Lawmakers returned to Des Moines Jan. 10 to begin the 2022 legislative session, and with so much of the past year focused on the state’s labor shortage, they say they expect that to carry over into the work they do this year at the Capitol.

 

Topics such as tax cuts and changes to the state’s unemployment system to ease the transition back into the workforce could be on the table. 

 

Lawmakers also say they are likely to revisit issues such as child care, broadband expansion and housing — all areas that were partially addressed in 2021.

 

The Business Record spoke with legislators from both parties before the session started to learn what their priorities were and what issues they will be closely watching in 2022. Here is some of what they had to say.

 

Senate Majority Leader Jack Whitver, R-Ankeny

Whitver said the workforce shortage has been exacerbated over the past year, and the Legislature needs to find solutions to turn that around.

 

“When I first got elected to the Legislature in 2011, there was a conversation about needing workers, but it was … kind of limited to specific industries,” he said. “Now it’s basically every industry across the state … that is struggling with workforce.”

 

One of the top priorities to bring more people to Iowa is the continued reduction in the state’s individual income tax rate. The individual income tax rate has decreased from nearly 9% five years ago to about 6.5%.

 

“We want to continue to move that down and lower that tax rate because high taxes create a disincentive to work,” Whitver said. “Continuing to reduce the individual income tax will be our No. 1 priority this year.”

 

While some members of his party have suggested eliminating the individual income tax completely, Whitver questioned whether that is feasible this year.

 

“Zero should be the goal, but whether you can get that done in one year or not is to be determined,” he said. 

 

Whitver said the Legislature will focus on the individual tax rate rather than the corporate tax rate. While he said the corporate tax rate is too high in Iowa, tax credits have been put in place that reduce the effect of that rate.

 

He said a “robust conversation” needs to be had with the business community, the governor and the House to determine what direction they want to go on the issue.

 

“So if the business community is up for that conversation, if the governor and the House are up for that conversation, we’re here for it, but we’re going to put our focus and our time on the individual income tax rate,” Whitver said.

 

Iowa’s corporate tax rate of 9.8% ranked it 46th in the country, according to the Iowa Business Council’s Competitive Dashboard released in February 2021. 

 

A recent report from the nonpartisan Tax Foundation showed that Iowa’s income tax rate ranked the state 38th in the country, which some business leaders say makes it unable to compete with other states with lower rates. 

 

Whitver said the income tax can be reduced without affecting the state’s budget with revenue being drawn from the state’s $1 billion budget surplus and the $1.2 billion taxpayer trust fund to make up the difference.

 

“So initially we can just cut taxes without a lot of revenue enhancements to begin with, but as you get closer to zero you’ll have to make some tough decisions,” Whitver said.

 

The Legislature will likely also take a look at licensing requirements for certain professions to make it easier for people to get into the workforce.

 

“If there are barriers to work, we want to make sure we’re trying to reduce those barriers,” said Whitver, the majority leader of the Senate, where Republicans control the chamber with a 31-19 margin over Democrats.

 

He said the Legislature will need to continue its work to move people from the welfare system to the workforce. Part of that will be building out programs through the Future Ready Iowa program, Whitver said.

 

He said he expects more work will be done on improving the state’s child care system.

 

Last year, the Legislature approved bills that worked to eliminate the child care cliff effect by increasing the income eligibility requirements for child care assistance and created a graduated phaseout for benefits as a family’s income rises. Lawmakers also increased the reimbursement rate for child care providers, and increased the number of children allowed in unlicensed home day care sites.

 

“We know [child care] is one of those barriers to the workforce, so anything we can do to make child care more affordable and more accessible, we’re going to be interested in that,” Whitver said.

 

Whitver also expects continued focus on broadband with further investment to expand high-speed internet statewide.

 

He said he also expects bills revolving around LGBTQ rights and tenure at the state’s universities to be brought up again this year, but acknowledged their future is uncertain.

 

“It’s hard to predict right now,” he said. “It’s too early to say where members go and where their passions lie. I just can’t make predictions on where some of those will go, so it’s hard for me to say what bills might gain traction this session.”

 

House Minority Leader Jennifer Konfrst, D-Windsor Heights

Konfrst said she hears from companies that are struggling to hire workers, and she hopes the Legislature can do more to boost paychecks, strengthen unions and lower costs for families.

 

“When it comes to the workforce, we need to address this in a broad and meaningful way,” she said. “Workforce challenges don’t just come out of the blue and they don’t just get fixed with one program. Iowa’s workforce needs exist because we have not been investing in the things that make Iowa an attractive place to live, and we need to do more of that.”

 

She said more investment in child care is needed. 

 

“We’ve addressed the cliff effect to some extent, but we haven’t done enough to address wages for child care workers,” she said. “We’ve not done enough to address access in rural areas and we’ve not done enough to incentivize organizations … to create more child care. We’ve made it better. We haven’t fixed it. We still need to do more.”

