As Iowa Legislature nears adjournment, lawmakers approve budget, policy bills

Iowa lawmakers passed budget bills and a few remaining pieces of policy Tuesday as the Legislature aims to end its session within the next few days.

The 2025 legislative session was unofficially set to end May 2, the date when legislators stopped receiving most session per-diem payments. Though this deadline is meant to encourage lawmakers to wrap up their work, they typically do not adjourn before approving the budget for the upcoming year. The new fiscal year begins July 1.

Republican majorities in the House and Senate had specific disagreements about budget items that caused a delay in passing spending bills for the upcoming year earlier in May, but reached an agreement May 8. 

Another roadblock appeared in the form of a dispute over carbon sequestration pipelines. A dozen GOP senators said they would not vote in favor of budget bills if chamber leaders did not bring up House File 639, to limit the use of eminent domain in carbon pipeline projects. Following days of delays and a lengthy, contentious debate Monday night, the Iowa Senate finally sent the bill to the governor’s desk.

On Tuesday, both chambers met to pass agreed-upon spending measures, alongside some outstanding policy proposals. Here’s what to know:

Budget bills approved in both chambers

The House and Senate both passed several budget bills Tuesday, with some measures heading to the governor’s office:

Health and human services: The House approved House File 1049, one of the largest funding areas in the state’s budget at $2.469 billion.

Rep. Ann Meyer, R-Fort Dodge, said the bill is “fully funding Medicaid” based on March estimates for fiscal year 2026 costs, a net increase of $252.7 million from FY 2025, with a majority of the additional funding allocated in order to make up for the “expected Medicaid shortfall in FY 2026” according to the Legislative Services Agency report.

Rep. Adam Zabner, D-Iowa City, questioned whether the state budget proposal will provide enough funds to backfill potential federal cuts to Medicaid, as discussed in recent U.S. House committee meetings. Meyer reiterated the Legislature was “fully funding” Medicaid, and argued the congressional actions being considered will not result in a loss of health care coverage.

“When you talk about federal cuts to Medicaid, federal cuts to Medicaid are going to be fraud and abuse – those are not cuts to Medicaid health care,” Meyer said.

Zabner said he was concerned that the funding proposal will not provide adequate money to make up for shortfalls in federal funding for the public health coverage program.

“Let me be clear: if the federal government cuts funding for Medicaid, and we are not prepared, we will see the biggest loss of rural health care in the history of our state,” Zabner said. “Medicaid is a lifeline for so many Iowans. Nearly 40 percent of births in the state. Nearly 700,000 people in rural, urban, suburban Iowa rely on this program for crucial services. And I cannot support a bill that leaves us unprepared to ensure that Iowans continue to receive the care they need, whether or not the federal government does their job and provides funding for that care.”

The bill also increases Medicaid reimbursement rates for nursing facility providers through $20 million in rate rebasing, and provides $420,000 to increase reimbursements for maternal health care providers. The bill also includes an increase in the personal needs allowance for people in care facilities on Medicaid from $50 to $55 per month through a $331,000 allocation.

One of the most controversial components of the bill was a new restriction on Medicaid for transgender Iowans. The bill prohibits Medicaid coverage for sex reassignment surgeries, hormone therapy and other physical medical interventions related to an individual’s gender dysphoria diagnosis.

The language was changed from a previous version of the bill that opponents said could prevent transgender Iowans from receiving other medical care, like mental health care, if it is related to their gender dysphoria. While Meyer said the new version of the bill allows for behavioral health care, Democrats said the measure still prevents transgender Iowans from equal access to health care. 

Rep. Aime Wichtendahl, D-Hiawatha, the first transgender Iowan elected to the Statehouse, said “​​gender-affirming care is life saving care.” Wichtendahl said her decision to transition saved her life, as she was severely depressed and suicidal before transitioning.

“Gender-affirming care enabled me to live my best life,” Wichtendahl said. “I am still here today because of it, and I know – to the chagrin of many, they would probably wish otherwise. But I do not see any reason why this government should deny its citizens health care and deny them the ability to live their best lives.”

