To the People of House District 95

As many of you are aware last year FEMA in their infinite wisdom developed new flood maps that include part of the Louisa Transfer Station in the event of a 100 year flood. It’s comical considering only about 15 years ago SE Iowa saw a 500 year flood and approximately none of that area took on water. Last Friday I spent most of my day communicating with multiple folks from DNR, including the Director, about how enforcing these federally unfunded mandates negatively impact rural counties with smaller reserve funds. While appealing anything directly to a federal agency is likely a dead end, I’m insistent that the DNR work with the County to either extend the compliance date if need be, or provide more regulatory room in order to make this transition more affordable. In addition, I’ve also made our federal delegation aware that once again FEMA is dropping the ball and Iowans are the ones to suffer. The unelected bureaucrats in D.C. have no concern for middle America, but where we can, we should always do our best to bring the bureaucracy at any level of government to heel.

At the end of next month I’ll be headed to McAllen Texas with many of our states county sheriff’s to get a look at Biden’s border crisis first hand. We will be linking up with the U.S. Border Patrol as well as the Texas Department of Public Safety to see where many of the illegal immigrants are entering our country – the Rio Grande River.

Starting this month, the State of Iowa will be sending approximately 100 Iowa National Guard troops to respond to the crisis. Following the troop deployment, the state will then deploy 30 Iowa Department of Public Safety personnel for 30 days in September. The governor made this announcement following a security briefing from Texas and a request for support from Texas Governor Greg Abbott following President Biden’s totally incompetent decision to end Title 42.

In June last year, Governor Reynolds approved sending nearly 30 Iowa State Patrol troopers to Texas as part of Operation Lone Star. During the first deployment, the troopers assisted with 240 criminal arrests, 51 vehicle pursuits and seizures of 948 pounds of marijuana, 37 pounds of cocaine and methamphetamine, 18 firearms, and $1.7 million dollars in cash.

If Biden refuses to secure the southern border, then the states will.

Now that the Government Realignment legislation has gone into effect, the Board and Commissions Review Committee has begun its work to review all 256 of Iowa’s boards and commissions. While the main focus of Senate File 514 was the realignment of the government’s state agencies, the bill also created a review committee to evaluate the efficiency and effectiveness of each board, council, commission, committee, or other similar entity of the state established by code.

The Board and Commissions Review Committee will evaluate the extent that goals and objectives of those entities are being met as well as make recommendations for the continuation, elimination, consolidation, or reorganization of those entities. With over 250 boards and commissions to review and evaluate, the Board has assigned subcommittees to divide the entities into related categories. The subcommittees are Licensing (47 entities), State Government (51 entities), Agriculture and Natural Resources (35 entities), Workforce, Labor, Education (36 entities), Economy and Finance (36 entities), and Human Services (51 entities).

The subcommittees will be gathering relevant information about each of their respective boards and commissions such as their memberships, number and frequency of meetings, compensation for members and costs, staffing, licensing, and fee structures. Once the subcommittees have gathered and reviewed the information they will make recommendations to the committee. The Committee shall consider the recommendations of the subcommittee, compile the information and submit a report to the Governor and the General Assembly with its findings and recommendations by September 30th.

The review and report shall give us as legislators more insight into how these boards and commissions can be addressed in order to eliminate unnecessary redundancy, provide adequate oversight of boards with licensing and fee authority, and improve Iowans interactions with these boards. As a member of the State Government Committee which oversaw the bill that established this review committee, I look forward to reviewing the report of the Committee to ensure that these boards and commissions are functioning as efficient and effective as possible.

Fiscal Year 2023 came to an end with the state nearly matching the record revenue levels of the previous year, according to the Legislative Services Agency’s June revenue memo. For the full year, the state took in $9.6278 billion in net receipts. That is decline of just .4% when compared to Fiscal Year 2022. The numbers were in line with the .5% reduction that the Revenue Estimating Conference had projected at its March meeting.

Personal income tax – Personal income tax collections were down a bit in June, with the state collecting $433.5 million in payments. This was a slight decline from the amount received in June 2022. For the fiscal year, personal income tax collections declined by $182.8 million, or 3.1% less than FY 2022. The decline was expected, as last year’s tax reform law lowered tax rates on January 1st and was slightly more than what the REC had projected in March.

Sales and use tax – Sales and use tax collections saw a slight increase in June. For the year, sales and use tax receipts grew by $83.5 million or 2.2% over Fiscal Year 2022. This is much stronger than the Revenue Estimating Conference’s prediction of a 3.5% decline for the year. The continued strength of sales and use tax payments for a third year reflects the sustained strength of Iowa’s economy.

Corporate income tax – June was another solid month from corporate income tax payments, even though not meeting last year’s levels. Collections were $141.2 million for June, which is $23.9 million lower than June 2022. But for the year, corporate income tax collections exceeded predictions. The state collected $984.1 million for the year, which is $65.2 million higher than FY 2022. The increase of 7.1% is higher than the 4.6% growth forecasted by the REC in March. FY 2023’s amount is virtually the same as FY 2021’s record high level, another sign of a healthy Iowa economy.

Refunds – State revenue growth would have been higher, but for a spike in tax refund payments. The total amount of refunds paid by the state through June 30 was $1.177 billion. This is a 12.9% increase in refunds from the amount paid back to taxpayers in FY 2022.

While the fiscal year may have ended on June 30th, the state’s books on Fiscal Year 2023 do not officially close until the end of August. During this time, revenue and refunds that should be counted as part of FY 2023 will be accounted for. This process will change the numbers slightly. Even before those potential changes are factored in, it is clear that Fiscal Year 2023 was another strong year for state revenue.

