In her Condition of the State address Tuesday, Gov. Kim Reynolds proposed that Iowans pay a 4% flat income tax rate and that the state no longer taxes retirement income.
Reynolds gave a speech to the Iowa Legislature in prime time. She hopes to sign the tax cuts, the third round of reductions she hopes to sign as governor, as well as $1,000 retention bonuses for teachers, law enforcement and corrections officers.
Reynolds is expected to seek reelection this year. She framed her policy proposals as a way to get government out of the way and allow Iowans to make their own decisions.
Reynolds said that they are strong because they have been guided by the lights of common sense, fairness and freedom. Government action isn't always bold. Iowans make their own decisions for their families and future.
More than 8,000 Iowans have been killed by the COVID-19 epidemic. She mentioned keeping Iowa's economy open, teacher pay, the state's worker shortage and Iowa's achievements in the last year.
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Reynolds and her policy agenda are to blame for worsening the state's worker shortage, according to Democrats.
Would you like to move to Iowa if you could? The chair of the Iowa Democratic Party said after Reynolds' speech that it was streamed live on Facebook. We have a lot of work to do to make Iowa a place where people want to live, work and raise a family. Because we are facing a workforce crisis and it is at the feet of Kim Reynolds.
Reynolds thinks the 4% income tax rate is fair.
Reynolds proposed a 4% flat income tax rate for Iowa over four years.
The Iowans understand that the building doesn't fund anything. Reynolds said that they do. Right now they are paying too much.
In the first year of the plan, Iowa's top income tax rate would be reduced from 6.5% to 6%, and then it would go down to 4% by 2026.
The tax cut will reduce state revenues by about $500 million in the first year, and by nearly $1.6 billion in the first year after that, according to Reynolds. If state revenues continue to grow at a 4% average rate and state spending continues to grow at a 2% average rate, her staff believes the state will be able to afford the tax cuts.
An average family in Iowa will pay $1,300 less in taxes in the year 2026, on top of another $1,000 that is being phased in from a previous tax cut, according to estimates provided by Reynolds' staff.
The tax plan would leave some low-income Iowans worse off.
He said it would be a tax increase for a lot of Iowans. "If you work part time and you don't pay the 4% rate, it's going to be an increase for a lot of people."
Retirement income from a 401(k), IRA or pension would be exempt from state taxes under Reynolds' plan. The measure is expected to reduce state revenue by $400 million. Farmers who retire would be exempt from state taxes on cash rent payments.
Reynolds said that you have worked hard all your life, saving for retirement and paying your taxes. It is time for you to stop paying the tax collector. You have earned it.
Republicans in both chambers are in favor of a push for more tax cuts this session, pointing to the fact that an overcollection of taxpayer dollars has led to a $1.2 billion surplus and another billion dollars in cash reserves.
The direction the Senate wants to go is definitely that of Reynolds' proposal. Getting to a flat tax is a huge step, and so I'm very pleased with the tax proposal and can't wait to get to work on it.
Democrats say that Iowa is taking in more money this year because of the federal relief money that came in during the coronaviruses epidemic, and they fear that cuts could hurt state services in the future. They are open to discussing tax cuts that focus on middle- and lower-class Iowans.
Reynolds has already signed two rounds of tax cuts as governor, including a law that cut income and property taxes and phase out the inheritance tax.
Reynolds wants to cut unemployment benefits.
Reynolds said in her speech Monday that the workforce was a central theme of the speech. $1,000 pay bonuses for teachers and law enforcement officers are included. She wants to make it easier for child care providers to operate.
Iowa has the ninth highest labor participation rate in the country, but needs to take bolder action to keep up.
The length of unemployment benefits would be cut from 26 weeks to 16 weeks. She wanted recipients to be required to take lower-paying jobs if they wanted to keep their jobs.
There are many reasons for the worker shortage, but we need to recognize that in some cases it is because the government has taken away the need or desire to work. The safety net has become a hammock.
Reynolds said that the new re-employment division inside Iowa Workforce Development will be the sole purpose of helping Iowans find work.
Democrats have called the Reynolds workforce crisis a "Reynolds workforce shortage". The national workforce has grown over the last year while the Iowa workforce has decreased.
I don't think the problem is people not wanting to work. When the governor cut off the bonus unemployment over the summer, that didn't solve the workforce crisis.
Reynolds says that she has made significant investments in key areas that affect Iowa's ability to attract workers, including affordable housing, water quality, broadband and child care. Democrats accuse her of taking credit for money included in legislation she opposed, because she is using federal relief funds to do so. Reynolds talked about some of the moves in her prepared remarks.
She said employees would receive a $1,000 retention bonus. She promised a $1,000 retention bonus to teachers who stayed on the job through the Pandemic.
She said that her work was essential and that she wanted to know it.
Konfrst said Republicans haven't done enough for teachers.
She said that she was not sure if the $1,000 bonus would make them feel better or more welcome in the state when they are already exhausted and weary from two years of teaching.
Democrats want Reynolds to condemn Senate president's "sinister agenda"
Reynolds introduced a number of proposals Tuesday aimed at increasing parental choice in education.
Reynolds said she will introduce legislation that will allow middle- and low-income families and students with individualized educational plans to receive state funding to move their child into the education system of their choice.
Reynolds said 70% of the money the state gives per child will go directly into an account for families to personalize their child's education. The state will give 30% to smaller school districts. Her staff said that school districts can still get local property tax levies for their students.
She said that school choice isn't a zero-sum game. It could raise the quality of all schools.
Reynolds had a similar scholarship program that did not pass the House of Representatives.
The speaker of the house wants to review the text of the bill, but he thinks that Reynolds has taken into account input from House Republicans.
He said they would see how it was received. She has tried to address some of the concerns that she heard from us, but it is a different plan than last year.
Reynolds spoke about the need to increase transparency for parents who are concerned about the materials available to their students at school, and she accused some school administrators of pushing their worldview onto students.
She referred to the debates over library books that have roiled school districts across Iowa and the country, taking issue with books that contain sexually explicit material.
She said that the books would be X-rated if they were movies. We live in a free country. There is a difference between shouting obscene words from a street corner and assigning them as required classroom reading. There is a difference between late-night cable TV and the school library.
Some of the Republicans' previous "school choice" efforts and proposals for parental choice have been criticized by Democrats as taking funding away from public education.
Democrats called for Reynolds to condemn comments made by the Republican Senate president.
Jake Chapman claimed in his opening speech that there is a sinister agenda to change the behavior of children. Chapman has attended school board meetings in the Des Moines metro to advocate against certain books in school libraries and has called for legislation that would make it a felony for teachers to distribute what he refers to as "obscene" books.
He was disappointed that Reynolds did not disavow Chapman's comments.
He said that Gov. Reynolds endorsed Sen. Chapman's speech from yesterday.
Stephen covers politics for the Register. He can be reached by email at sgrubermil@registermedia.com. You can follow him on the social networking site.
Ian Richardson is a reporter for the Des Moines Register. He can be reached at irichardson@registermedia.com, or on the social media platform, at@DMRIanR.
Brianne Pfannenstiel is a reporter for the Register. She can be reached at bpfann@dmreg.com. She can be followed on the social networking site, at her account, calledbrianneDMR.
Reynolds proposes 4% income tax, unemployment cuts, and school choice.
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