Meyer said transgender Iowans will continue to receive health coverage for gender dysphoria through behavioral health treatment.

“I’ve heard psychological issues surrounding what might happen if someone is denied this treatment,” Meyer said. “And I will say, if someone is in mental distress, if someone’s suicidal, the treatment for those issues is not surgery, it’s not hormone treatment, it’s behavioral health, which we fully commit to covering.”

Administration and regulation: House File 1044, the administration and regulation budget, provides $73.7 million from the general fund and $134.2 million from other funds for several statewide elected offices and agencies including the Iowa Department of Inspections, Appeals and Licensing (DIAL) and Department of Management.

Rep. Michael Bergan, R-Dorchester, said the bill primarily keeps status quo funding for state departments, with some changes including a $1.2 million increase for the Iowa Public Employees’ Retirement System to hire five new staff for administrative and investment work.

The measure also includes a $600,000 appropriation to the Iowa Insurance Division for work related to regulations and oversight of pharmacy benefit managers (PBMs), the entities negotiating prescription drug prices between pharmacies, health insurance providers and drug manufacturers. The Legislature sent a bill to the governor Monday to implement new regulations on certain PBM business practices.

Rep. Megan Srinivas, D-Des Moines, introduced an amendment to the House version of the bill that would have added tax credits for direct-care workers, saying the Republicans’ budget proposal does not include any funding to address workforce shortages and inadequate care at Iowa nursing homes.

Srinivas said a report from the Iowa Health Care Association that found 94% of Iowa nursing facilities said they faced difficulties because of staff shortages, and that half have said they have had to deny admission to Iowans seeking care because they do not have enough staff.

“This is not just about our nursing homes,” Srinivas said. “This is about elder care. It’s about rural health care access. It’s about plain human dignity. But we have an opportunity here to end that, to work towards improving our health care workforce, specifically for our nursing homes, by passing this amendment.”

The amendment was voted down, but Srinivas said she would support the bill because it included funding to help address “some critical shortages,” like PBM oversight. 

“I will be supporting this, although I do hope that we can move towards including nursing home issues as a part of this budget in the future,” Srinivas said.

The bill passed 60-31.

Transportation: The House sent the state’s transportation budget, Senate File 628, to the governor in a 87-4 vote. The bill appropriates $502.8 million to the Department of Transportation, primarily from the Road Use Tax Fund and Primary Road Fund.

The bill includes a $20 million appropriation to modernize the state’s vehicles record system, the computer system used for dealer plates and license renewals and $18.9 million for renovating the Waterloo maintenance garage. The bill also includes an increased $11.2 from the previous fiscal year for DOT inventory and equipment replacement, funding Rep. Jacob Bossman, R-Sioux City, said was needed as costs of equipment and replacements are rising.

Economic development: House lawmakers approved the state economic development budget, Senate File 645, which provides a decrease of $450,000 in general fund appropriations, but a net increase of $25,000 with money coming from other funds. The Senate approved the bill earlier Tuesday, which sends the measure to Reynolds.

The bill includes a $150,000 reduction for the World Food Prize and $150,000 reduction to the state tourism office compared to the current fiscal year. It also includes $1.25 million for the grocer reinvestment and local food processing fund, contingent on the enactment of the program proposed in House File 1032. The legislation, passed unanimously by the House but not yet taken up by the Senate, would allow new or existing grocery stores to apply for funding to expand capacity, upgrade or purchase equipment and cover professional costs.

The bill extends funding for the continuation of the Housing Renewal Pilot Program for three years, a program providing grants for the acquisition, rehabilitation and redevelopment of buildings, including blighted structures, throughout the state that was set to end this year.

Rep. Shannon Latham, R-Sheffield, said the pilot program funding, as well as providing $3 million for the Council of Governments (COGS), were highlights of the agreement reached with the Senate.

She said the housing renewal program “reduces risk for developers and lenders, plus it provides affordable housing for hard working families, as finished houses are sold for families under 120% of the median income.” COGS has partnered with Habitat for Humanity for some of the projects under taken as part of this program, Latham said.

“They’re especially helpful to local governments in rural areas by managing grants and projects, and that’s why we worked so hard to make sure that they were funded,” Latham said.