Remember House File 2317 from 2022? You should since it was the largest tax cut ever passed in Iowa! Everyone saw a tax cut as a result. House File 2317 gets Iowa to a flat tax of 3.9% on all taxable income in tax year 2026. House File 2317 helps the single mom with two kids on an income of $25,000. That mom would pay $714 in Iowa taxes under the current law but will only pay $521 in 2026 because of this bill. That is a 27% reduction in her taxes!

The bill also helps the family of four with two working parents on an income of $50,000. That family would pay $1,918 under the current law, but will have that number cut to $1,520 because of this tax cut. That’s more than a 20% tax cut for that middle-class, working family!

House File 2317 not only reduced individual income tax rates and provides for an eventual flat tax rate of 3.9% on individual income, but also exempts retirement income from individual income tax, lowers the corporate tax rate to an eventual 5.5% flat tax based on a revenue trigger, and makes changes to tax credits. Couple that with the fact that Iowa hasn’t taxed social security in more than a decade and Iowa really is the Midwest’s Field of Dreams when it comes to taxes. So how do our neighbors stack up?

To the north—Minnesota has a graduated individual income tax, with rates ranging from 5.35% to 9.85%. Minnesota has a 9.80% corporate income tax rate. Minnesota taxes your social security and all retirements. Moving north does not seem viable—especially if you are over 55. Additionally, Minnesota raised their gas tax, raised vehicle registration fees, increased taxes on the sales of new vehicles and enacted a new fee on the delivery of most goods. Minnesota really is earning their new nickname as the California of the Midwest.

Let’s look to the east—Illinois has a flat 4.95% individual income tax rate. Illinois also has a 9.50% corporate income tax rate. Surprisingly, Illinois does not tax social security or retirement.

How about Michigan? Michigan has a flat 4.25% individual income tax rate, but there are also jurisdictions there that collect local income taxes. Michigan has a 6% corporate income tax rate. Governor Whitmer has also twice vetoed tax cuts in 2023. It’s retirement that gets really weird in Michigan. If you were born before 1946, the tax breaks for retirement income are pretty good. However, if you were born later, the state is a lot stingier (although some seniors still might qualify for a tax break). There were some new retirement tax benefits signed into law this year that seem to stairstep in based on age. Michigan does not tax social security.

What about Wisconsin? They have a graduated individual income tax, with rates ranging from 3.54% to 7.65%. Wisconsin also has a flat 7.90% corporate income tax rate. Their governor also recently vetoed an income tax cut. The Badgers exempt Social Security benefits from state taxes, but pension income along with distributions from IRAs and 401(k) plans, are generally taxable. Bottom line—retiring in Wisconsin is expensive!

What about our neighbor right to the west? Nebraska has a graduated individual income tax, with rates ranging from 2.46% to 6.64%. Nebraska also has a 5.58% to 7.25% corporate income tax rate. Doesn’t sound too bad unless you are a retiree. The Cornhuskers tax most Social Security benefits and other retirement income. The best decision here is to cross the Missouri River and retire in Iowa.

So, if you have landed in the Midwest and Iowa or Iowa State’s tailgating experience is not reason enough for you to homestead in Iowa…just stack us up against our neighbors and see where you will keep the most of your hard-earned money. It turns out, all roads lead to Iowa.

August 4th and 5th is Iowa’s annual sales tax holiday weekend on back to school clothes and shoes—and it is just around the corner. In general, select clothing and footwear are tax exempt—meaning no state sales tax and no local option sales tax will be collected. Sales do not have to be in person and will still be tax exempt if they are ordered and paid for online during the exemption period.

Iowa Code section 423.3(68)(a)(2) states the sales tax holiday begins at 12:01 a.m. on the first Friday in August and ends at 12:00 am midnight the following day—so the sales tax is back for Sunday purchases! Businesses that are open on these days are required to participate. It is not an optional holiday and a business cannot advertise that they will pay or otherwise absorb the sales tax on items that do not qualify.

The exemption does not apply in any way to the price of an individual item selling for $100.00 or more. The exemption does apply to each article priced under $100.00 regardless of how many items are sold on the same invoice to a customer. Things that are not exempt include: watches, watchbands, jewelry, umbrellas, handkerchiefs, sporting equipment, skis, swim fins, roller blades, skates, and any special clothing or footwear designed primarily for athletic activity or protective use and not usually considered appropriate for everyday wear.

Iowa’s sales tax-free weekend is always a very popular event—more information can be found at https://tax.iowa.gov/iowas-annual-sales-tax-holiday.

Fiscal Year 2023 saw record spending on roads and bridges in Iowa, according to the Iowa Department of Transportation. The DOT announced that spending on transportation projects for the year amounted to $1.47 billion, which is a combination of state and federal transportation funding provided to the department.

This amount funded 839 projects throughout the state during the fiscal year. The spending was broken down by DOT to include:
•    $274.5 million on the farm-to-market road system;
•    $358 million on the state’s interstate system;
•    $26.8 million in the secondary road system; and
•    $136.8 million in urban roads and bridges.

This year’s spending continued the department’s efforts to address the condition of Iowa’s bridges. Since 2006, DOT had made a concerted effort to repair or replace state-owned bridges that were found to be in poor condition. Over the last 17 years, this number has fallen from 256 to just 23 currently. There are still a number of poor-condition bridges that are part of the county road system, and counties are working to reduce those numbers as well.

As always, you can shoot me an email at taylor.collins@legis.iowa.gov with any questions or conerns.

Sincerely,

Rep. Taylor Collins