming more competitive with those of other states, she added. “Continue to work on those to help bring Iowa in line with other states.” Ms. Crain noted, “We are excited about 2024 and grateful for legislative leaders who understand a healthy business climate results in increased quality of life for all Iowans.”