Rep. Elizabeth Wilson, D-Marion, introduced an amendment that would have provided more funding to several programs in the budget in addition to requiring the Iowa Economic Development Authority to work with Iowa businesses and communities to evaluate and identify state laws that have a negative impact on issues like workforce retention, population growth and new business recruitment.

The amendment was not adopted. Wilson said she appreciates the work Latham, other lawmakers and IEDA did on crafting the budget, but that “I think we have to do a lot of work to help them do their jobs even better so that we can grow our economy.”

Latham said she appreciated the bipartisan priorities met in the budget, but that the final bill reflected a practical spending target.

“There are certainly many worthy projects, but we all know that time and money is limited, so we must manage the budget,” Latham said.

Education: Legislation setting state appropriations for the Iowa Department of Education, public higher education and other divisions was sent to the governor’s desk Tuesday evening with concerns lingering about status-quo funding as costs keep rising. 

The education appropriations bill, Senate File 647, allocating more than $1.033 billion, contained $451.4 million in funding for the Department of Education, including a $8.5 million increase and $578.5 million for the state Board of Regents with a $5.5 million increase. The increase for the state education department is largely containing a $7.5 million bump in funding for the state’s community colleges — part of the agreement reached with House Republicans, who had originally asked for $8 million.

Amendments filed by House Democrats that would have bumped funding for the Iowa Workforce Grant and Incentive Program fund and vocational-technical tuition grants fund by $1 million and added $5 million for area education agencies failed to pass. 

The Iowa Senate sent the legislation to the House Monday night with a 34-14 vote, with Senate Democrats criticizing the funding proposed for K-12 and higher education. 

While Rep. Elinor Levin, D-Iowa City, acknowledged successes found in the bill, including increased funding for the Iowa Department for the Blind, Iowa PBS and the Teach Iowa scholarship program and $1 million in funding for the UI to research cancer rates in Iowa, she said there is still too much in the legislation that “disappoints.” 

Flat funding for statewide assessments, CTE programming, work-based learning, children’s mental health and more, as well as cuts to certain line items, in a year when inflation rose by as much as 5% creates problems, Levin said, and she believes the legislative body can do better. 

“In a year like this, status quo is a cut,” Levin said. 

Zabner said the status quo budget with regards to higher education will contribute to rising tuition in the future, impacting Iowa’s students and families. 

Rep. Austin Harris, floor manager of the bill, said he doesn’t believe allocating the same amount of funds from one year to the next qualifies as a cut. Pointing out the $12 million increase from the state to public universities allocated last year, Harris said tuition still rose, earning an additional $30 million for the institutions. 

Pieces of the bill Harris said he was proud of included the additional $7.5 million for community colleges, cancer research funding and an $8 million appropriation to the health care professional incentive program. 

“As we know in this building, you don’t get the budget you want, you get the budget you can get, and I think we have a pretty good budget,” Harris said. 

The legislation passed with a vote of 59-32. 

Judicial branch: Senate File 648 appropriates $221.83 million in funding for the state’s court system. The bill included a $1.27 million increase for judicial officer salaries, Sen. Julian Garrett, R-Indianola said, representing a 2.5% pay raise. Iowa Supreme Court Chief Justice Susan Christensen had said in her January Condition of the Judiciary address that despite the 5% increase to judicial pay granted in 2024, pay for justices and judges in the state remains behind national averages.

Sen. Matt Blake, D-Urbandale, said the 2.5% bump in judicial pay is not enough to turn the tide of the judicial shortages in the state system.

“We are struggling to find judges throughout the state,” Blake said. “… One recent opening for a judge only had two applicants. There’s literally people just raising their hand and saying, ‘I’ll do it,’ with no diversity, because of the problem that we’re having related to funding our judges.”

He also said the measure does not provide needed funding for court reporters, another field suffering a worker shortage in the courts system. While Blake said there were underfunded areas in the budget, he also said having an overall revenue deficit in the state “makes it hard for me to come up here and talk about all the needs (not) being met.”

Garrett said he understands the want to increase judicial pay by a larger rate.

