Iowa Legislative Network Bulletin

                                January 31, 2008

From the Desk of Lobbyist Craig Schoenfeld

Governor Chet Culver at the start of the session charted a 2008 legislative course that seeks to close corporate tax loopholes, expand the scope of Iowa’s container-deposit law, address workforce-related issues and invest more in infrastructure upgrades.

Culver touted the accomplishments he and the Democratic-led Legislature made during their first year in office, but warned a tight eye on spending will be required in 2008 to fulfill funding commitments and to address new challenges. The governor’s $6.4 billion spending plan calls for a $540 million boost in appropriations, but only about 3 percent of that total represents new funding initiatives. The other 6 percent in increases represents previous commitments to boost teacher pay, expand preschool and establish the Iowa Power Fund that require multi-year spending jumps.

House Minority Leader Christopher Rants criticized the governor for not focusing more aggressively on property tax reductions. A report last month by the Legislative Services Agency projects that Iowa residents will pay nearly $500 million over the next six years as a result of the increases in the taxable value of residential and agricultural property.

“We have a half a billion property tax increase on the horizon,” Rants said. “The governor knows it, the Democrats know it and we’ve heard not one Democrat stand up in two days and lay out any ideas on how to deal with it. … Instead, we’re hearing about $100 million in tax increases.”

In his condition of the state address to the Legislature, Governor Culver stated, ”So, for the benefit of working Iowans, I challenge you to try to find consensus, and to not be afraid to debate difficult issues, like, prevailing wage, independent contractor reform, choice of doctor, fair share, and the right to bargain matters like employee discipline and discharge.” These comments sent shivers down the spine of interest groups such as the National Federation of Independent Businesses. Here’s an excerpt from their legislative bulletin:

·          Prevailing Wages or state-mandated wages and benefits for public construction projects. This issue would increase the cost of public construction projects by 10% to 15% by requiring higher Davis-Bacon like standards for public projects.

·          Independent Contractor Reform– HF 2026 [see below for more information] … presumes all workers to be employees unless proven otherwise.

·          Choice of Doctor in workers’ compensation cases, meaning changing Iowa’s 90 year old law from employer choice of doctor to employee choice of doctor thereby increasing workers’ compensation insurance, according to the national Council on Compensation Insurance (NCCI) would increase premiums by at least 15%. Some NFIB members reported increases of 20% to 25% when asking their own insurance agents.

·          Fair share or gutting Iowa’s Right-to-Work Law gives every business in Iowa or considering Iowa a big reason not to expand or locate here.

·          Employee Discipline and Discharge – While Culver gave no specifics many NFIB members argue current law is too burdensome on these issues and I do not get the impression Culver was interested in reducing burdens to business with this phrase.

Tracking Proposed Legislation

HF 2026 – Introduced last week by House Democrats. Establishes civil and criminal penalties for employers who hire unauthorized aliens. Establishes provisions to prevent contractors from misclassifying employees as independent contractors. Contains provisions to help state agencies enforce these measures. Highlights of the legislation include:

·          Prohibits employers from employing illegal immigrants and subjects employers to a $10,000 fine for violation.

·          If eligibility was verified through the E-Verify system, the employer is not held liable. Repeated offenses by a corporate officer will be considered a serious misdemeanor.

·          The purpose of the new code section on independent contractors is to, “… address the practice of misclassifying employees and independent contractors.”

·          It required the Division of Labor Services, Division of Unemployment Services and the Department of Revenue and Finance to share information and work jointly to seek out violators of the new independent contractor standards. 

·          Iowa law would now presume a person working for a contractor is an employee unless two different conditions can be met: individual performs services free from control of the contractor, and sole proprietor or partnership performs services free from direction or control. The independent contractor must also comply with 13 additional criteria outlined in the bill.

·          It increases contractor registration fees from $25 to $100.

SSB 3042 - Contractor Registration Fee (Labor) increases the contractor registration fee to $50.