Iowans will pay a 3.8% flat income tax rate starting next year after Gov. Kim Reynolds signed a law Wednesday lowering the state’s rate and speeding up a series of cuts.

The law builds on a 2022 tax cut that was already set to take Iowa to a 3.9% flat income tax rate in 2026.

Iowa’s top income tax rate this year is 5.7%. Under the new law, all Iowans will pay a 3.8% income tax rate next year.

Reynolds, a Republican, signed Senate File 2442 Wednesday afternoon in the governor’s formal office in the Iowa State Capitol.

It’s the latest in a series of tax cuts Reynolds and Republican majorities in the Iowa Legislature have passed since 2018. Those cuts have brought Iowa from a top individual income tax rate of 8.98% to next year’s 3.8% flat rate, which will apply to Iowans across the board.

“Simply put, we’ve comprehensively transformed our tax code and dramatically increased our competitiveness within a few short years,” Reynolds said. “At the same time, conservative budgeting practices have kept us living within our means and allowed us to continue making historic investments in key priorities of Iowans.”

The latest changes to Iowa’s tax code are expected to reduce state revenues by more than $1 billion over the first three years, and more than $1.3 billion through fiscal year 2030.

Reynolds said when added together all the tax cuts she has signed into law as governor will save Iowa taxpayers $24 billion over a decade.

More: Iowa’s income tax rate is dropping to 3.8%. See how that stacks up against other states

Individual income taxes made up 46.8% of Iowa’s revenues in fiscal year 2023, the most recent year for which complete data is available.

The new law will give Iowa the sixth-lowest income tax rate in the country among states that impose an income tax. Nine states have no income tax for individuals.

Democrats have criticized the flat tax, saying most of the benefits go to the wealthiest Iowans.

There are also around half a million Iowans who do not receive any benefit because their income is low enough that they do not pay income taxes.

Instead, House Democrats this year proposed cutting the state’s sales tax by 1 cent, which they say would disproportionately benefit lower-income Iowans.

“As opposed to the legislation we’re considering, which will be a tax cut for about two-thirds of Iowans, this will be a tax cut for 100% of Iowans,” Rep. Sami Scheetz, D-Cedar Rapids, said April 19 during debate in the Iowa House. “And as so many people in this state know, the sales tax is the most regressive form of taxation. It hits the people in the state who need help the most, the hardest.”

More: What’s in Iowa’s $8.9 billion state budget for the coming year? We break it down:

Law taps Taxpayer Relief Fund to make up shortfall if state revenues fall below spending

If state revenues drop below state spending during a fiscal year, the law says 50% of the costs will be covered using the Taxpayer Relief Fund. The other half would come from the state’s ending balance.

That part of the law will be repealed on July 1, 2029.

The LSA analysis of the legislation says state revenues are not estimated to fall below the state’s spending levels through fiscal year 2029, meaning the relief fund would not need to be tapped.

The state ended the previous fiscal year with $2.74 billion in the Taxpayer Relief Fund. The amount is expected to rise to about $3.6 billion in July, when the fiscal year ends.

More: All-night marathon caps Iowa Legislature’s 2024 session. What’s changing: AEAs, your taxes

What else does the tax law do?

The law also allows county boards of supervisors to eliminate their county compensation boards, which review salaries for elected officials and recommend increases.

And it makes changes to a property tax law last year that limits how much city and property tax revenue can grow. The new law tweaks how much a community’s assessed property value can grow before the government must use a portion of its excess revenue to lower property taxes.

The legislation also repeals an 1848 law requiring Lee County, the only county in Iowa with two courthouses, to maintain courthouses in both Fort Madison and Keokuk.

Reynolds signs law authorizing tax credits for large projects

Reynolds on Wednesday also signed Senate File 574, which creates a new tax credit program for large manufacturing and research projects that cost at least $1 billion.

The new program, called the Major Economic Growth Attraction Program, applies to businesses “primarily engaged in advanced manufacturing, biosciences or research and development.” Data centers and retail businesses are not eligible for the tax credit.

Companies seeking the tax credit must demonstrate that their project will create jobs that pay benefits and meet a certain wage threshold.

The program allows the Iowa Economic Development Authority to authorize a tax credit for up to 5% of the cost of the businesses’ investment in the project. Companies cannot claim the credit until the project is in service and at least half of the jobs specified in the company’s contract have been created.

The tax credit can offset taxes paid by the company, and will be spread out over five years.

