Iowa House and Senate Republicans roll out competing state budget plans

DES MOINES — With Friday’s end-of-session target date approaching, both Iowa House and Senate Republicans released their 2026 state budget plans Monday — showing a relatively small gap in their bottom lines, but both dipping into reserves as lawmakers had expected.

The Republican-controlled Iowa Senate and Gov. Kim Reynolds released a compromise in tandem, projecting a spending amount of $9.417 billion, down from Reynolds’ previous proposal of $9.433 billion that she presented in January.

“We cut taxes to ensure Iowans could keep more of their hard-earned money, and we must maintain spending discipline to ensure it stays that way,” Reynolds said in a statement. “Iowa remains on a strong fiscally sustainable path, and we should continue our focus on putting taxpayers first.”

This proposal is an increase of $470 million, or about 5.25 percent, over this year’s spending level of $8.9 billion.

“A budget agreement with Governor Reynolds moves this legislative session one step closer to adjourning for the year,” Senate Majority Leader Jack Whitver, R-Grimes, said in a statement. “As we continue to work on important issues in the legislature and find agreement among legislators, this deal marks an important step forward. We look forward to more conversations with the House of Representatives on how we can pass a sustainable budget for the upcoming fiscal year.”

Across the rotunda, House Republicans that control the chamber are proposing a budget target of $9.453 billion — $36 million more than the Senate’s plan.

“Our caucus is committed to delivering a budget that follows responsible budget practices, while funding the priorities Iowans care most about,” House Speaker Pat Grassley, R-New Hartford, said in a statement. “Iowans expect to see their tax dollars used wisely to fund important services like nursing homes, paraprofessional pay, support for human trafficking victims, and more of that sort, and that’s what this House Republican caucus is fighting to deliver.”

The House proposal is an increase of $506 million, or about 5.65 percent, over this year’s spending level.

Both proposals require spending more money than the state is projected to take in this fiscal year, which ends June 30. In March, the three-member Iowa Revenue Estimating Conference projected the state will collect $8.5 billion in 2025, down from its initial estimate of $8.7 billion in December 2024. The dip is due to the lower 3.8 percent flat state income tax now in effect, according to projections from the state’s nonpartisan Revenue Estimating Conference.

When she released her initial budget proposal in January, Reynolds said she planned on drawing the remaining funds from the state’s general fund balance, the Taxpayer Relief Fund, Cash Reserve Fund and Economic Emergency Fund.

The expected revenue, along with an unspent balance of more than $2 billion in the general fund and a $2.1 billion excess in state reserve funds, give the state a spending allowance of roughly $10.8 billion, according to the governor’s office.

House Democrats argue the chamber’s budget proposal takes away from health care spending and from public education through the Education Savings Accounts used by families to pay tuition at private schools using public money.

“The Republican budget gives private school vouchers a 44 percent increase and cuts health care and food for Iowans. Their plan also gives another $1 billion tax break to corporations that lay off workers while Iowans are forced to pay higher property taxes,” Rep. Timi Brown-Powers, D-Waterloo, said in a statement. “Iowa Republicans have the wrong budget priorities, and plan to spend more than the state takes in, forcing the state to borrow money for ongoing expenses.”

How does each proposal allocate funds?

Health and Human Services funding makes up the largest chunk of both proposals. Both plans allocate roughly $2.47 billion, with the Senate’s plan allocating about $478,000 more than the House plan.

Both budgets also include a 2 percent increase in general state funding to K-12 schools, which was sent to Reynolds’ desk after passing through both chambers. Reynolds has yet to approve the funding.

Here’s how each proposal would allocate funding:

Senate:

House:

The proposals are slated to go through subcommittees and committees in both chambers this week.

The last scheduled day of the 2025 legislative session is Friday, but lawmakers often go into overtime. They are required to pass a state budget before they adjourn.

Tom Barton and Erin Murphy of The Gazette Des Moines Bureau contributed.