Government Affairs Weekly Report - Week 6: Feb. 13-16, 2017

by CBI Lobbyist Jeff Boeyink - Partner, LS2 Group
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Overview / Major Events
This week has been completely dominated by simultaneous debate in the House and Senate on collective bargaining reform. After a well-attend public hearing on Monday (union members were out in force) both Chambers have spent most of Tuesday, Wednesday and Thursday debating the merits of the proposed reforms.

At the delivery of this newsletter, both the House and Senate used a parliamentary rule to end debate and set a “time certain” for a final vote on the legislation. Once the time certain arrives, ALL debate is stopped, all remaining amendments are voted on without any further debate, and the bill goes to final passage. It used to be an informal rule at the Iowa Capitol that the majority controls the agenda, but the minority controls the clock. However, in recent years the majority party has begun to exercise more control over the length of debate through the rules process.

It is clear Republicans WILL have the votes to pass collective bargaining reform in both Chambers and the issue resolved by the close of business Thursday.
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Recap of Key Provisions of Proposed Reforms (SF 213 and HF 291)
 
Key provisions:

• Exempts public safety union workers from many of the reform provisions.
• Provides employers with the statutory right to evaluate their employees and makes it easier to discipline and fire poor performing employees.
• Eliminates the ability to bargain for payroll deduction for union dues or political contributions (means unions will have to use other means to collect dues and contributions from their members).
• Limits the scope of bargaining with non-public safety employees units to ONLY wages and other mutually agreed upon topics.
• Prohibits bargaining on insurance issues – which would allow the state to bargain for a statewide health insurance pool on behalf of ALL state employees and give local governments the opportunity to join (similar to the state’s public employment retirement system).
• Requires periodic and automatic union recertification votes.
• Prohibits arbitrators from considering the terms of previous collective bargaining agreements or a public employers “ability to pay” when making arbitration decisions.

When the state’s Revenue Estimating Committee (REC) met in December and lowered the estimated growth rate for state revenue in the current fiscal year, that triggered the need over $100 million in cuts to the current fiscal year budget.
 
That spending reduction effort consumed most of the first three weeks of the 2017 Session of the Iowa General Assembly. Unfortunately, continued softness in the state’s revenue growth could trigger a second round of cuts.
 
Through January 2017, year-to-date revenue growth is 1.6% as compared to the current estimate (which was lowered in December) of 3.6%. With each one percentage point of state revenue equivalent to around $70 million, if this two percentage point under performance continues through the year, that would mean $140 million less revenue than was estimated and that would most certainly trigger another round of spending reductions.
 
Personal income taxes are by far the largest revenue source in state government and they have grown by 1.5% year-to-date. Unfortunately, the estimate for personal income tax growth is pegged at 5.8% and it is this shortfall that most significantly impacts the state budget.