Henderson: Iowa Republicans have come to agreement on a signature tax cut bill.

And the legislative session is still in the month of February.

We examine the politics and the policy with a reporter's round table on this edition of Iowa press Voiceover: Funding for Iowa Press was provided by Friends, the Iowa PBS Foundation.

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Iowa Press has brought you political leaders and newsmakers from across Iowa and beyond.

Celebrating 50 years of broadcast excellence on statewide Iowa PBS, this is the Friday, February 25th edition of Iowa Press.

Here is Kay Henderson.

Henderson: It's been a newsy week at the Iowa capitol and really a sobering week on the world stage.

And we've assembled a group of reporters to open their notebooks and tell us about the stories they've written this past last week to sort of lend some light to what's going on.

Katarina Sostaric is joining us today.

She is the state government reporter for Iowa Public Radio.

Stephen Gruber-Miller is the Statehouse reporter for The Des Moines Register.

Erin Murphy is the Des Moines bureau chief for The Gazette in Cedar rapids.

And Dave Price is the political director at WHO-TV 13.

Is that how we say it in Des Moines?

Price: That'll work.

Henderson: Oh, okay, great.

Let's begin.

And maybe bring some of our viewers up to speed if they may have had other plans on Thursday night and they missed passage of a major tax bill.

Cleared the Senate first, and then it cleared the House.

Katarina, tell us a little bit about what that bill does.

Sostaric: Right.

The bill that passed was very similar to what the governor unveiled in her condition of the state address last month.

So, but rather than a 4% flat personal income tax, it's a 3.9% flat personal income tax.

That would be phased in by 2026.

This bill would eliminate all taxes on retirement income .Puts in some new tax breaks for retired farmers and people who work for and retire from employee owned companies.

And then there's also some corporate tax cuts in there, as well as some changes to some refundable corporate tax credits.

Henderson: Stephen, how did they put corporate tax cuts in there when it wasn't originally in the House plan?

And we heard Speaker Grassley tell reporters on the House floor...needs more work.

Gruber-Miller: Sure.

Yeah, there were three different kind of ideas about what to do with corporate taxes.

The governor wanted to cut to a flat rate of 5.5% from the current rate of 9.8.

And that's what they ended up doing.

So if corporate revenues exceed a certain threshold, the excess revenue will start ratcheting down that tax rate.

The House didn't wanna touch them, as you said, and unless there was conversation about tax credits for corporations.

And that's something the Senate was working on, too.

So what they're doing is they're reducing how much money corporations can get back from refundable tax credits.

That means if you have no tax liability and you claim a refundable credit, the government still cuts you a check.

So one of those credits, the research activities tax credit, paid out like $44 million last year to big companies.

So they're gonna cut in half the amount that companies can get from refundable tax credits.

Murphy: And as we talk, just to throw in here, what's notable not only about what's in the bill is what's not in the bill.

The Senate had proposed a sales tax shift and to use that to trigger funding for the natural resources and outdoors recreation fund.

House Republicans got a little queasy about that part.

Henderson: As did the governor on this show last week.

Murphy: That's correct.

And so that ultimately was not in the final version.

Although, we were told by Senator Dan Dawson that he's gonna continue to work on that issue for the rest of the session.

Henderson: So stay tuned on that.

So Erin sort of take us inside the House and the Senate on Thursday.

What were the partisans saying about this bill?

Murphy: Republicans were saying flat and fair.

Did anybody else around this table hear that once or twice over the last few weeks?

It eventually, as Katarina mentioned, it ratchets the tax system down to just one rate for everybody.

It's fair for everybody is what the Republicans argue.

Democrats said, hold on just a minute, it's not fair because you're giving a bigger tax break to the people at the top of the income scale, who will now see their income tax cut almost in half, versus the middle class who was already around that 4% anyways.

Or low income workers who were already around that 4%.

So they're not seeing much of a tax break.

So the Democrats don't consider it to be fair.

Price: And the Republicans will point out and will like to talk about this, that this ended up being bipartisan.

So you had two Democrats in the House, two in the Senate, all went for this.

So it's not a totally Republican bill here, but there's enough.

You know, they're gonna count this as bipartisan, even though you're only talking about a couple members in each chamber, Henderson: Stephen folks who read your story in the Des Moines Register learned a little bit about the backstory behind, maybe why this moved so quickly.

Gruber-Miller: Maybe.

well, so the governor has a big speech coming up next week.

She is giving the Republican response to president Biden's State of the Union address, which gives her a national stage on which to talk about Iowa's great achievements.

So here she has another achievement to talk about with this tax cut bill.

The House and Senate Republican leadership said, well, hold on, we were already working on this.

Like, we've been talking about it the whole time.

Nothing to see here with this timing.

But the Democrats were definitely saying, look, this is clearly advantageous to the governor.

It gives her something to talk about on the national stage.

Price: Nothing to see here, but yet the Senate and the House chose to do all of this in one day.

