Government Affairs Weekly Report - Week 16: Apr. 23-26, 2018

by CBI Lobbyist Jeff Boeyink - Partner, LS2 Group

Overview / Major Events
This will be an abbreviated report this week as Session has drug into a second week of overtime and little has changed since last week. That said, the LS2group lobby team has been a constant presence at the Capitol and will be likely working well through today.

Tax Deal Reached (but no language yet available)
It has been confirmed that House and Senate leaders, as well as the Governor’s office, have reached agreement on the framework of a tax reform package. It is not currently available in bill form (nor has anyone released a summary document), but here is what I believe may be included (this is not an exhaustive list):

• First year tax cut of up to 10% on individual income taxes (there would NOT be any change in federal deductibility the first year).
• Second year and beyond there would be additional individual income tax rate cuts that are tied to gradual elimination of federal deductibility.
• Iowa’s 12% top corporate income tax rate will be reduced to less than 10% through the elimination of corporate federal deductibility.
• NO changes to any tax credit programs, with that conversation moved to an interim study.
• Additional business tax reductions through Section 179 coupling and qualified business income deductions.
• Some form of triggers will be included to slow down the tax cuts in year two and beyond if revenues fall below certain levels (protection against a Kansas situation).

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I do not expect to see anything until Monday. If I were leading the respective caucuses, I would time the process to release the language, immediately go to caucus, then right to the floor. If the language is public prior to this weekend, it will give the lobby a whole weekend to work against those portions they don’t like (and I suspect the leaders would like to avoid giving us lobbyists that opportunity).

State Budget Work Begins
On Wednesday the House approved two of the 10 budget bills necessary to close the 2018 Session with the passage of Agriculture and Natural Resources appropriations and Transportation appropriations. The Senate spent much of Thursday in Appropriations Committee for the purpose of bringing a number of budget bills out of committee and ready for floor debate.

It is believed the House and Senate have agreed to at least half of the budgets already, so those should be able to move through the process fairly quickly. Differences on the remainder, and a few big policy issues yet unresolved, are what will be the real test next week. Watch for the General Assembly to make a run for adjournment next week, with May 4 or May 5 being likely end dates.