Gov. Kim Reynolds uncertain of plans for $1.3 billion in federal COVID-19 funds for Iowa

By Dave Dreeszen, Sioux City Journal

SIOUX CITY — Gov. Kim Reynolds has made it abundantly clear she’s not happy with the $1.9 trillion pandemic relief bill that passed the U.S. House on Saturday.

The measure, backed by President Joe Biden and passed exclusively with Democratic votes, spends too much, allocates dollars to non-COVID measures and “punishes” states like Iowa that keep businesses open, contributing to low unemployment and flush coffers, the Republican governor said.

But Reynolds acknowledges she hasn’t given much thought to how to best spend the $1.3 billion in state aid that Iowa would receive under the House-passed bill, which now goes to the Senate.

“Let’s see where we’re at … and see where we maybe need to add some supplemental funding and how it can be targeted in that approach,” Reynolds told the Sioux City Journal Editorial Board on Monday.

Pressed further by the board to identify one area where she would consider allocating the federal dollars, Reynolds mentioned small businesses affected by the pandemic-driven downturn.

“We still have small businesses that are hurting, people who have lost their jobs or lost their businesses and put their entire life savings into it,” she said.

Reynolds said her administration also may take a look into devoting federal dollars for mental health services and the state’s ongoing initiative to expand broadband coverage. The latter is one of her top legislative priorities this year. Iowa’s internet speeds rank 49th, behind only Alaska.


“I’ve said that is not where we want to be,” Reynolds said. “We need to catch up, we need to be bold and we need to do it.”

Reynolds said she is not looking to use the federal COVID funds to further cut state taxes. But in her budget proposal she delivered in January, Reynolds mentioned she did call on the Legislature to remove the “triggers” that were put into the 2018 tax reform law. That would allow a speedier completion of the largest tax cuts in state history. Under current law, the state would have to meet certain revenue goals to trigger the multiyear tax cuts.

Reynolds was one of 21 governors who issued a statement last week that objected to Biden’s COVID-19 relief package as biased against their states. Unlike the previous stimulus bill that allocates funding solely by population, the Democratic measure gives added weight to a state’s unemployed population.

In a tweet Monday, Reynolds said the Democrats’ package provides “bigger checks to states who chose aggressive shutdowns and mismanaged their state budget.

“We ended COVID in a good financial position,” Reynolds told the Journal Editorial Board. “You shouldn’t punish states that do that.”

Iowa’s unemployment rate is one of the nation’s lowest at 3.1 percent. Reynolds said she continues to hear from employers who are experiencing trouble filling open positions due to acute local labor shortage.

The Democratic bill, the American Rescue Plan Act of 2021, would provide the unemployed with an additional $400 in weekly jobless benefit, and extend the duration of benefits offered through temporary pandemic relief programs through Aug. 29, instead of March 14.

“We don’t want to be paying people to stay home when we actually have businesses needing employees,” Reynolds said.


By Dave Dreeszen, Sioux City Journal

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