Iowa Legislature compromises, ends gridlock and adjourns session

The Iowa Legislature adjourned the Second Session of the 89^th General Assembly in the early hours of May 25, after a nearly month-long gridlock. Governor Kim Reynolds and leadership in both the House and Senate worked to find a compromise on key policy issues including the FY 2023 budget, Iowa’s bottle bill, tax reform, pharmacy benefit managers and education savings accounts (ESA). Agreements were reached on all priorities with the exception of ESA.

Taxes

Gov. Reynolds, Senate leadership and House leadership pushed for a historic tax bill this session and approved HF 2317 in February which will move Iowa from 46^th to 15^th on the State Business Tax Climate Index. SF 2367 was adopted on May 23 and includes additional tax reform provisions that exempt state income taxes on retention bonuses provided by the State with American Rescue Plan Act funds.

Workforce

The legislature approved two of Gov. Reynolds's workforce priorities.

• HF 2355 shortens the maximum unemployment benefit duration to 16 weeks, shortens the timeframe and wage requirements for someone on unemployment to accept a job, and allows for businesses to be reimbursed for overpayment of benefits.
• Then SF 2383 was approved and includes provisions related to work-based learning, recruitment of healthcare workers, city and county inspections of manufactured houses and elimination of certain fees for veterans. Both bills were sent to the Governor and are expected to be signed into law.

Placemaking

• In April, Gov. Reynolds announced she would allocate $100 million in American Rescue Plan Act funds to Destination Iowa, a new program that will award grants to quality of life and tourism projects across the state.
• SF 2305 failed to pass this session, a bill that would have provided additional risk protection and flexibility for jointly financing quality of life projects. In the House, a companion bill passed the Economic Development Committee unanimously and was referred to the Ways and Means Committee where it did not see any further action.

Childcare

The Legislature passed three additional childcare bills.

• HF 2198 establishes new child-to-staff ratios in child care centers and allows workers 16 years or older to work in child care centers without additional supervision.
• HF 2127 allows childcare centers to collect the difference between Child Care Assistance rates and rates charged to private pay families.
• HF 2252 expands Child Care Assistance eligibility to parents with permanent disabilities.

Bottle Bill

SF 2378 was approved and reforms Iowa’s decades-old bottle bill for the first time since its adoption. The bill becomes effective Jan. 1, 2023, and:

• Allows dealers to opt-out of redemption
• Increases the handling fee paid by distributors
• Allows for a refund on the barrel tax for beer
• Places civil enforcement with the Department of Natural Resources and Attorney General
• Allows all retailers who possess a food establishment license to opt-out

Renewable Fuels Incentive

HF 2128 was signed into law on May 15. It adopts a standard for access to E15 throughout the state and was one of the Governor’s top priorities for 2022.

Food Delivery Services

Lawmakers approved new restrictions on third-party food delivery services. The legislation would require third-party delivery services to enter into a formal agreement with restaurants from which they deliver. Apps couldn’t advertise a restaurant’s menu without first reaching an agreement with the restaurant owner. New food-safety requirements are also included in the legislation.