Iowa House and Senate Republicans reach budget agreement
The rotunda in Iowa Capitol as seen May 8, 2025. (Photo by Robin Opsahl/Iowa Capital Dispatch)
Majority-party lawmakers in the Legislature have reached a budget agreement, House Republicans announced Thursday, signaling the 2025 legislative session is nearing an end.
In a news release, House and Senate Republicans released the spending figures from their budget agreement — a total of $9.425 billion in state appropriations for fiscal year 2026. The compromise is $28 million less than the House Republicans' initial budget target and $8 million more than Senate Republicans and Gov. Kim Reynolds' target released in April.
The road to reach an agreement included some public disputes between GOP legislative leaders and the governor over specific budget items. One of the major points of contention was $14 million in pay for paraeducators and other school staff that was first allocated in the 2024 law making changes to Iowa's Area Education Agencies.
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Rep. Gary Mohr, R-Bettendorf, the House Appropriations Chair, said the budget agreement will provide this funding for paraeducator pay, alongside some other House GOP funding priorities, through the Sports Wagering Fund. The state fund is where taxes on sports betting and internet fantasy sports are collected — which currently contains more than $40 million.
The one-time spending from this pool will go to these budget items for the fiscal year, Mohr said, with the expectation that spending on these programs will come from the state's general fund in future years when revenues increase.
The allocation from the Sports Wager Fund comes on top of commitments to draw from the state's reserves and Taxpayer Relief Fund already expected for the upcoming fiscal year, as the budget comes in above projected state revenues. The state's general fund is expected to collect $8.5 billion in FY 2026, according to the Iowa Revenue Estimating Conference in March, driven in part by cuts to the state income tax and federal financial uncertainty.
Mohr said he believes spending of these one-time funds will not put the state in a bad position heading into future years, as state revenue is expected to increase. The state's reserves — totaling more than $6 billion — were factored into the decision to make income tax cuts in 2024, he said.
'If you look back at the history of Iowa revenue, we expect over time, revenue will increase much faster than state spending,' Mohr said. 'So again, while we knew we were going to (need) to take dollars out of the savings accounts, we don't expect that to continue for five or 10 years. Yes, we knew it was going to be necessary for the first few years, but we expect state revenues will be sufficiently higher in the out years to offset, so we're not continually taking money out of the reserve savings.'
Reynolds released a statement Thursday supporting the budget agreement.
'As I've said for the last few weeks, my priority with the budget is maintaining fiscal discipline and putting Iowa taxpayers first,' the governor said. 'This agreement among all three parties does just that, and I want to thank Republican leadership in both the House and the Senate for coming together to keep Iowa on a strong and fiscally sustainable path.'
The House Appropriations Committee passed several spending bills Thursday afternoon that reflected the compromise reached between the chambers. The education appropriations bill, House Study Bill 337, included $7.5 million for community colleges, lower than the $8 million proposed by House Republicans but still 'about $7.5 million more than what the Senate initially wanted to do,' Rep. Austin Harris, R-Moulton, said.
GOP budget agreement gives increase to community colleges but not state universities
The House bills for the administration and regulation budget, House Study Bill 343, and for the agriculture and natural resources budget, House Study Bill 338, were also passed in the committee meeting. Democrats expressed frustration with the changes made through the compromise, saying they preferred House Republicans' initial spending proposal.
Rep. Sean Bagniewski, D-Des Moines, praised Rep. Norlin Mommsen, R-DeWitt, who ran the subcommittee for the agriculture and natural resources appropriations bill, for including and answering questions about Democrats' and advocates' wants and concerns during the budgeting process.
'This is certainly not what we would have put together as Democrats for this budget, but I just want to express my appreciation for the process that he laid out for this,' Bagniewski said.
There are still several appropriations bills left, including the standings bill that contains paraeducator pay, and the health and human services budget bill. Mohr told the committee he is expecting to have another committee meeting Monday, but House Republican staff confirmed they do not plan to meet Friday or over the weekend to wrap up session.
While House lawmakers will not be back until next week, senators are scheduled to hold floor debate Friday. On the tentative debate calendar are several budget bills.
Also on the schedule is House File 639 — the bill passed earlier this year by the House that combined several earlier measures aimed at the proposed Summit Carbon Solutions pipeline. It would raise requirements for pipeline operators, change the definition of a common carrier eligible for eminent domain, and add new requirements surrounding the Iowa Utilities Commission.
The measure was passed through the committee process in the Senate with Sen. Mike Bousselot, R-Ankeny, recommending a significant amendment, but it has not come to the floor. The Senate has not brought up legislation related to pipelines or eminent domain for debate in several previous sessions, though such measures have passed with bipartisan support in the House.
But this year, there's more pressure for the Senate to bring the bill up for debate. In a letter to Senate leadership, 12 GOP senators pledged to oppose any budget bills unless House File 639 is brought up for debate.
While the eminent domain legislation is on the calendar, this does not guarantee the bill will be brought up. However, without the support of the 12 Republican senators, the budget bills are unlikely able to pass. With 16 'no' votes from Democrats who are expected to oppose most Republican spending proposals, legislation will be unable to reach the needed 26 votes.
Sen. Kevin Alons, R-Salix, one of the letter's signers, told the Iowa Capital Dispatch it 'absolutely is still the intent' of the 12 GOP senators who signed the letter to vote against appropriations bills unless eminent domain legislation is brought up for debate, and that he thinks there's 'resolution to stick with it' within the group. He said he cannot confirm the pipeline bill will come up Friday when the chamber is scheduled for debate, but that 'if we retain enough support to stop the budget, then it needs to be brought up.'
'I am optimistic that there's a recognition that the issue needs to be addressed,' Alon said. 'And this is the bill in front of us. … I think it's going to come to a vote. It's just — I don't know if it's tomorrow, I don't know if it's next week. I don't know when that is for certain.'
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