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Reynolds plans to revive tax swap plan

Reynolds plans to revive tax swap plan

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Gov. Kim Reynolds updates the state's response to the coronavirus outbreak during a news conference Tuesday in Johnston.

CEDAR RAPIDS — With Iowa’s economy bouncing back from a COVID-19 gut punch, Gov. Kim Reynolds says she is “definitely” looking to revive her stalled Invest in Iowa tax swap plan next legislative session as a way to improve the state’s business climate, resources and appeal for the next decade.

Reynolds said Iowa has weathered the pandemic better than many states with the help of federal stimulus money for businesses, individuals and government entities that helped the state government maintain a surplus budget ledger.

“We’re really, I think, positioned well to come out strong and build back better than ever,” the governor said — noting, though, that many farmers and residents are still hurting from the destructive Aug. 10 derecho, and many workers remain idled and merchants hit by the coronavirus shutdown don’t share in the optimism some Iowa companies have.

Reynolds said she has had to make some tough choices “threading the needle” in balancing the protection of Iowans’ lives and livelihoods during an unprecedented health crisis that has been marked by changing dynamics and directives by health experts. Those experts are now worried about a second wave of COVID-19 infections coupled with the normal flu season.

“I’m ready for 2020 to be over,” Reynolds said after ticking through a list of challenges that included Missouri River flooding, the pandemic onset, civil unrest, July tornadoes, August’s derecho and school reopenings among others.

Against the backdrop of a recovering economy and a new revenue projection calling for 4 percent growth in fiscal 2022, Reynolds said she expects to renew her call for her centerpiece tax-swap plan to fund water quality, mental health, income tax relief and other initiatives that she envisioned last January.

The governor’s multipronged Invest in Iowa Act sought a 1 percent sales tax increase while cutting state income taxes by 10 percent, funding water quality efforts and easing local property taxes by shifting mental-health costs to the state and phasing down property tax levies.

The plan — which she said amounted to an overall tax reduction — would generate about $540 million a year for the state. Of that, $172 million would go to natural resources, conservation, outdoor recreation and water quality improvement, while more than $80 million a year would be earmarked for mental health care.

“I was really, really proud of the initiative, just the coalition that it brought together, and it really was I thought the way that we set the table for the next 10 years, the next decade, and talk about why Iowa is a great place to live, work and raise a family,” Reynolds said.

“I think we have an opportunity to just say to people on the East and West coasts, and honestly in Minnesota and Missouri, hey, things are going well here, there’s a lot of opportunity, we have a great quality of life and all components of that really helped build that out,” she noted.

Adding to that, Reynolds said, is the fact that the pandemic has caused more Iowans to spend more time outdoors and discover “the amazing assets that we have in our state and county parks” that the state could improve and build on using elements of the Invest In Iowa plan.

The governor’s indication that she plans to push the proposal during the 2021 legislative session may elevate the issue in some of the Nov. 3 races in Iowa House and Iowa Senate districts.

Reynolds said she again expects to push a constitutional amendment that would restore voting rights to felons who complete their sentences more permanently than the executive order she put in place earlier this year to enable thousands of Iowans to vote next month.

She expects to get recommendations from task forces she appointed on social justice issues and Iowa’s economic recovery that also could get incorporated in her 2021 legislative agenda.

The governor said she also will consider proposals dealing with child care, housing and broadband needs, although she noted the $81 million in state and federal funding that has been committed for broadband expansion has leveraged another $120 million in private investments that has expanded service to 70,000 homes, schools and businesses in all 99 counties over the last two years.

Once Iowa is on the other side of the COVID-19 pandemic, Reynolds said she expects officials within her administration to produce an “after-action report” to review the decisions that were made to address the outbreak once it hit Iowa last March.

She said it was a smart idea to coordinate all state government functions through the state emergency operations center in Johnston and she praised the “unprecedented” coordination by the state’s health care system to “connect the dots” in tracking available beds and capacity in hospitals around Iowa as positive cases spiked.

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