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2010 Legislative Session Roundup: Iowa

Like other states, Iowa battled the effects of the national recession and state revenues that were 4.27 percent lower than last year.  Legislators managed to balanced the state budget without making major cuts in public services, while funding job creation programs, and increasing aid for local education.  The state also made major reforms in its own state heatlh care system, enact tax credit reforms, pass reforms to hold corporate campaign spending accountability to the public and shareholders, and protected the interests of veterans in the state.

In the end, lawmakers were able to balance $180 million in their budget and put a total of $200 million into the state’s savings accounts.  Several reforms took place to achieve a balanced legislative package, most notably the first substantial reorganization of state government in almost 25 years.  The Legislature’s biggest achievements were found in the areas of tax and health care reform, which shared the goals of transparency and better consumer protection.  Health care patients and insurance consumers are among the biggest winners, as well as veterans and students.  With more transparency in tax credits, it is hoped that the revenue that is desperately needed will finally reach Main Street.  Support continued for small businesses, including renewable energy producers, and job-seekers. 

Budget and Job Creation:   Several reforms took place to achieve a balanced legislative package, most notably the first substantial reorganization of state government in almost 25 years to save an estimated $125 million, combined with early retirement packages for state employees to save an additional $190 million. 
Combined with tax credit reform, this all helped overcome the deficts faced by lawmakers, while allowing them to fund jobs programs to lay the groundwork for future economic growth.  The latter measures included:

  • SF 2389 invests nearly $274 million for infrastructure projects, to continue the I-JOBS public works program, and to help small businesses grow. Through SF 2389, the Iowa legislature maintained its commitment to the Iowa Values Fund, the state's job-creation initiative.
  • Also, HF 2522 connects unemployed workers with new employers and with state services by providing $18.3 million to Iowa's workforce centers. These workforce centers, 55 in total, provide job counseling, training, placement and assistance. 
  • The Iowa legislature also agreed to make new low-interest loans available to help small businesses create jobs and strengthen Iowa's Small Business Development Centers [HF 2522]. A new website will be developed as a central point for small business assistance

Education Despite the tough budget situation, legislators voted to increase state aid to local schools by $145 million in order to recruit and keep good teachers in the classrooms, expand pre-school programs and make sure students graduate with the skills they need to land a good job.  In order to keep the tuition of higher education institutions down, the legislature also approved SF 2376 to provide community colleges $10 million and more than $550 million to public universities.

Health Care Reform:  Many initiatives were implemented to expand health care to more Iowans.  Building on the IowaCare Program, which enrolls 32,000 Iowans and is aimed primarily at adults (age 19-64) whose adjusted gross income is no higher than twice the federal poverty level (200% FPL), the Legislature enacted SF 2356  to expand the provider network to include regional community health centers available across the state, principally in rural areas.  Members of the regional provider network must be certified medical homes, as established by DHS. The bill received support from the AARP and the American Cancer Society’s Iowa Director who declared, “Starting July 1, low-income, uninsured cancer patients from across the state will no longer need to travel long distances to Iowa City for treatment, which has long been an unnecessary barrier to the lifesaving care they need.”

In addition, SF 2356 creates the Iowa Insurance Information Exchange, administered by the Insurance Commission, to allow Iowans to obtain information on an ongoing basis about health care coverage options, including comparison of benefits, premiums, and out-of-pocket expenses.

After Iowa’s largest health insurance carrier announced an 18 percent insurance rate hike last month, the Legislature enacted the Insurance Company Accountability Plan, SF 2201, which calls for a detailed annual report from the Iowa Insurance Commissioner on health care spending and health insurance in Iowa, including rate increase data, health care expenditures, ranking factors that raise or lower costs in each insurance plan and other data. Other provisions include public hearings on rate health insurance increase applications before they are approved, notification of rate increase applications to all policyholders, and immediate notice of any insurance plan changes, so that Iowans can budget accordingly.

To protect consumers against rate increases due to catastrophes affecting their credit scores, SF 2075 will protect families suffering death or serious illness, a military deployment, identity theft, a natural disaster or an extended job lay-off from insurance rate increases due to lower credit scores created because of that catastrophic event.  Insurance companies are required to tell consumers when their rates are being raised because of a lower credit score.

