Iowans are starting to hear a lot of noise surrounding Amendment One. The amendment, which would require a two-thirds vote of the Iowa Legislature to increase income taxes, is on the ballot for the November 3 election. Some of the debate centers on what that higher threshold could mean for priorities such as education and health care. Fortunately, Iowa’s recent experience provides some answers. Even as lawmakers have repeatedly reduced income tax rates, state spending on both education and health care has continued to grow.
Since 2018, Iowa has been reducing income tax rates, with individual rates moving from 8.98% to 3.8% and corporate rates being cut from 12.0% to 7.1%. Over this time period, the state has increased spending on its largest priorities. That fact highlights something important that must be remembered during discussions about Amendment One: Making it more difficult to raise income taxes does not determine how much Iowa spends on education, health care, or any other program. Those remain choices for legislators to make each year. And Iowa’s elected officials have consistently chosen to prioritize education and health care.
Iowa’s General Fund budget for Fiscal Year 2027 totals approximately $9.6 billion. Of that amount, approximately $5.4 billion goes toward education, while another $2.7 billion supports programs administered by the Department of Health and Human Services (HHS). Together, those two areas account for roughly 84% of General Fund spending. Education and health care are not small programs competing at the margins of Iowa’s budget. They dominate it.
Education alone represents nearly 56% of the budget, including more than $4 billion for K-12 state aid. Since Iowa tax cuts began in 2018, state education spending has increased by an estimated $800 million. Perhaps the strongest evidence comes from where lawmakers directed new spending in the current budget. When examining the increase in General Fund appropriations for the year, approximately 90% of the new spending is going to education. In other words, Iowa has not had to choose between reducing income tax rates and investing in education.
Health and Human Services spending has also remained a major commitment. Medicaid, the largest component of that budget, is affected by numerous factors, including health-care costs, enrollment, federal matching rates, and changes in federal policy. Those factors can cause state appropriations to fluctuate from year to year, but HHS continues to consume more than one-quarter of Iowa’s General Fund.
The larger lesson is straightforward: Iowa’s budget reflects its priorities.
Amendment One would not establish a spending limit for education. It would not reduce Medicaid funding. It would not dictate how much Iowa spends on public safety, courts, corrections, or any other state responsibility. In fact, Amendment One does not set spending levels at all. It would only require a two-thirds vote in both chambers of the Iowa Legislature to increase individual or corporate income tax rates, or to create a new state tax based on income.
Legislators would still be required to pass a balanced budget every year. They would continue deciding how much money should go toward K-12 schools, higher education, Medicaid, public safety, and every other function of state government. What would change is the threshold lawmakers must meet before turning to higher income taxes to finance additional spending.
Government, like Iowa families and businesses, has a limited amount of financial resources. Policymakers must determine which responsibilities are most important and allocate available resources accordingly. That means setting priorities, finding efficiencies, slowing spending elsewhere, or making difficult choices among competing demands.
In the end, the debate over the amendment is also about two different philosophies of government. One side believes that government programs should have an almost unlimited claim on taxpayer dollars, and that anything short of a blank check means that programs are being underfunded. The contrasting viewpoint is that the legislature must prioritize their spending, and that it should, in fact, be difficult to increase income taxes.
Taxes and spending are two sides of the same fiscal equation. Over time, the amount government spends influences the amount of revenue government must collect. If lawmakers can easily increase taxes whenever spending desires exceed available revenue, there is less pressure to distinguish between what government would like to spend and what it truly needs to spend.
Making income tax increases more difficult changes that calculation. It encourages legislators to prioritize existing resources before asking taxpayers for more. It encourages greater scrutiny of new spending commitments. And it requires a broader consensus if lawmakers ultimately conclude that taking more from taxpayers is necessary.
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