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Iowa Legislative Roundup

Archived Industry News:Iowa Legislative Roundup

Last Updated: 3/26/2021 9:28 AM

Iowa Legislative Roundup

Schultz: Bill Would Level Playing Field

In Sen. Jason Schultz’s newsletter last week, he shared his thoughts on the issue of credit unions buying banks, and how a bill (SF 530) being considered by the Iowa Legislature would help level the playing field between banks and credit unions.

In his column, Schultz (R-Schleswig) writes, “One of the most important priorities I deal with as chair of the Senate Commerce Committee is to provide a level playing field in Iowa and then get out of the way of competitors. This philosophy is never so clear as when I review the situation between Iowa banks and credit unions. These two entities compete for Iowans’ deposits, loans and financial service needs. I just said they compete, but they aren’t supposed to compete. They are different entities intended to serve different populations.” Read his message.

State Tax Changes
A top issue of discussion at the Iowa Capitol is how U.S. Treasury Secretary Janet Yellen will define “indirect use of the federal funds” as it relates to state legislative tax reductions. Under the federal American Rescue Plan Act, states taking federal funds are prohibited from using those funds to make direct or indirect tax reductions. Yellen is being asked for quick guidance on how she intends to define “indirect.” Several states, including Iowa, were in the middle of passing tax reductions long before the American Rescue Plan was passed. The Iowa Senate has stated that they will not permit the federal government to determine when Iowa can make changes to our tax code. The Iowa House has not publicly made any statement on the issue. Several state attorneys general (not Iowa) are filing a lawsuit against the constitutionality of this federal restriction. As a result, the uncertainty is growing on what tax changes may be possible at the Iowa statehouse this year. Read an overview of Iowa’s estimated allocations from the American Rescue Plan.

REC Updates Projections Through 2023
The three-member Revenue Estimating Conference met last Friday to adjust their December projections for fiscal years 2021 and 2022. They also made a projection for fiscal year 2023. After some deliberation the committee came to the following consensus for Iowa general fund net receipts plus transfers.

  • Fiscal year 2021 was increased $109.6 million over the December estimate to $8.0789 billion — a 1.9% increase over FY 2020 actuals.
  • Fiscal year 2022 was increased by $119.9 million over the December estimate to $8.3856 billion — a 3.8% increase over FY 2021 projection.
  • Fiscal year 2023 was projected to total $8.7625 billion and 4.5% growth over the 2022 projection.

If the two projections for 2021 and 2022 hold true, only the revenue trigger would be met, but the growth trigger would fall short resulting in a delayed enactment of the 2018 tax cuts.

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