Governor Unveils Compromise Tax Relief/Economic Growth Legislation - Legislative Session Continues

Governor Reynolds held a press conference Wednesday to announce the elements of a significant tax relief and economic growth omnibus bill. The legislation, which has been introduced in the senate as SSB 1276, addresses a number of different topics including tax, housing, childcare, mental health, energy, and manufacturing. The bill is aimed at establishing a compromise between the House, Senate and Governor that would allow for budget agreements and ultimately provide an end to the 2021 legislative session. Some of the key components of the legislation include the following:

• Eliminates the tax triggers as passed by the Legislature in 2018
• Phases out and eventually eliminates the inheritance tax by July 2024
• Increases the housing trust fund cap from $3 million to $7 million
• Expands the workforce house tax credit program to $40 million for FY22, $35 million for FY23 and $30 million for subsequent years
• Establishes a Manufacturing 4.0 grant program
• Allows the IEDA to consider onsite daycare as bonus criteria under the High Quality Jobs Program, amends the criteria for a HQJP project and lowers the overall cap
• Couples with federal bonus depreciation and decouples with the 30% interest expense limitation known as Sec. 163(j)
• Phases out and eliminates the mental health levy at the county level and shifts mental health funding to the state
• Implements payment parity for mental health services via telehealth 
• Increases the income threshold from $45,000 to $90,000 for families qualifying for certain child care tax credits
• Phases out the property tax backfill payments to local governments over several years

ABI is registered in favor of the legislation as it contains several legislative priorities of the association. The Senate is set to hold a subcommittee on the legislation this coming Monday. The House has their own version of the bill, but it is lacking some of the pieces the Senate has included. House and Senate leaders and the governor have been working to forge an agreement on tax policy and the budget over the last several weeks and will continue to do so into at least next week.