“What I’ll tell you is we did the best we could with what we had,” Garrett said. “We would like to have done a little better. We did give the judges 2.5% increase. We gave a 5% increase last year. So you know, we’re doing what we can with what we had to work with.”

The House also sent the agriculture and natural resources appropriations bill, approved by the Senate Monday, to the governor.

House sends anti-DEI bill to governor’s desk

The Iowa House passed legislation barring state entities and community colleges from funding diversity, equity and inclusion offices or positions Tuesday, concurring with the Senate to remove private universities from the bill and send it to Gov. Kim Reynolds’s desk.

House File 856 would prohibit state agencies, authorities, cities, counties and community colleges from spending public or private dollars on opening or maintaining DEI offices, or on hiring or keeping DEI officers, with exceptions. The legislation originally passed out of the House in March, but it bounced back to the chamber from the Senate with an amendment. 

Democrats who spoke during debate on the bill said its amendment from the Senate, which strikes all mention of private universities and changes language in the definition of “diversity, equity and inclusion,” said it doesn’t make a bad bill good, but it does make it slightly better. 

Rep. Rob Johnson, D-Des Moines, said DEI is not just some buzzword, but the “heartbeat of innovation in this country.” He emphasized in his comments that lawmakers voting on this bill will have to own up to the fact that they are working against the ideas and ideals of diversity, equity and inclusion, rather than some strategy to influence people. 

“This isn’t about handouts. This is about access,” Johnson said. “This is about opening the door and making sure that nobody is holding it shut from the inside, especially with our institutions of higher learning.”

The legislation passed with a vote of 59-32. 

Senate sends Reynolds’ rural health care initiative to her desk

The Iowa Senate passed the governor’s rural health care proposal, House File 972, in a 41-4 vote.

The bill is Reynolds’ proposal to help alleviate health care workforce shortages and lack of access to care in rural areas of the state. The bill directs the state Iowa Department of Health and Human Services to work on acquiring $150 million in federal funding for the creation of a projected 115 new residency slots at Iowa teaching hospitals. 

It would also provide $10 million in new funding and consolidate Iowa’s current system of student loan repayment programs, opening the plan to people trained out-of-state who commit to practicing in high-demand areas of Iowa for five years.

Some Democrats questioned some components of the bill, like whether health care professions not listed in the bill – such as physical therapy – would still be covered by student loan repayment programs in the new system. Sen. Mike Klimesh, R-Spillville, said the legislation allows the Departments of Education and Health and Human Services to include other health care professions in the program if there is a shortage of workers in the field.

Sen. Cindy Winckler, D-Davenport, said she was concerned about the lack of definitions included in the bill, like what constitutes a “high demand” area or field. While Klimesh said these definitions would be included in administrative rules on the bill, Winckler said the bill “leaves a lot to the discretion of the department”  that should be defined in the measure.

“My concern is this is a concept, it is not a bill,” Winckler said.

Klimesh said the bill is a transition, moving from traditional programs to a more flexible system that allows the state “to adjust in real time to the needs that are presented to us to fill those positions in rural Iowa.”

The bill also includes provisions intended to help establish a “hub-and-spoke” funding model for rural health care systems modeled off of the Centers of Excellence Program, Iowa’s system of regional specialized health care providers for rural areas.

He said the bill will help “ensure that we are getting doctors, nurses – potentially physical therapists, anybody else – that we see a need for in those areas, and be flexible enough in this approach to ensure that we’re able to fill that with that.”

The legislation heads to the governor’s desk for final approval.

What is left?

The Senate and House Appropriations Committees must still pass the standing appropriations bill, the vehicle for funding for State Supplemental Aid that gives per-pupil funding for Iowa’s public K-12 schools as well as other remaining state spending obligations. The budget agreement has set a $4.837 billion allocation for that budget — with a majority going to SSA — though it may be amended to include other policy or spending measures. This bill includes the $14 million appropriation to fund increased pay for paraeducators and educational support staff.

In the compromise reached between Senate and House Republicans, this funding will come from the Sports Wagering Fund, a one-time pool of money that currently contains $40 million.

Brooklyn Draisley contributed to this report.