Tax Credit Reform: In reaction to several scandals surrounding excesses around Iowa’s business tax credit programs and subsequent shortfalls in state revenues, the Iowa legislature passed HF 2527/SF 2380 to ensure that tax credits receive a careful and regular examination.  The legislation highlights include:

  • Suspension of the film tax credit program for three years
  • Cutting the Supplemental Research Activities Tax Credit (RATC) in half for large corporations and shifting part of the savings to research and development incentives for small businesses
  • Lowering the overall cap on business tax credit from $185 million to $120 million
  • Cutting the Iowa Fund of funds contingent tax credits from $100 million to $60 million
  • Cutting other tax credit programs by 10 percent

While a great step ahead, the Iowa Fiscal Project argues that the final law will likely deliver only a fraction of the $115 million it promises to save.  Advocates had hoped for broader reforms, including a five-year sunset on all tax credit, the elimination of the transferability of other credits, and the complete elimination of the refundability of RATC for large companies to achieve broader effect.  Although the law also establishes a 10-member panel of legislators to review a set of tax credits for the next five years, advocates would have preferred additional public access to information about tax credits and expenditures.  

Campaign Finance:  Reacting to the U.S. Supreme Court ruling in Citizens United v. FEC that declared corporations legal "persons" and eliminated restrictions on independent campaign expenditures by corporations, Iowa's SF 2354 was introduced as a way to regulate corporate involvement in campaigns. Under this new law, a corporation cannot use its treasury to pay for an independent expenditure without the approval of a majority of the board of directors or similar leadership body in the same year as the expenditure. Any material or ads produced by the corporation must include the "paid for by" attribution, the name and address of the corporation, and the name and title of the chief executive officer.   1000 Friends of Iowa, and others believe it is among the strongest campaign disclosure policies in the country, although Iowa Citizen Action Network Executive Director Betty Ahrens argued that "ultimately the solution that we need to keep pushing for is a voluntary public financing option."

Veterans Iowa has passed numerous measures to assist veterans and their families.  For instance, the Governor signed an expansion of jobless benefits for the spouses of soldiers who are forced to quit their jobs when their husband or wife is deployed overseas.  Under the state’s unemployment compensation laws, workers who voluntarily leave their jobs are usually not eligible for jobless benefits. This new law makes an exception for the spouses of deployed soldiers. As the bill’s opponents worried about the impact on the business trust fund that finances jobless benefits, backers assured that the number of claims is likely to be very small, and could be financed by interest generated by money in the trust fund.  In addition, a provision has been included to ensure that the business’ tax levy is not altered. 

Clean Energy:  With nearly 20 percent of the electricity produced in Iowa coming from wind, Iowa is now the second largest wind producer in the country with more than 200 businesses that supply parts or services to support wind energy production.  To build on that strength, the Legislature approved its fourth and final year of the Iowa Power Fund (HF 2531), the $100 million program first enacted in 2007, along with other legislation to expand the production of Iowa-grown renewable energy.  Unfortunately, it did not receive the Governor's signature.

Disappointment on Failure of Labor Reforms:  While appreciating solid budget achievements, labor advocates were frustrated that key workers rights and labor reforms stalled during the 2010 session. Defeated bills included one to expand the subjects subject to collective bargaining, as well as HF 2420, which would have allowed unions to negotiate reasonable reimbursements for the costs of representing workers in a unit, while still allowing each employee to choose whether or not to become a union member or take part in other union activities, was not passed.  And a paid sick days bill, SF 2337, while approved in a Senate committee, did not move forward.

Resources:
Quad-City TimesIowa Democratic Leaders Defend Spending Plan
The Iowa Independent - AARP Praises Legislature for Health Care Advances
Globe Gazette -  IowaCare to Offer Services Closer to Those in Need
Progressive States Network - Shared Agenda: Corporate Transparency in State Budgets
AARP - AARP Applauds Passage and Signing of SF 2201
Radio Iowa - Business, Labor Groups Unhappy with 2010 Legislature
Sioux City Journal Culver Signs New Benefits for Military Families
1,000 Friends of Iowa — Legislative Updates and Action Alerts
WhoTv - Full Disclosure: New Rules for Campaign Finance Disclosure in Iowa