More: Kim Reynolds signs Iowa farmland law regulating foreign ownership. Here’s what it does:

The law also authorizes businesses to claim a withholding tax credit of up to 3% of gross wages paid to employees on the qualifying project.

And businesses can qualify for a sales tax refund on taxes paid on electricity, water, gas and sewer utilities, property or services performed by subcontractors. The Department of Revenue will pay the refund to the business over five years.

Reynolds signed a law in April strengthening disclosure requirements for foreign ownerships of Iowa farmland and stepping up penalties for owners that fail to comply.

Senate File 574 allows the tax credits to go to a foreign business as long as the business qualifies for the program and can establish that it is not associated with a foreign adversary and is not actively engaged in farming.

Stephen Gruber-Miller covers the Iowa Statehouse and politics for the Register. He can be reached by email at sgrubermil@registermedia.com or by phone at 515-284-8169. Follow him on Twitter at @sgrubermiller.

In these days of digital newspapers, I find The Budget delivers a comforting, hefty thump when it lands in my rural mailbox. The Budget, published since 1890 out of Sugarcreek, Ohio, brings 50 to 60 paper pages of news from every Anabaptist community in the world, including Amish, Mennonites, and Brethren.

It boasts “50,000 Readers each week in Plain Communities across the Americas.”  The “scribe” of every community reports the weather, the comings and goings, the births and deaths, and the illnesses and recoveries of their group — plus any other anecdotes that might resonate with these far-flung readers.

With the news comes inserts advertising everything from harmonicas to wellness centers where “brain scanning, rife scanning, and microscope blood analysis” is offered. Individual ads hawk the necessities of Amish life: horseshoes, hoop house covers, trampoline parts, and pain-relief supplements. And yet another section includes feature stories and national news — the opening of an Amish quilt show at the Smithsonian Institute, volunteer work drilling wells in Haiti, and lectures on the odyssey of some Mennonites who fled Prussia, where they were forbidden to own land, to settle in Russia, then eventually in Mexico.

The Anabaptist diaspora kicked off in 18^th century Europe and spread all over the world, but the majority of the communities settled in the United States. A quick glance at The Budget finds columns from Pennsylvania where the Amish first fled from persecution, to Alabama, to Kentucky, to Montana. Predominantly, the Amish, a sub-group of the larger Mennonite umbrella, left the Swiss/Alsace region of Europe to find the religious freedom to practice their beliefs that rejected infant baptism, military killing, and swearing oaths of allegiance to the state.

This week’s Budget column from Fredericksburg, Ohio began with a description of the eclipse:

Screech owl hooted. In the Speelman Bottom 18 deer came out to feed. The eclipse goggles were great. But our youngest one was worried the birds will become blind since they don’t have the convenience of these glasses. Our oldest Hershberger in church wondered if the hens will lay twice since it was expected they’ll go roost.

Then at the end of this column, another animal became a main character in a story about a benefit auction:

The auction seemed well-attended with some high-priced items, which is good. One of my uncles deemed it wise to check on buying a tall night-stand, there at the auction for his wife’s side of the bed, giving her a convenient spot to park her glasses and dentures, instead of on the floor. Recently, one morning they searched high and low around the bed for those teeth of hers. Bed cover shaken, nothing. In the living room underneath the recliner they were found then, all honor to the house pup … Teeth got thoroughly scrubbed!

But it was the wind that carried the theme of the rest of this week’s paper. A scribe in Albia, Iowa, thanked the previous owners of their farm for the plantings that block the fierce spring winds:

Andy and Millie, I don’t know if you read these or not, but we’ve often been thankful for the plants and trees you planted, now for our benefit. Also, the evergreen wind block on the north–that is a real blessing in good old IA! Smile.

In contrast, in Nashville, Arkansas, the scribe didn’t have such a good experience with the wind:

Later Mon. evening a thunderstorm from the south brought several gusts of wind. A neighbor was burning brush behind Grace Point Mennonite Church and the wind caused it to spread and put the building in danger. Our fire department responded to the call and soon had it under control.

Then wedged into the right-hand corner of the next page of The Budget: a story of a visit to the Schlabach’s former family home near the village of Jessberg in Hesse, Germany. The family had once occupied a house that now stored bagged fertilizer and garden supplies. Two hundred years before, the Schlabachs had left everything behind to set sail for the United States:

The Schlabach family had boarded the ship “James von Bremen” at the port city of Bremen on the Weser River on April 19, 1820. Due to “adverse winds and storm,” which prolonged the ocean crossing to three and a half months, it was not until the 15^th of August that the ship first touched shore at the harbor in New York.