 

Konfrst, the minority leader in the House, where Republicans control the chamber by a 60-40 edge over Democrats, also said the state needs to invest more in public schools.

 

“People choose to move to Iowa because of our public schools,” she said. “What we need to be doing with our public schools is paying attention to what our kids need in public schools. Making sure our public schools are funded in a way that allows all kids to learn the best they can. We need to make sure we’re funding our public schools in a way that helps Iowa’s workforce grow.”

 

Konfrst also said more needs to be done to make Iowa a welcoming state for all.

 

She said she believes bills that harm the state’s reputation will be introduced again this year.

 

“Just introducing these bills has a chilling effect, and as I talk to business leaders across the state, I tell them it’s the responsibility of all of us to call out things that are making it harder to get people to come to Iowa to work, live and grow,” Konfrst said.

 

On taxes, Konfrst said the Legislature needs to rewrite tax rules to make sure more is done to help working families so they are able to pay their bills.

 

Senate Minority Leader Zach Wahls, D-Coralville

Wahls said that when he talked to chamber leaders before the pandemic, workforce was their top concern.

 

“And obviously that has been an issue that has been exacerbated in the last year or two,” he said. “So I think our No. 1 priority is going to be a focus on expanding the path to good jobs.”

 

Wahls said he thinks that can be done with greater investment in programs that lead to better career and technical education and apprenticeships that can lead to good jobs in Iowa.

 

“But I think workforce challenges are part of a broader question of how do we attract and retain more talent into the state of Iowa,” he said. “It’s something we’ve been saying for years. We need more Iowans, younger Iowans and better-paid Iowans.”

 

Wahls said more focus needs to be placed on child care.

 

“There’s this huge gap between what the cost of child care is and what parents can afford to pay,” he said. “So I think we should be talking about increasing eligibility for child care assistance so more working parents and middle-class families can actually have child care they can afford and depend on. Then we need to increase what providers are paid so they can take care of kids who are on the child care assistance program.”

 

He said what was done in 2021 was “a step in the right direction.”

 

“But I think it clearly did not solve the problem,” Wahls said. “It was not commensurate with the challenge of what we’re dealing with.”

Wahls also said the Legislature should look at various forgivable student loan programs that could help attract workers in high-demand occupations, such as medicine, teaching and law enforcement.

 

 He also said that continued expansion of broadband in Iowa is important to attracting companies and people to Iowa, and that continued emphasis is needed on affordable housing.

 

“We’ve taken some steps in a positive direction there, and I would like to see us continue to move in those right directions,” Wahls said.

 

In 2021, the Legislature increased the Workforce Housing Tax Credit to provide incentives to developers to build homes and increase the housing stock for working professionals. Lawmakers also increased investment in the Housing Trust Fund for affordable housing opportunities across the state.

 

Rep. Brian Lohse, R-Bondurant

Lohse said while workforce will be a major priority for lawmakers in 2022, dealing with the budget surpluses and excess revenue the state is taking in is also at the top of the agenda.

 

He said a key focus for him will be moving people off of unemployment and into the workforce. He is considering introducing a bill that would create an “off-ramp” where someone taking a job that pays less than they receive in unemployment benefits would receive the difference in unemployment for the duration of the benefit that was being paid.

 

Another priority is attracting people to come to Iowa and take jobs here, Lohse said.

 

He said one way to do that would be lowering or eliminating the individual tax rate.

 

Another possible solution is to give a state income tax abatement to people who move to Iowa to take a job, said Lohse, who introduced bills proposing the credit each of the past two years.

 

“Whether or not we eliminate the income tax entirely or give workers a tax abatement like we often do businesses, we have to find creative ways to bring people to Iowa,” he said.

 

Lohse said he doesn’t believe there will be an appetite to eliminate the individual income tax all at once.

 

“We need to ramp it down so that we can ensure we’re replacing that revenue appropriately,” he said.

 

Lohse said that there will likely be some discussion on lowering the state’s corporate tax rate, but that the primary focus will be on lowering the income tax rate.

 

“We can attract all the business we want, but we need more people here in order to give them people to hire,” he said. 

 

Lohse said he believes there will be greater momentum this session to approve incentives for people to move to Iowa because of the ongoing labor shortage.

 

“I’m hoping it gets more attention this year because we desperately need to attract more people to the state,” he said.

 

Lohse said he’s open to more discussion about expanding investment into broadband as another workforce development tool. He’s also willing to listen to discussions on further action on child care, but isn’t convinced more action is needed this session.

 

“We did so many different things on child care last year that we probably need to let those marinate a little bit to see what impact they have … and see what we need to do in 2023 to see if it’s had the desired effect. And if not, then we need to make additional efforts there,” he said.