Gruber-Miller: One day.

Like, literally on a weekend during a snow storm.

Murphy: Yeah, we first saw the bill at about 11:30, and by 8:30 PM it was passed.

It just reminds us, as we often say covering the legislature, the legislative process moves slowly until they don't want it to, and then it can move as fast as they want.

Henderson: Dave, what do we expect the governor to say in this address on Tuesday evening?

Price: I think we know that this tax cut plan will come up, right?

Henderson: Shocker.

Price: Shocker.

That that will give her something to talk about.

And I think, I think she will stress some of those themes that she's been talking about, how the state's not locked down, it's open.

And it's interesting always to me, the way she talks about this.

This anti mandate, everything is open kind of thing, which is a reverse of what she supported early on during COVID, which she does not talk about.

And she did tell me a couple weeks back that that's one of those do over things she wishes she could do.

That they would not have shut down, like shut down schools, all those kind of things that she had supported early on during this, knowing what she knows now.

But this I because I wanted to make sure I had my stuff together on this.

I did look through all the governors here, and she is a, she's not quite a unicorn as my daughter would say, but she is rare in the sense that she is only one of three Republican women who are governors right now.

You have one in Alabama, who's pushing 80.

You have one in South Dakota.

And if you just Google her, you will find out why she maybe isn't the rising star that she once was.

And then you have Kim Reynolds, which makes her probably a pretty obvious fit for Republicans to give that sort of rebuttal to the president's State of the Union.

Henderson: Okay.

Jump ball question here.

What does being on this stage, giving this speech, do for her politically?

Gruber-Miller: Money.

She can raise a ton of money off of this.

That's the first thing.

Even if there's no other benefit to her, it gets her in front of a national audience who might say, hey, I like what I'm hearing.

I might give some money for her reelection race this year.

Beyond that, it puts her deeper into a conversation about some national office, perhaps, in 2024.

It's an E...I wouldn't say easy, but it's an opportunity for her to put herself out there for that while she can still credibly say like, listen, I'm not necessarily pursuing that, but I'm just kind of seeing what I hear, what I hear back from the response to this.

Murphy: And we have some recent tangible evidence on this from right here in Iowa.

In 2015, U.S.

Senator Joni Ernst gave this same response to the State of the Union.

And within a short time after that, we were hearing that she was on the short list of possible vice presidential candidates.

Henderson: Dave.

Price: And told Donald Trump she didn't wanna be vice president later on in that.

And the whole thing is fascinating to me in that Reynolds has never really, in conversations with her, seem to express any interest in working DC, working in DC.

And she's talked about how she wants to live here.

But she has very much to me been an example here of how we always hear all politics is local, but how all of this politics is nationalized now.

And, and we can point out several of the issues that Republican legislators are working on this session with banning books, those kind of things, opening schools, whatever, tax cuts.

But she very much focuses on how bad Joe Biden is during a lot of her speeches rather than, oh yeah, I'm gonna have a Democratic opponent in my reelection race.

Gruber-Miller: Part of that is because I think she doesn't feel very challenged in her reelection race.

Yeah.

So she can run against Joe Biden, basically, who is extremely unpopular in Iowa, the polling is showing.

Henderson: Katarina, you mentioned the governor's speech on January 11th, when she laid out her agenda for legislators.

One of her top agenda points, which she's making a second try with is the students first scholarship.

What is the status of that in the legislature?

Sostaric: Right.

So those would be scholarships for up to 10,000 kids to go to private schools and that would be state funded.

The status of that is kind of, it seems like it's kind of hanging in the balance right now.

Senate Republicans advanced that ahead of a key deadline recently.

The House Speaker while the House Republicans never held a vote on it, the House Speaker used his power to kind of save it at the last minute from falling to that deadline.

And it seems like there's still some negotiations going on, where whatever passes might not be exactly what the governor proposed in terms of that, but it seems like it still has some kind of chance of passing.

Murphy: And, part of the reason this has been a harder lift is unlike other private school tuition assistance programs that are just kind of a separate pot of money, this literally does take money that's dedicated to the public school in that area and shift it to go with the student.

And you have concerns, especially in rural school districts, about what that could do to their funding if a number of students from that district were to take this, take that money with them, and then leave that district with that much less funds to try to operate with.

And in the House Republican caucus in particular, that's where this has run into resistance because of that.

Price: And even fundamentally, private school is not an option for a lot of these rural families, because there isn't one that's nearby.

If you somehow have the means to drive your kid 30 minutes each way, 45 minutes each way, to pull this off.

But don't you think that's one additional factor that some of these legislators have talked about that, even if fundamentally they believe in it, that tax dollars should help kids go to private school, it's not an option for a lot of kids depending on where they live.

Henderson: So, Stephen, I know what sources are telling me about this.

What are sources telling you about the prospects in the House?

Gruber-Miller: Yeah, I mean, the opposition to this seems to run pretty deep.