In the end, it’s the columns of the scribes in international locations that most interest me. I followed the Waterford, Ireland community throughout the pandemic, intrigued by the lockdowns there, the quarantines, and the romance between a member of the community with a man in the U.S. I traced the travels of the prospective groom. He had to bring proof of vaccination from the United States, then isolate once he had arrived in Waterford before he could be married to his beloved.

I saw the war in Ukraine through the eyes of communities in Suceava, Romania who ran medical supplies through Moldova into their ravaged neighboring country. The Mennonites drove trucks toward Odesa, risking their lives, bombs and missiles dropping around them. A Feb. 14, 2024 entry again reported on this Mobile Medical Team:

And finally, the Christian Aid Ministries scribe in Jerusalem dramatized the tremendous fear that lives in the hearts of those in Gaza and Israel. On January 31, 2024, she wrote:

. . . Fifty miles from here, the conditions in Gaza continue to worsen. I hear it by the news and from bits and pieces of information from Palestinian friends who have family in Gaza. Daily, and especially at night, I hear the low rumble of fighter jets overhead. The sound is not terrifying, but it is a reminder that one more bomb will explode in Gaza.

On Feb. 21, 2024, the Jerusalem scribe wrote :

Then this week, the Jerusalem scribe continued:

WASHINGTON — Mayor Pro Tem Millie Youngquist can officially shorten her title, coming out of a special election Tuesday with 432 ballots in her favor. At 44.7%, she won the plurality of votes cast to choose Washington’s next mayor in a four-way race.

Reached for comments after unofficial election results were announced, Youngquist said she was, “Pleasantly surprised.“

“I’m pleased and flattered that the citizens of Washington have put their vote of confidence in me,“ she said. ”I’ve done a lot of hard working meeting people and knocking on doors and shaking hands, and talking to people, and hopefully that helped get some of the vote out.“

The longtime council member and Washington’s acting mayor for the last 14 months campaigned on a simple message: she’s practical. She’s patient. And she already knows how to do the job.

Those talking points proved more persuasive than those from skeptics, some of whom argue she’s not as assertive a leader as recently resigned Mayor Jaron Rosien, or blaming her for recent sewer and water rate hikes.

Runners-up in the race were council members Elaine Moore (171 votes,) and Ivan Rangel, (240 votes,) as well as challenger candidate Rob Meyer (130 votes.)

Special elections — which happen outside of regularly scheduled primaries and general elections, involving high-profile state or federal offices — are not known for generating much voter interest. With that in mind, a considerable number came to the polls April 30, totaling 978 ballots.

The number dwarfs the last citywide special election in 2017, which saw just 507 voters turn out for a public measure on hotel/motel taxes.

But it falls short of other off-season citywide elections in recent memory, like a contentious bond referendum in 2016, which brought 1,712 voters to the polls before it ultimately failed. And Washington’s last contested mayoral election, a two-way race between Jaron Rosien and Pete Schaefer in 2017, brought 1,308 ballots, considerably more than Tuesday night’s totals.

Even for a special election, the latest race happened on unusually short notice, and for the first time used a polling place at Dallmeyer Hall on the Washington County fairgrounds, rather than a retirement home closer to most residents’ doorsteps. Both factors may have suppressed turnout for demographics that rely on the convenience of a longer mail-in absentee window, or access to a ballot box within walking distance.

After winning what was effectively a re-election bid, Youngquist is poised to remain in the mayor’s chair once unofficial results are finalized by County Supervisors next week. That gives her a green light to direct council members toward her priorities, a list that includes infrastructure maintenance, communication with the public and enforcement of the city’s nuisance and property maintenance codes.

The mayor-elect previously said she thought of the race as a referendum on her own leadership over the last several months. Tuesday’s vote appeared to confirm Youngquist still has the public’s blessing to stay at the helm, at least from the plurality of Washington’s voters.

“For me, knowing that I’ve been duly elected by the citizens of Washington, would be like a vote of confidence,“ Youngquist said in an earlier interview with SEIU. ”I could move forward with my ideas. I always want to remain open for citizens, for them to come to me.“

On Tuesday night, the Mayor-Elect said she was excited to continue her role, and thanked opposing candidates for running.

“I look forward to working with Ivan and Elaine on city council, they have not lost their position on council and their voice, and they are passionate about Washington,” she said. “And I also thank Rob for putting himself out there as a candidate, and wish him the best.”

Comments: Kalen.McCain@southeastiowaunion.com