The Segebart Report: Pandemic limits progress on tax reform

Friday, June 26, 2020

The legislature adjourned for the year on Sunday, June 14. This year’s session was definitely different than previous years. While we didn’t get to all the legislation we wanted, we were still able to accomplish a lot in the time we did have.

Before we paused the session in March, the Senate passed legislation to lower barriers to some professions, and bring unemployed people back into our workforce and encourage them to build careers for themselves. We worked to expand the governor’s Empower Rural Iowa and Future Ready Iowa initiatives, and passed bills to improve access to and availability of affordable health care in our state, especially in rural areas. We passed bills that would put victims first in Iowa, and make sure their rights were just as important and protected as those who have committed crimes against them. We funded an increase of almost $100 million in new funding for K-12 schools, including transportation equity and per pupil equity, while also working to protect teachers and giving them additional tools to work with students who become violent in the classroom.

At the beginning of the year, many of us had high hopes of continuing our work on tax reform for Iowans. The pandemic has had a major effect on what type of tax reform was possible this year, but we were still able to make some reforms and changes to the tax code. One of the most important parts of this bill is ensuring the stimulus payments many people received a few months ago would not be taxed at the state level. It also ensures any loans that are forgiven through the Paycheck Protection Program (PPP) and payments universities and colleges received to help students with expenses would also not be taxed. Payments received under the Governor’s Iowa Small Business Relief Program to provide financial assistance to small businesses economically impacted by the COVID-19 pandemic will also be exempt from tax at the state level. Additionally, the tax bill ensured companies doing business in Iowa would not be punished for stepping up to help their communities during the pandemic, and eliminated the additional tax liability for companies that switched their production outputs to make masks or gowns instead of their normal products.

Lastly, one of the main things we had to do upon coming back into the session was pass a budget for the next fiscal year. We wanted to pass a responsible budget that we knew the state could afford. We did not want to be in a situation where we would have to cut money we appropriated when the legislature reconvenes in January. Many of us felt the state should be tightening the budget just as Iowans across the state have had to tighten their budgets as a result of the pandemic. In the end, the budget we passed appropriates $7.778 billion for the next year. This budget focuses state spending on the areas that matter most – health care, K-12 education, and public safety.

Licensing Reform

Iowa is one of the most heavily licensed states in the country. Nearly one out of every three workers in Iowa is required to maintain a license to work in their profession, while the national average is one out of every four workers.

Licensing in many areas of the economy has a proper role. It ensures consumers can depend on reliable and professional service and it protects them from scammers and grifters. However, excessive licensing is a significant burden for low income Iowans trying to work their way out of poverty. It creates hurdles for job creators in their effort to expand their business and meet the demands of their customers.

HF 2627 starts to ease those burdens by waiving first-time licensing application fees for low income individuals. For many licenses, it credits work performed in other states without licensure to meet Iowa’s license requirements, establishes universal licensing path that recognizes licenses from other states, and improves the licensing process for felons who have completed their sentence. A uniform conviction standard, focused on offense directly related to professions, will help some felons earn a living and reduce their likelihood of recidivism.

Licensing reform is one of a number of pro-growth bills passed in the short conclusion of the 2020 legislative session to rebuild the Iowa economy. The economy was the best in the history of the state prior to the arrival of the coronavirus in Iowa. Policies like HF 2627 will play a key role in rebuilding our economy.

Thank you for all your calls, emails and messages throughout the legislative session. I look forward to retiring and heading back home, for the final time, and seeing our grandsons on a more regular basis - they are in Wisconsin. These past 8 years has been a truly unforgettable experience. Thank you for your support.

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