2026 Government Relations Legislative Update – Week Seven

By: Matthew H. McKinney, R.G. Schwarm & Kelsey R. Schott

Capitol Update

With the first legislative funnel now behind them, lawmakers shifted their focus this week to floor debate, working to advance legislation out of their respective chambers.

Education funding legislation, SF 2201, returned to the Senate floor Monday for concurrence with the House amendment increasing the funding rate from 1.75% to 2%. The Senate approved the measure with a vote of 27-20. The Governor signed SF 2201 on Thursday, making it the first bill she signed into law during the 2026 legislative session.

Property tax reforms remain a central focus at the Capitol, with competing proposals from House Republicans, House Democrats, Senate Republicans, and the Governor still under consideration. The Senate held a subcommittee meeting on Thursday to discuss the Governor’s property tax proposal, SSB 3034, which includes a 2% revenue growth cap for local governments (plus new construction, with exceptions for debt service and school funding). Local government representatives spoke on the bill, in particular about the 2% cap as well as changes to Tax Increment Financing (TIF) dollars, including a sunset provision. Several speakers cautioned that the proposal could impact local economic development efforts. Senator Dawson, Chair of the Senate Ways and Means Committee, led the five-member subcommittee panel, and highlighted ongoing concerns about TIF that surfaced during last year’s deliberations. The same five-member panel will meet Tuesday, March 3rd to review the Senate Republican property tax proposal, SSB 3001.

In the House, lawmakers advanced HF 2511, which addresses statewide resilience planning. In response to recent natural disasters, particularly with major flooding, the bill directs the Iowa Flood Center to create a resilience plan in coordination with key agencies to identify important infrastructure and facilities by December 31, 2027. The resilience plan will be submitted to the Governor, General Assembly, and the Department of Public Safety. Reporting will be required every other year, beginning December 31, 2029, setting out improvements and revisions to the plan.

Meanwhile, the Senate passed SF 2417, which addresses the use of chatbots for conversational AI chatbots in Iowa. The bill establishes requirements intended to protect minors, enhance parental oversight tools, prevent exposure to explicit content, and create enforcement mechanisms through the Attorney General’s office. As AI technologies continue to evolve and expand across industries, regulatory frameworks such as this are expected to remain an ongoing topic of legislative discussion.