Capitol Notebook: Iowa Senate Republicans amend governor’s unemployment tax bill

Gov. Kim Reynolds’ proposal to lower the taxes that businesses pay into the state’s unemployment insurance fund is advancing in both chambers of the Iowa Legislature, but Senate Republicans have put their own spin on it.

Senate File 504 started as Reynolds’ proposal to reduce Iowa businesses’ unemployment insurance taxes by $1 billion over five years. But Senate Republicans early in the bill’s legislative life amended it to add a 10 percent surcharge for employers whose workers withdraw more than 25 percent from the unemployment trust fund than they contribute over a three-year period.

The provision comes from a separate unemployment bill introduced by Sen. Adrian Dickey, R-Packwood, that failed to advance before last week’s legislative funnel deadline.

SF 504 was approved Tuesday by a subcommittee and later by the Senate Ways and Means Committee, with Republican support only.

Democrats expressed concern with what might happen if the economy goes into a recession or any other event occurs in which the state’s unemployment fund would face a higher need — like it did during the peak of the COVID-19 pandemic.

Dickey, during the committee meeting, said even after the reduction, the fund would still be well-stocked for an economic emergency.

With its passage out of the Ways and Means Committee, the bill is now prepared for debate by the full Senate.

Anti-SLAPP legislation advances

A bill that would allow Iowans to request a rapid dismissal of a lawsuit on free speech grounds was unanimously advanced Tuesday by the Iowa House.

House File 427, dubbed an “anti-SLAPP bill,” is legislation that pushes back against strategic lawsuits against public participation.

A SLAPP lawsuit is intended to silence or intimidate critics. Instead of seeking a favorable outcome in court, the intention behind SLAPP suits is to create a chilling effect by draining another party’s financial resources by dragging a case out as long as possible.

The bill would give Iowans who face a lawsuit based on something they said in public debate or through expressing their free speech 60 days to ask a judge to dismiss the lawsuit.

Rep. Steve Holt, a Republican from Denison and the bill’s floor manager, highlighted a 2017 case where a former police officer sued the Carroll Times Herald newspaper after it reported that he had a sexual relationship with a 17-year-old. The judge ruled in favor of the newspaper, but the case took two years to litigate and the paper experienced significant financial burdens.

“A newspaper reporting the truth was sued by the individual who the truth was reported about, and even though the newspaper won the lawsuit, it cost him $100,000 and almost put him out of business,” Holt said. “The point of this is to protect freedom of expression, to protect First Amendment rights.

“This chamber has been anti-SLAPP before anti-SLAPP was cool. It appears that it's now cool in the Senate,” he said.

Thirty-five states have similar anti-SLAPP laws. Ohio became the 35th after it recently passed a bill.

Similar legislation has passed the Iowa House during the past two sessions but failed to gain traction in the Senate. Holt said he is optimistic about the bill’s chances across the rotunda this year.

Senate File 47, the companion bill, was advanced out of the Senate Judiciary Committee in February, making it eligible for floor debate.

Energy assistance expansion moves forward

Iowa House lawmakers unanimously advanced a bill out of subcommittee Tuesday that would raise the income threshold for the Low Income Home Energy Assistance Program, allowing more people to benefit from it.

LIHEAP is a federally funded program that assists low-income families with heating and cooling costs by providing financial assistance to cover portions of energy bills, including during crisis situations.

Currently, income-based eligibility requires a household to have gross income equal to or less than 200 percent of the federal poverty level, or equal to or less than 60 percent of the state median income.

House Study Bill 308 would expand LIHEAP eligibility for households with a gross income equal to or less than 250 percent of the federal poverty line, that reside in an electric utility service territory that increased the rate for furnishing electricity between July 1, 2023, and July 1, 2025, and that meet non-income-based requirements to participate in the program.

Democratic Rep. Lindsay James, a member of the Ways and Means subcommittee from Dubuque, said that city — the oldest in Iowa — has some of the oldest housing stock in the state.

“There are low-income residents who are entering into leases without realizing how expensive their energy costs will be,” James said. “They are now unable to afford their rent because the energy bill is so high, because the old housing stock is less efficient.”

Rural economic development program advances

An Iowa House Ways and Means subcommittee considered and advanced legislation that would create a tax credit for specific capital contributions made to certified rural business growth funds.

House Study Bill 274 would create an Iowa Rural Development Tax Credit Program to provide tax credits for cash investments in a rural business growth.

Alex Stepanek, representing Advantage Capital, a private equity and venture capital firm that invests in small businesses in rural areas across the country, said six states — Georgia, Missouri, Ohio, Oklahoma, Pennsylvania and Utah — have passed similar legislation and seen success in their programs.

“The goal here is, how you bring in more affordable and flexible financing to be complementary to the work that banks are doing and to get financing in the hands of the business so they can finish their project and continue to grow in rural Iowa,” Stepanek said.

The Iowa Bankers Association opposed the bill, arguing the legislation should also create a tax credit for banks that offer similar loans.

All three members of the committee — Reps. Derek Wulf of Hudson, Jane Bloomingdale of Northwood and Eric Gjerde of Cedar Rapids — signed on to advance the bill.

The Iowa House passed similar legislation in 2024, but it failed to make it through the Iowa Senate.

“The discussion that was spawned around this particular bill last year around finding ways to invest in our rural communities and try to keep them growing in Iowa were really great last year,” Wulf said. “We should continue down that path."

Gazette-Lee Des Moines Bureau