Iowa House Democrats propose increase in minimum wage, expansion of sales tax holiday

Money and Debt

by Kathie Obradovich, Iowa Capital Dispatch
February 1, 2024

Democrats in the Iowa House unveiled several bills Thursday that they said were aimed at improving the economic well-being of Iowans, including proposals to increase the minimum wage and expand the state’s sales tax holiday.

The bills also included proposals to eliminate a waitlist for disabled Iowans for services under Medicaid and to expand a child care pilot program.

Democrats hold 36 seats in the Iowa House so any legislation they propose would need Republican support to advance. Republican lawmakers on Thursday discussed plans to continue efforts to cut Iowa’s income tax.

Here’s a brief look at the legislation:

Minimum wage:  Democrats are proposing to raise Iowa’s minimum wage from $7.25 an hour to $10.85 by July 1. The bill would increase the wage to $13 an hour in 2025 and $15 in 2026.  Iowa’s minimum wage was last increased in 2007, and it is the lowest of all of its neighboring states, Rep. Ken Croken of Davenport said.

“It’s wrong. It’s indecent. Working men and women deserve the respect reflected in a decent, livable wage, and we’re here to bring that issue forward,” he said.

Sales tax holiday: Iowa’s current two-day sales tax holiday, scheduled for a weekend in early August, eliminates the sales tax on clothing and shoes. Rep. Sue Cahill of Marshalltown said her bill would expand the items that could be purchased tax free, including school supplies and art supplies, computer products, musical instruments and sports and recreation equipment.  It also would allow the tax-free purchases over 14 days, which she said would give more people the chance to go shopping after collecting their paycheck. The bill would also allow the tax break on individual items up to $250; the current limit is $100.

“The sales tax holiday would be a direct tax relief that every person in Iowa could benefit from,” Cahill said.

Eliminate Medicaid wait list: Rep. Josh Turek of Council Bluffs sponsored a proposal to eliminate the Medicaid wait list for people with disabilities. He said there are about 41,000 Iowans with disabilities currently on the waiting list for Home and Community-Based Services covered by Medicaid. Iowans with intellectual disabilities face a six-year wait for services, he said.

“This is abhorrent, honestly, morally reprehensible that people would have to wait six years for their health care,” Turek said.

He said it would cost an estimated $69 million to eliminate the wait – money that he said was available from unspent federal American Rescue Plan funds.

Expand child care pilot project:  Child-care workers statewide would qualify for state child care assistance under legislation sponsored by Rep. Sean Bagniewski of Des Moines. The state currently has a shortage of child care workers. A pilot project has been successful at extending assistance so child care workers can afford to pay for the care of their own children, Rep. Tracy Ehlert of Cedar Rapids said, adding it’s time to make the pilot project permanent and extend it to workers statewide.

Iowa Capital Dispatch is part of States Newsroom, a nonprofit news network supported by grants and a coalition of donors as a 501c(3) public charity. Iowa Capital Dispatch maintains editorial independence. Contact Editor Kathie Obradovich for questions: info@iowacapitaldispatch.com. Follow Iowa Capital Dispatch on Facebook and Twitter.