The Rozenboom Report – January 28, 2022

by Senator Ken Rozenboom

We have wrapped up the third week of the legislative session, a week that was filled with subcommittee and standing committee meetings. We are also beginning the budget process. As always, we focus specifically on K-12 school funding first for two reasons. Our school boards have to develop their own budgets soon, and need to know what funding will come from the state. Also, spending for education comprises about 57 percent of our state budget and greatly impacts all other spending priorities.

Senate Study Bill 3003 passed out of subcommittee on Thursday. This proposed measure establishes a mental health professional loan repayment program, making mental health professionals eligible for financial help if they agree to stay in an eligible practice area for a certain period of time. An eligible practice area is defined as a city in Iowa within a federal mental health shortage area. Helping retain mental health professionals in areas of need is a priority for us, and this legislation would be helpful to Iowans across the state, especially rural Iowans in need of more mental health access.

On Wednesday I chaired a subcommittee hearing on SF330, also known as the “hands-free bill”. This bill expands violations relating to the use of electronic devices while driving by prohibiting any use of an electronic device unless it is in a voice-activated or hands-free mode. Distracted driving is a growing problem in Iowa, and is responsible for an increasing number of traffic injuries and fatalities, along with a great deal of property damage. The bill passed on a unanimous vote in the Senate Transportation committee on Thursday, and is now eligible for debate and voting on the Senate floor.

Senate Republicans held meetings this week with Senator Chuck Grassley and Congresswoman Ashley Hinson. Both provided insight and updates on their work in Washington, D.C., and their concerns with the policies coming from the Biden Administration. They also shared recent successes, goals for the upcoming weeks and months, and words of encouragement for our members. It was great to have them back home and we appreciated the opportunity to visit with them.

This week Senate Republicans rolled out a tax reform proposal. The governor told Iowans in her Condition of the State speech that tax reform was a high priority for her, and we agree. As is always the case, we will have to work out the differences between her plan and ours, but that’s what the legislative process is all about. I want you to know that, despite the rhetoric from some in the minority party and the media, this reform package provides additional tax relief to all Iowans.

Our tax relief package contains a number of sections, but the highlight of the bill is a major reduction in the income tax Iowans pay. The top income tax rate in Iowa, 8.53 percent, currently applies for earnings over roughly $78,000 for a married couple. Since the top rate threshold is so low, many middle-income Iowans are paying some of the highest tax rates in the country. The goal of Senate Republicans is to end up with a flat 3.6 percent tax rate. If we get this done our state income tax rate will be the 4th lowest income tax rate in the country instead of the 8th highest as it is today. Always keep in mind that several states have no income tax at all, and we have to compete with them.

The Senate proposal also fully eliminates all taxes on retirement income, expands military pay exemption to full-time National Guard members, and provides farmers a first-time pension exemption by exempting income from either cash rent or farm crop shares. These policies promise to keep retired Iowans from fleeing to states that don’t have a pension tax.

Iowa also has a corporate tax rate of almost 10 percent and, again, that is one of the highest rates in the country. We offset that high rate with a number of credits and exemptions but that tends to create winners and losers. We hope to eliminate some of the exemptions and credits, and ultimately end up with a lower and simpler corporate tax that is fair to everyone.

We’ll have to see how this all plays out in the weeks ahead. Significant, permanent income tax reform makes sure Iowans keep more of what they earn. It helps them weather the historically high inflation caused by reckless policies in Washington, D.C., and it makes Iowa a beacon of growth and opportunity.

Please feel free to contact me with comments or questions about legislation. My legislative email address is ken.rozenboom@legis.iowa.gov. And please feel free to visit us at our beautiful Capitol. It’s always nice to see familiar faces from Senate District 40!