Taking Iowa’s state income tax rate from sixth highest to sixth lowest in the nation and slashing red tape are ways Iowa is growing business in the state, Gov. Kim Reynolds told Iowa Association of Business & Industry (ABI) members on Wednesday, June 5.
“Taking Care of Business” is once again the theme of that group’s annual two-day convention, which runs through today at the RiverCenter in the heart of downtown Davenport.
Some 500 business leaders from across the state gathered in the Quad Cities this year to network and share ideas as well as to sample what the region has to offer.
Ms. Reynolds, clearly an ABI favorite, was exchanging handshakes and hugs in the Great Hall before heading to the podium. The audience for her speech often applauded as she shared a long list of pro-businesses reforms made during her tenure as governor.
Ms. Reynolds also lauded ABI members for their contributions in growing the state. “You’re in the trenches of our economy every day, facing challenges, seizing opportunities and building prosperity and opportunities across this great state,” the Republican leader said.
“Government is insulated from some of the market pressure that you deal with on a daily basis,” she added. That often results in bureaucratic bloat. “In business, you would never tolerate that and truly the government shouldn’t either.”
Iowa cuts the bloat
That’s why Ms. Reynolds said she has made it a top priority ”not only to resist that tendency but also to reverse it.” Among the ways the administration has done that, she said, is by eliminating a backlog of 5,400 unemployment cases in just the three months – a task expected to take well over a year – and consolidating professional licensing from 11 different agencies into one.
She also slashed 21 agencies from her cabinet for a savings of $215 million over four years. She highlighted legislation that realigned behavioral health services and consolidated 32 systems into seven regions to help Iowans “get the services they deserve and require.”
And Ms. Reynolds said Iowa has begun “putting guardrails in place” to keep rules and regulations in check. For example, in May she signed a law that would cut more than 100 Iowa state boards and commissions.
Leaders also eliminated 1,800 rules and approved a five-year sunset on the remaining ones unless they are reviewed and found necessary first.
“By making government more efficient and maintaining our conservative budget practices, we are creating opportunities for Iowa and for business and returning those savings to hard-working Iowans that they could put toward their home, they can put toward education, they can put toward retirement, and have a chance to achieve the American dream,” the governor said.
Income taxes slashed
One reform she’s especially proud of, Ms. Reynold said, is slashing taxes. “You know, when I took office our personal income tax rate was the sixth highest in the country at 8.98%,” she said.
Since 2018, Ms. Reynolds said she has signed five landmark tax reform bills. They include measures that created Iowa’s first-ever flat tax and eliminated taxes on inheritance and retirement income. “We cut property taxes and we still have work to do there,” she added. “And we reformed our corporate tax rate system.”
In addition this year, she said, lawmakers passed and she signed a law that “accelerated and lowered the flat tax so in January 2025, we’ll go to a 3.8% flat tax. We’ll go from the sixth highest in the nation to the sixth lowest.”
When you put all those tax cuts together, the governor said, Iowa taxpayers will save nearly $24 billion from 2020 to 2030. “So that’s money that’s going back into the economy,” she said.
She also celebrated progress on ABI priorities including: 5,000 publicly supported housing units currently under construction In Iowa, adding 25,000 child care spots since last year and boasting a record number of active apprenticeships.
In addition, the governor said, a bill she signed this year that will expand work-based learning to help grow the workforce.
Changes pay off
Those changes are paying off in a number of ways. For example, the governor said, Iowa increased the state’s real GDP for the third year in a row and added a record-setting 34,000 new business launches in 2023.
“Even in a difficult environment across the country our innovators and Iowans are still confident in us to start a new business,” she added. The data also shows that more people are moving to Iowa than out of it. “None of our surrounding states can make that claim,” Ms. Reynolds said.
She credited “strong partnerships” for that, including with Iowa businesses. “You are driving our economy,” Ms. Reynolds told ABI members. “You are the reason that we’re seeing success and we want you to be a partner.”
Thanks to that partnership and the efforts of the state and business leaders, the governor said, Iowa is ranked as the No. 1 state for fiscal responsibility and it boasts one of the lowest cost of living and highest rankings for low-income homeowners.
It’s also the No. 1 State to Retire In, “and I can’t say that enough,” Ms. Reynolds said. “We don’t have a beach and we have cold weather, take that my southern colleagues.”
She’s not ready to rest on her laurels, however, even though Iowa moved up from seventh to sixth in the nation for Best Overall State to Live, Work and Raise a Family last year.
“I’m very competitive, so I am hoping we can get into the top five next year,” she added.
