Government Affairs Weekly Report - Week 10: March 13-16, 2017

by CBI Lobbyist Jeff Boeyink - Partner, LS2 Group
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Overview / Major Events

• New revenue estimate from the REC sends a shock through the State Capitol as leaders deal with a new budget reality.
• The most significant reform of Iowa’s workers compensation law cleared the House on Thursday.
• Two weeks remain until the second legislative funnel is reached.

March REC revenue estimate is a shocker
The state’s Revenue Estimating Committee met on Tuesday of this week and announced a downward revision of their projections for the remainder of FY17 (our current budget year) and FY18 (the budget year currently being constructed by the legislature).

The REC reduced FY17 revenue projections by $131 million (and this is on top of the $110 million reduction announced at the December 2016 meeting of the REC and which triggered mid-year budget reductions) and FY18 revenue projections by $190 million.
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With only 3.5 months left in the FY17 budget year, another $100 million in new budget cuts could have significant impacts on the state’s ability to continue to provide many key basic services. Thus, the Governor and legislative leaders have agreed to bridge the revenue shortfall by using the state’s cash reserve fund and avoid further cuts this year.

​State budget law also requires the General Assembly to use the LOWER of the December and March revenue estimates when crafting the new state budget, so this new March estimate means the state has virtually NO new money for FY18.

Teachers and school administrators who mocked House and Senate Republicans for approving ONLY $40 million in new FY18 school funding just a month ago should be counting their luck stars as had lawmakers known how little new money would actually be available for FY18 spending, this number would have likely been substantially lower.

Iowa House approve significant workers compensation reform
After a week of intense competition between the business lobby and trial lawyers over the scope of proposed reforms to Iowa’s workers compensation system, the Iowa House approved changes Thursday to the state's workers' compensation laws, agreeing to scale back the legislation's most controversial proposals after pushback from some Republicans.

The original version of HF 518 was an incredibly aggressive effort to rebalance the scales of an Iowa system that has become hugely weighted against employers and has been driving large increases in workers compensation costs in Iowa. While some concessions will be made to the final version, make no mistake, the final package of reforms will be the most significant made in decades. Expect the Senate to approve the bill in identical form next week.

House Action This Week

• Passage of HF 518, a package of nearly 20 major reforms to Iowa’s workers compensation system.
• Passage of SF 376, a bill designed to curb the abuse of asbestos-related litigation. The bill now goes to Governor Branstad, who is expected to sign it.

Senate Action This Week

• Passed SF 447, a bill designed to encourage animal feeding operations to invest in best practices my offering additional protections to “good actors” against nuisance lawsuits. An identical bill is currently on the House calendar.
• Began approving many of Governor Branstad’s significant appointments to boards and commissions. Of note was the unanimous confirmation of Mike Richards (Des Moines doctor and business leader) to the State Board of Regents and former state representative Linda Miller as Director of the Department for Aging.