June 03, 2020 at 10:14 AM
The Iowa Legislature returns to Des Moines today after a two and a half month pause. When legislators left Des Moines back on Monday, March 16th, due to the COVID-19 outbreak they were in beginning the second funnel week meaning that any policy bills that had not been approved by the relevant policy committee in both chambers were supposed to die for the year. Today, the Legislature will restart the second funnel week, albeit with a much smaller list of potential bills.
Legislation in the Time of COVID-19
New safety procedures will be in place as Legislators, lobbyists, staffers and press get back to work. Before entry, everyone except legislators will be required to undergo health screenings, and social distancing, and increased hygiene practices will also be required.
Once inside the Capitol, social distancing rules will be practiced. All committee meetings will be moved from their typical meeting rooms and instead be held in the actual House and Senate Chambers. Social distancing in the chambers will require legislators to proceed without their clerks, and other staff will have very limited access to the chambers. Media will be removed from the chamber floor and instead assigned to a place in each gallery above the chambers.
What Happens Next?
After the abbreviated funnel week this week, the Legislature will work the week of June 8th with the goal of passing any remaining policy bills, a fiscal year (FY) 2021 budget, and adjourning (sine die) for the year by the end of the week (June 12th or 13th).
Focus on the Budget
The pandemic has dramatically reduced revenues coming into the state. The Revenue Estimating Conference (REC) held a special meeting on Friday, May 29th to update their March estimates and give a summary to the Legislature and the Governor to provide guidance about how much revenue they can safely allocate in the FY 2021 budget.
Legislators can only spend 99% of estimated revenues, and the Legislature is bound by these new revenue estimates. The good news is Iowa has a healthy budget and strong reserves to help weather emergencies like this. The bad news is the REC acknowledged they will not have a strong fix on the actual impact until their October meeting, and there was a lot of discussion and disagreement about the FY21 and 22 estimates. The results of the REC meeting:
Fiscal Year 2020 (July 1, 2019-June 30, 2020):
- Current year revenues dropped $149.5 million, for a total of $7.9412 billion.
- This represents an increase over FY 2019 of $82.4 million (or 1%).
- The adopted FY20 budget didn_t spend all available revenues, so there will still be a healthy $400 million surplus at the end of FY20.
- Fiscal Year 2021 (July 1, 2020-June 30, 2021):
- Next year’s revenues dropped $360.1 million, for total of $7.8766 billion.
- This represents a decrease over FY 2020 of $64.6 million (-0.8%).
- This is the budget that the Legislature will need to address when they are in session the next two weeks.
- Keep in mind this reduction of $64.6 million does not include the roughly $100 million increase already approved for schools.
- Iowa has a healthy $800 million in reserves should a second wave of virus hit (the revenue estimates do not include a second wave of virus in calculations).
Gaming Receipts/Infrastructure Account Funds:
- Infrastructure funds (which are paid with money from gambling) are way down.
FY 2020 receipts were reduced by almost 25% ($72.9 million, for total $220.7 million available).
- FY 2021 receipts go up a bit in the next fiscal year (to $268.6 million), but that is still $25 million below the original March estimate of $293.6 million.
- These funds pay for things like trails, environmental and water quality programs, REAP, university and state building renovations, and other special one-time projects.
- Fiscal Year 2022 (July 1, 2021 through June 30, 2022):
They will look more closely at this in their October meeting, so they left projected growth at proven historical levels (4.1%).
The estimates will drop some because the growth will be factored off the revised FY 2021 estimates.
Other Noteworthy Data:
Current unemployment is 14.7% and retail sales dropped 16.4%There are no economic models they can use for pandemic, so they are doing their best guesswork.
Currently $2.2 billion in federal loans, PPP, and unemployment benefits have come into the state.
Another $2.6 billion came into the state in the form of direct stimulus checks to taxpayers.
Challenges in agricultural sector persist and were a problem before pandemic.
The Governor will release her revised budget very soon.
The state plans to use $1.25 billion in federal funding from the coronavirus relief fund (the bulk of the $2.2 billion mentioned above) by addressing some major issues. The Governor said the state is allocating $700 million toward relief efforts but will hold the balance of the $550 million while continuing to monitor the status of Iowa_s unemployment trust fund and any additional unforeseen COVID-19 related expenses. Of the $700 million, Reynolds said she has allocated it in the following way:
- $215 million to provide relief for Iowa businesses and families, including the small business relief program, housing assistance, workforce initiatives and Iowa_s food banks.
- 100 million is going toward relief for Iowa Farmers.
- $125 million is going toward relief for Iowa Communities. Gov. Reynolds said the state is launching an online payment portal for cities and counties applying for reimbursement of COVID-19 related expenses.
- $50 million is going toward relief for Iowa health care providers, including home and community-based providers, substance use providers, and mental health providers.
- $85 million is going toward expanding access to tele-work, tele-health and tele-learning. This includes broadband expansion and IT upgrades.
$125 million is allocated to the state for COVID-19 related expenses, like the cost of PPE and overtime pay for frontline workers.