As the 2021 legislative session gaveled out this week, among the list of accomplishments being touted by lawmakers were several measures that could directly affect Iowa’s business community.

We wanted to review this year’s session, and look at some of those wins.

Lawmakers approved bills that would allocate $100 million a year for the next three years to expand high-speed internet to underserved areas of the state.

They also approved bills that aim to eliminate the child care cliff effect by increasing the income eligibility requirements for child care assistance and creating a graduated phase-out for benefits as a family’s income rises up to 275% of the federal poverty level. They doubled the income eligibility level for child care tax credits from $45,000 to $90,000, and increased the reimbursement rates for child care providers to 50% of 2020 market rates, an improvement from a several-years-old reimbursement model. A bill also passed that increases the number of children allowed in unlicensed home day cares from five to six.

In other areas, the Legislature increased the Workforce Housing Tax Credit from $25 million to $40 million in the next fiscal year, with $12 million earmarked for rural communities. The program provides incentives to developers to build homes in the $200,000 to $285,000 range to increase housing stock for working professionals. The Legislature also increased investment in the housing trust fund from $3 million to $7 million for affordable housing opportunities across the state.

The Legislature also approved a large tax reform bill as the session wound down that reduced income taxes, eliminated the inheritance tax and moved funding for mental health services from county property taxes to the state.

Lawmakers also voted to put more money back in the pockets of those engaged in the fight against food insecurity.

To measure reaction to this year’s session, we spoke with several members of statewide and regional business groups and nonprofits, who said some of the legislation passed this year could help attract more people to Iowa and build the state’s workforce.

We talked to Joe Murphy, the executive director of the Iowa Business Council; Andrea Woodard, senior vice president of government relations and public policy at the Greater Des Moines Partnership; Dustin Miller, executive director of the Iowa Chamber Alliance; Dave Stone, advocacy officer at United Way of Central Iowa and J.D. Davis, vice president of public policy for the Iowa Association of Business and Industry, to get their takeaways from the 2021 session.

Unanimously, they listed bills that addressed the state’s child care challenges and the expansion of high-speed internet as among the biggest wins at the Statehouse this year.

“Those were the ones that we will be talking about in the coming weeks … that we feel were very good for the business community,” Woodard said.

Here’s more about what Woodard and the others had had to say on those and other issues coming out of the 2021 session.

CHILD CARE
Murphy: “Child care is a huge win for working families and for general workforce development as well. Having the expansion of child care tax credits, increasing that ceiling from $45,000 to $90,000 brings a whole other sector of working families into eligibility for that program. … And having the child care cliff effect being passed the last couple of days of the session is hugely significant as well. To have that issue figured out is really important as we move forward and try to bring more people into the workforce that are already in Iowa. That will be a really important tool for us in the future.”

Stone: “Child care is one of those key barriers to families succeeding. Iowa is tied for first in the nation in the number of parents or guardians working. In Iowa 75% of parents or guardians are working. This is one of those situations where it’s a Catch-22. Do I go to work and work a full-time job that may not pay well where my salary basically goes to pay for child care, or do I stay home and not work to take care of the kids? Just being able to get every available worker available to work, child care is one of those silver bullet situations that helps in that situation.”

Davis: “That’s key in the business community because you literally have people turning down advancement opportunities in their career so they can keep child care subsidies. That’s the wrong signal. You want people to continue how to figure out how to create wealth and bring wealth home, so those changes … we think it will go a long way.”

Woodard: “There were a lot of bills that were filed and passed, in the House in particular, this year. It was great to see some of them end up in the final negotiations. A lot of those bills that were passed are a great starting point for down the road. We know that child care has been an issue and it’s only been exacerbated by the pandemic, and it will continue to be an issue, so we think it’s a good place to start come 2022.”

BROADBAND
Murphy: “To get that done with significant investment of $100 million for this first year is absolutely critical. It’s the way we communicate in business. It’s a way we receive health care and it's a way our students are educated. That is a significant win for the state of Iowa and set the tone for future growth and success in years ahead.”

Stone: “It’s a good step in the right direction to really start working on dead zones and access issues for our families because the pandemic has changed the nature of work, changed the nature of learning, and then the derecho highlighted really bad, aging infrastructure that needed to be addressed. Access to the internet has become an essential need. When we do rebuild, let’s not do that with dated technology. Let’s really future-proof and look for what’s out there and new models. A lot more needs to be done and it's going to be a decadeslong effort to get Iowa modernized. We are 45th in the nation in terms of broadband access.”

Davis: “We’re pleased with what was accomplished. We love the proportion of the high-speed internet versus penetration where it was not available so we think they got the balance right and the right incentives. As we look around, the incentives were correct and people are changing their business models to come here and build out high-speed internet. It’s a necessity for our businesses and our manufacturers.”

Miller: “Broadband was a huge victory for us. The [100 megabit per second upload and download speeds] was very important to us not necessarily for residential applications but for commercial applications so that small manufacturers in rural communities can thrive as if they were in larger, urban communities. They also did a telecommuter-forward certification. We’re really trying to create a buzz around communities that are set up to support telecommuting.”

HOUSING
Murphy: On the Workforce Housing Tax Credit: “The credit needed to be expanded so that developers will go and build homes in that $200,000 to $285,000 range so that people can have that workforce housing as opposed to these really huge homes that may be a half million dollars or more that a person just starting out or in their late 20s or early 30s, they’re not at a point where they could afford at this point or ever. This really tries to spur that development in all of Iowa’s communities in those targeted professional workforce areas.”

On the state’s Housing Trust Fund: “That program will be used throughout the state through various county trust funds to help low-income, affordable development opportunities throughout the state, so to have a more than double increase is a great step in the right direction for affordable housing needs throughout Iowa.”

MENTAL HEALTH FUNDING
Murphy:“We supported the mental health change because that state takeover will provide an additional $23 million above where we’re currently at in our state. It will go from $93 million to $116 million statewide the first year alone. Increased funding will yield increased access to mental health services, so that’s hugely important.”

Stone: “One that is really exciting is the mental health telehealth parity provision [which allows those services to be paid at 100%]. Making this permanent in law is huge for that rural access.”

Miller: "The largest group of property tax payers are residential and commercial and industrial, so any move has a big impact on our members, especially on the commercial side. Mental health funding is not typically something that is a business issue, but it’s something we’ve heard more and more and made it one of our priorities for this year.”  

SALES TAX EXEMPTION FOR FOOD BANKS AND FOOD PANTRIES
Stone:“They still pay sales taxes on things like office supplies or capital goods like refrigeration and trucks to deliver food. That all adds up … and is estimated to be about $190,000 a year. They have such huge buying power, so by reducing that collection of sales tax, that $190,000 a year, they could in turn purchase an additional million pounds of food every year to serve Iowans experiencing hunger. The impact of those funds could far outweigh any benefit to the state of collecting those taxes.”