What’s Alive and Dead Following the Second Funnel Deadline

The 2024 legislative session is on the downhill slide as a key deadline for legislation has come and gone today. Most bills, excluding appropriations, ways & means and a few others, must have passed through one full chamber and through a full committee in the other chamber in order to remain eligible for the end of the year.

Following the second funnel, ABI remains in a good position to advance our priorities of Workforce, Taxes and Regulatory Reform through the end of the session.

Read which key issues we’re tracking below:

Alive

HF 2401 - Pharmacy Benefit Managers (PBMs): The House has passed and the Senate Commerce Committee took action to keep active a proposal affecting how pharmacies are reimbursed for services. ABI supports the stated goal of the legislation which is intended to support small, independent and rural pharmacies but opposes the current language of the bill. PBMs are the only tool that let employer health plans negotiate prices with drug manufacturers and manage other costs in an effort to keep health plans affordable for employers and their employees. The bill language is unfocused and provides benefits to very large pharmacy networks based inside and outside of Iowa. With Senate Committee passage the bill will trigger a fiscal workup on the bill. Please stay tuned to this issue as ABI members will be asked to contact their legislators to get this bill back on track.

• ABI Position: Against

SF 319 - Drug and Alcohol Testing: Long sought changes to Iowa’s drug and alcohol testing statute are alive and moving through the legislative process. The bill flips the burden of proof from the employer to the employee to prove the employer violated the statute. The legislation also clarifies the definition of “safety sensitive position” by eliminating subjectivity, modernizes communication methods for sending and receiving drug and alcohol testing results by providing more flexibility for both parties and establishes an evidentiary standard for the plaintiff attempting to prove their case against the defendant. The bill has passed the Senate and the House Labor and Workforce Committee. 

• ABI Position: Support

SF 2260/HF 2516 - Work-Based Learning: House and Senate Workforce and Appropriations Committees have taken action on broad based legislation aimed at sustaining and expanding programs at Iowa Workforce Development first funded by Covid-era federal funds. The programs focus on work-based learning and apprenticeships. Under the bill and pending amendments in each chamber, $30 million will be allocated from the Unemployment Compensation Reserve Fund for multi-year programming. The remaining $120 million in that fund will be transferred to the main Unemployment Insurance Trust Fund for use to pay unemployment benefits and reduce the demand on current unemployment taxes to fund those benefits. This legislation is expected to move as the state budget takes shape.

• ABI Position: Neutral

HF 2524 - Unemployment Practices Codified: The Senate and the House Labor and Workforce Committee have approved legislation that would put two administrative procedures currently utilized by Iowa Workforce Development (IWD) for unemployment insurance into law. Four weekly work searches must be completed by claimants in order to receive unemployment benefits. IWD would also have to use multi-factor authentication when verifying the legitimacy of the claimant in order to unlock benefits. The legislation encourages individuals to find work and helps protect the integrity of the unemployment insurance trust fund.

• ABI Position: Support

SF 2152 - IWD Employer Audits: Iowa Workforce Development (IWD) conducts federally required field audits of employers related to unemployment insurance. The bill requires that IWD and the employer cooperate to determine the time, place and scope of the audit. The bill also codifies what documents can be sought and the retention period for such documentation. It is hoped this will create a less adversarial process.

• ABI Position: Neutral

SF 574 - MEGA Sites: ABI has supported legislation focused on attracting very large economic development projects to Iowa since its introduction last year. The legislation helps Iowa match incentive packages offered by other states to lure expansion or location of major projects. The incentives are focused on ensuring billion dollar plus investments with appropriate wages and opportunities for Iowa based supplier networks. The Senate first passed the measure and the House subsequently amended it to ensure that focus on helping rural Iowa projects is not lost. The Senate is expected to concur with the House changes and send the bill to Governor Reynolds.

• ABI Position: Support

SF 2398 - Governor’s Income Tax Plan: As “tax season” has arrived at the legislature and some greater attention moves to taxing decisions, the legislature is setting the table of options for tax policy. SF2398 is amended to be just the income tax reduction proposal of Governor Reynolds’ broader tax plan. The bill was moved out of the Senate Ways and Means Committee so that a fiscal analysis could be performed by the Legislative Services Agency (LSA). That official scoring can then be used for policy decisions to be made in the coming weeks. The governor’s proposal would set the rate retroactively to 3.65% in TY2024 and establish a new target flat tax rate of 3.5% for TY 2025.

• ABI Position: Support

SSB 3141/HSB 720 - House & Senate Income Tax Plan: The House and Senate Ways and Means Chairs have introduced companion legislation outlining their income tax reduction approach for individual and corporate income tax filers. On the corporate side, as growth in corporate tax revenue surpasses a target of $700 million, the tax rate would be adjusted down to 4.9%, replacing the current law target of 5.5%.

The individual income tax changes would begin a process to lower the individual rate to zero.  This is accomplished by depositing several billions dollars of accrued taxpayer relief funds into a sovereign fund managed to produce earnings which would then adjust the tax rate downward.  Authors expect the reduction process to last decades to reach the zero goal and argue that the availability of the one-time tax relief funds are best used for this long-term transformational proposal.

• ABI Position: Support

SJR 2003/HSB 721 - Income Tax Constitutional Amendment: Both the House and Senate Ways & Means Committee have moved forward an amendment to Iowa’s Constitution that would enshrine the flat individual income tax, which we are currently set to be under in 2026, and require the Legislature to achieve a two-thirds vote in order to raise any income taxes. The bill would have to pass this year and also in 2025 or 2026 in order to be on the ballot for the Iowa voters in 2026. From there, a simple majority vote must be achieved to enact these changes. Iowa has made significant pro-growth reforms to our tax code over the last several years. It’s critical these reforms be protected. 

