(Radio Iowa) – This is the second year Governor Kim Reynolds has proposed cutting the tax businesses pay to cover unemployment benefits when people get laid off from their jobs — and Reynolds says it’s a top priority for lawmakers to pass before the 2025 legislative session concludes this spring. “It’s a billion dollar tax savings, tax cut to our employers over five years,” Reynolds said. “That matters. It makes a difference.” Reynolds says Iowa’s Unemployment Trust Fund has too much money in it. “Quite frankly, we’re over-collecting,” Reynolds said. “We’re sitting on nearly $2 billion.” Iowa’s unemployment tax is 12th highest in the country. The governor’s plan would lower the top unemployment tax rate and reduce the taxable wage base by half. Last year, some business groups expressed concerns that if there’s an economic downturn, the fund would not have enough money to pay unemployment benefits.

“And so I said I’m going to work with all of the groups that it would apply to,” Reynolds said, “and I got all of them on board,” Reynolds says this year’s bill includes a message to employers, suggesting what they should do with the tax break. “I’m asking them to put that back into their people,” Reynolds said, “you know, to really consider looking at wages and supporting the employees that make their companies great.”

Reynolds reviewed some of her top legislative priorities this (Thursday) morning during an interview with Radio Iowa and this was the first bill she mentioned. The Iowa Federation of Labor says the reason this business tax could be cut is because in 2022 Republican lawmakers reduced the number of weeks Iowans can receive unemployment benefits by over a third – from 26 to 16 weeks. Democrats say the state should be focused on helping Iowans who are losing jobs rather than on providing more tax breaks to businesses.