You mentioned that she, the governor had tried last year to do this similar program.

She's changed the bill now in an effort to get more support,.

But it's not really clear to me that that's gonna be successful.

Because the people, the Republican legislators in the House, who are opposed to what they say are vouchers for private schools, are just fundamentally opposed, right?

It's not necessarily...doesn't necessarily seem to be a question of, can I tweak this and get somebody on board?

A lot of the opposition appears to be like, they think it will hurt schools in their district, and they're concerned.

Now, that said, what Katrina said is correct.

They are negotiating.

They are trying to figure out some new language.

But I don't know whether or not that's going to be successful.

Henderson: So, last week as I was covering the legislature for Radio Iowa...my full-time gig.

Uh it seemed like almost every story I wrote was about some education bill that was percolating through the legislature.

Erin, what's a live round in terms of education policy, and what's just sort of trial balloon out there?

Murphy: Yeah.

There are a couple of big ones.

And I'll just pick one that came up more recently, which is this issue of books and educational curriculum that parents may have an objection to.

May feel that there's obscene material in them.

And what's interesting about this as a kind of a broader legislative from a legislative perspective, is you have different legislators taking different approaches at this.

Some are just calling for more transparency in what books and curriculum materials are in schools.

Some want to go a little farther by literally making it a crime Price: A lot farther.

New Speaker: Yeah.

A lot farther.

To literally make it a crime for teachers to distribute these materials in a class.

So it's gonna be interesting to see which approach ultimately wins out there.

And we see, especially in the Senate, a shift cuz they ran the governor's bill, which was more focused on just the transparency side.

But after that meeting, the legislators said, we need more teeth in that transparency aspect.

Gruber-Miller: Yeah.

And this issue of education, getting parents to know what's going on in schools.

This ties back to the governor's private school proposal as well.

One of her big campaign themes, and really the theme for a lot of Republicans this year, is going to be to say we opened schools, we got parent parents involved.

So the private school portion of that is about giving parents choice.

The transparency aspect of that.

It all ties together.

And so, you know, if it's too difficult of a lift to get consensus around private schools, it may be easier to get consensus around this transparency piece and then they can run on it this fall as well.

Henderson: The governor also unveiled some speedier ways, if you will, to become a classroom teacher.

Some apprenticeships.

Is that sort of in the mix of, if we're not gonna do students first, we do teachers?

Murphy: Yeah.

When, when I hear from educators on this, what I hear about those bills is those are great.

Those are helpful.

Thank you.

Do that.

That may help here and there.

But there's bigger problems to solving the teacher shortage, which is what these bills are getting to.

So it's kind of a nipping around the edges type of approach.

Henderson: House Republicans also passed a bill that would provide an extra $19 million to schools, not to hire teachers, but hire pretty much every other staff person in the room.

Stephen, what do you think the prospects are?

Gruber-Miller: Well, I think that last year House Republicans tried to do like a one time supplemental bill for education too.

And I, I don't think that ended up passing the Senate.

So it seems to be an approach that in the House they like to take, to give a little boost.

And the way they talked about it this year was that it was in response to some of the high inflation that we've seen.

That doesn't seem to be an approach that the Senate likes to take.

And in the negotiation over state supplemental aid for schools, we already saw the Senate come up a little bit from its initial proposal to match the House at that ultimate number of two and a half percent.

Price: And there doesn't seem to be this big commitment to funding education as a whole here.

So even though that would be, it seems like fundamentally, a way to kind of work into this, to just say, all right, here's a chunk of money to kind of get you through this year when we're gonna give you two and a half percent increase in funding when inflation is three times that.

There isn't this kind of big picture commitment that we're gonna throw a bunch of money and fix our schools.

Henderson: Katrina, shifting gears here, you and I covered a really interesting subcommittee hearing about policy regarding carbon pipelines that are being proposed in Iowa.

What did you hear?

Sostaric: There was some tension in the room.

There were several landowners there who were asking lawmakers for protection against the use of eminent domain to build these privately owned carbon pipelines.

And then you had some lobbyists for the pipelines in the room who were, you know, trying to give their side of the story saying, you can't change the rules on us now because we're already partway through this process.

And then you had some senators who were not happy to hear what the lobbyists had to say.

And you know, while the bill they were considering, which would've completely restricted the use of eminent domain for these pipelines, it didn't advance.

There's definitely lawmakers, more rank and file lawmakers I would say, in the legislature who have been expressing concerns about these pipelines.

And it really transcends party lines, too.

It's not necessarily a Republican or Democrat issue.

Price: Yeah.

And what are they going to do about it?

So Republicans, in killing this bill, we're working against some of their constituents back home, right?

So that's where, I mean, they have this rural support.

That's one of the reasons why they are where they are.

And so, Murphy: And against the idea of private property land rights, which is typically a Republican Price: Exactly.

So they're, you're going to allow a private company to come in and mandate terms with local property owners.