• ABI Position: Support

HSB 735/SSB 3182 - Unemployment Insurance Tax Cuts: Governor Reynolds put forward a proposal that would provide estimated unemployment payroll tax relief of $800 million over five years to businesses. The legislation would cut the taxable wage base in half from approximately $36,000 to $18,000, lower tax rates and shrink the number of tax tables and tax ranks. A House Ways & Means Subcommittee advanced the bill to the full committee yesterday. The bill manager indicated he would like to see the bill come out of committee in order for a fiscal note to be drafted by the Legislative Services Agency (LSA). The fiscal note should contain projections on how the tax cuts could affect the solvency of the unemployment insurance trust fund. Both proponents and opponents of the bill believe it’s important to have a look at these numbers.

• ABI Position: Support

HF 2655 - Childcare Property Tax Relief: Iowa has been a leader when it comes to enacting policies and appropriations related to advancing affordable, available and sustainable childcare. HF 2655, which has passed out of the House Ways & Means Committee, allows for a commercial childcare center to be taxed at the residential rate. This will benefit operators and put more money back into their pockets.

• ABI Position: Support

HF 2420 - Workforce Housing Tax Credit Expansion: Legislators in the House have advanced a bill that would increase the capacity of the workforce housing tax credit. The legislation would raise the cap from $35 million to $50 million and increase the rural set aside from $17.5 million to $25 million. The State of Iowa is seeing a significant return on their investment in this tax credit as more infrastructure is being built in both rural and urban areas.

• ABI Position: Support

SF 2370 - Air Dispersion Modeling: This week, the House State Government Committee passed the Senate approved Executive Branch rulemaking proposal offered by Governor Reynolds. The bill would call for a rolling 5 year review of all administrative rules, effectively codifying her Executive Order 10 which requires a one-time review of all rules. Within that bill is language that affects air dispersion modeling requirements in Iowa. Under current practice a project owner of a new minor emission source could be required to perform air dispersion modeling at great cost to the project. This requirement is not a federal requirement, a state law or an administrative rule. The bill language simply states that if this is the case, the DNR or the Environmental Protection Commission are not required to mandate the modeling. This should lower potential costs and regulatory burden for project owners. Additional amendments are expected as the bill moves to the House floor.

• ABI Position: Support

SF 455 - Topsoil and Stormwater Regulation: It’s imperative that homebuilders have consistency and clarity when it comes to building housing. The bill ushers in uniformity related to the regulation of topsoil and stormwater across the state as it preempts cities and counties in this regard. The legislation has passed the Senate and also the House, but must go back to the Senate for final approval as it was amended in the lower chamber. The legislation is another piece of the puzzle in facilitating lower costs for housing.

• ABI Position: Support

HF 2388 - Housing Exterior Regulation: The House and the Senate Local Government Committee have approved legislation that would help reduce the cost of housing for buyers. The bill creates a single standard when it comes to the regulation of styles and materials used for residential building exteriors. Rising housing costs continue to be an issue for would-be buyers across the state. This bill is one more tool in the toolbox to help alleviate those challenges.

• ABI Position: Support

HF 2574 &SF 2385 - Boards and Commissions:During the interim last year, a committee formed by the passage of the state government reorganization legislation undertook a holistic review of Iowa’s boards and commissions. They released their recommendations to Governor Reynolds and the Legislature. The governor issued a bill based off those recommendations, which was filed in the Senate. That bill eliminates over 100 boards and commissions. The House unveiled their own bill, which eliminates just a few dozen. Both bills have passed their respective State Government Committees. The legislation has been placed on the “unfinished business calendar”, which means it’s alive for the rest of the year.

• ABI Position: Neutral on HF 2574 / Supportive of SF 2385

Dead:

SF 108 - E-Verify Mandate: Illegal immigration has been a very hot topic across the country this year. Several states have taken action to try and mitigate the effect of the federal government’s failure on this subject. In Iowa, one idea some policymakers believe will help tackle the issue is mandatory e-verify.

It would have required businesses to utilize the e-verify system when hiring someone. It would have imposed very onerous penalties including the permanent revocation of all businesses licenses for violating the law twice. It would also allow any member of the public to file a complaint with Iowa Workforce Development (IWD) alleging that a company hired someone illegally. Though the bill passed the Senate, it died in the House thanks to the work of ABI staff and others opposed to the legislation.

• ABI Position: Against

SF 2201 - OSHA Walk-Around Bill: The Senate Workforce Committee passed a measure that was a reaction to the Biden Administration’s new proposed rule allowing third parties to accompany OSHA inspectors on worksite inspections. The bill would have required Iowa OSHA to develop a program that did not allow such arrangements citing a phrase in our state-federal agreement that Iowa programs must be “as effective as” OSHA rules. The federal rule will be challenged in court and IOSHA could promulgate such a response to the federal rule without legislation. There was no companion legislation in the House.

• ABI Position: Monitor

SF 186 - Adoption Mandate: For many years now, a bill has been around that would require employers to extend the same benefits and policies they give to parents who have a newborn child to parents of an adopted child. The bill initially would have affected children 0-18, but after educating policymakers about some of the unintended consequences, the bill would only affect children 0-6 and not impact employer’s disability policies. The House passed the bill in 2023, but it was not considered in the Senate this year.

• ABI Position: Neutral

SF 2026 - Whistleblower Protections: The Senate Workforce Committee did not take action on a private sector whistleblower bill that would have shielded conversations between legislators and private sector employees. Such communications are already protected in Iowa Code and the Iowa Supreme Court has recently reaffirmed that confidentiality.

• ABI Position: Neutral