Iowa Gov. Kim Reynolds proposed enacting a 3.5% flat income tax in 2025, raising minimum salaries for teachers and overhauling special education services during her seventh Condition of the State Address on Tuesday evening.
But she started her speech talking about last week’s shooting at Perry High School that killed 11-year-old Ahmir Jolliff and wounded seven others. Reynolds said her prayers continue for the victims and their families.
She highlighted how Perry High School Principal Dan Marburger, who is still hospitalized with multiple gunshot wounds, risked his life to protect students.
“Dan is a hero, and we pray that he’s soon back where he belongs, with the students who are so lucky to have him,” she said.
Reynolds also thanked the law enforcement officers and others who responded to the shooting. She said they immediately entered the school.
“This is who Iowans are and what we do,” Reynolds said. “Whether in person or in spirit, Iowans showed up that day in Perry, and we’ll be there every day through their recovery.”
Reynolds then touted some of her past initiatives.
She said Iowa has reached a goal of having 70% of Iowans in the workforce obtain training or education beyond high school. Reynolds credits her Future Ready Iowa program, passed in 2018, with laying the foundation for Iowans to reach that goal.
“Everything we do in this building should follow that same pattern,” she said. “Set a bold vision, build the infrastructure and then turn it over to the people of Iowa to do what they do best.”
She also highlighted her push for state-funded scholarships for kids to go to private schools, which passed the legislature last year.
“By locking in educational freedom, we sent a powerful message: Where our children are concerned, no system, however long-standing, is above reform,” she said. “This session, we must be guided by that principle again.”
Reynolds said Iowa students with disabilities are being left behind. She proposed an overhaul of the state’s Area Education Agencies, which provide special education services, by opening them up to competition.
She said Iowa spends more than 50% above the national average to educate students with disabilities, but the results are below average.
In response, she wants to cut teacher training and media services from Iowa’s AEAs so that special education, starting at birth, would become their only focus.
School districts could continue to use the same AEA to support special education, but they could also opt out and use a different AEA, or work with a private company.
Reynolds said her goal is to improve, not cut, special education services.
“In fact, we are not reducing special education funding by one dime,” she said. “We are simply giving control of the funding to those who work directly with your child on a daily basis, and we’re taking special education off autopilot, where it has been stuck for far too long.”
Reynolds’ plan would also bring AEA administrators into the Iowa Department of Education, where she said there would be more accountability in a brand new division dedicated to special education. The governor’s staff said it’s possible some AEAs will consolidate if school districts opt out of their services.
Reynolds asked the Legislature to raise the minimum starting salary for teachers to $50,000, up from the current $33,500, and set a minimum salary of $62,000 salary for teachers with at least 12 years of experience. That would cost the state $96 million.
She also proposed a $10 million merit-based grant program to reward the highest-performing teachers.
“These investments will put Iowa in the top five states for starting pay and help recruit more of the best and brightest to join the teaching profession,” Reynolds said.
Reynolds also proposed more income tax cuts.
In 2018, the top rate was 8.98%. Under current law, Iowa’s income tax would drop to a flat 3.9% at the start of 2026.
Reynolds’ new plan would bring Iowa’s top income tax rate of 5.7% for 2024 down to 3.65%, retroactive to the beginning of this year. In 2025, that would drop to 3.5%.
“And there would be no waiting,” she said. “The cuts would start to show up in paychecks this year. So let’s not hesitate. Let’s stick to the approach we established in 2018 and allow Iowans to keep more of their money.”
The governor’s staff estimates this would save taxpayers, and cost the state, a total of $3.8 billion over five years.
She is proposing an $8.9 billion state budget, a 4.3% increase from the current year. That would be far below the state’s projected revenue, and her staff estimates there would still be a $970 million budget surplus with the proposed tax cuts.
“Let me be absolutely clear: the surplus does not mean that we aren’t spending enough,” Reynolds said. “It means we’re still taking too much of Iowans’ hard-earned money.”
Reynolds proposed reducing unemployment insurance taxes, which her staff said would save employers $800 million over five years.
Reynolds also highlighted the “fetal heartbeat” abortion law — that remains held up in court and would ban most abortions as early as six weeks of pregnancy — passed by Republicans last summer.
“To continue building a robust culture of life, we must also do everything in our power to ensure new moms and their families — especially those who are struggling — have what they need to make ends meet,” she said.
Reynolds proposed expanding Medicaid health insurance coverage for new moms from the current 60 days post-birth to 12 months for people who make less than $42,000 per year.
She is also renewing her proposals for allowing Iowans to get birth control from a pharmacist without first seeing a doctor and four weeks of paid parental leave for state workers.
Reynolds is also proposing slashing the number of state boards and commissions by 43% and eliminating the requirement that boards have an equal number of men and women.
Top lawmakers react to Reynolds’ speech
Republican leaders praised Reynolds for laying out what they called a bold agenda.
Senate Majority Leader Jack Whitver, R-Grimes, said he was not sure if Senate Republicans would work off of Reynolds’ income tax cut bill, or if they would move their own bill forward. The Senate GOP has previously advanced a bill to eliminate the income tax.
“We want to go as low as we can,” Whitver said. “We want to do it responsibly, though. And so that’s where it’s just a math problem as far as what it looks like in the out years.”
House Minority Leader Jennifer Konfrst, D-Windsor Heights, said the governor’s tax plan does not help the lowest-income Iowans who don’t pay income taxes.
“It’s not good news for the 500,000 Iowans who don’t receive any benefits from this plan,” she said.
House Speaker Pat Grassley, R-New Hartford, said he liked Reynolds’ tax cut proposal and said it sounds “very reasonable.”
He also said the state needs to do better for special education students, and Reynolds is trying to streamline the Area Education Agencies, not eliminate them.
“But as we dig into the details of it, I think we need to be mindful that we need to be able to continue to provide those services in rural Iowa,” Grassley said. “But I also don’t want to shortchange and say that rural Iowans can’t be creative and can’t be collaborative in their efforts as well.”
Senate Minority Leader Pam Jochum, D-Dubuque, said she is concerned that Reynolds is making an effort to privatize AEA services and that changes will affect rural areas the most.
“We need to see the actual bills, whether it is on tax policy, whether it is on AEAs, whether it is on raising teacher salaries, the devil is in the details,” she said.
Republican leaders also said they’re interested in raising teacher pay, but they didn’t commit to following Reynolds’ plan. Democrats said they support raising teacher pay, but think other educational professionals should also get a raise.
This story was updated Tuesday, Jan. 9 at 9:26 p.m.
