This article was published in the Telegraph Herald.
In addition to being honored by the CATO Institute, Governor Reynolds received the Tax Foundation’s Distinguished Service Award and was named a Public Official of the Year by Governing magazine.
Iowa Governor Kim Reynolds has once again been rated as the nation’s most fiscally conservative governor in the CATO Institute’s 2024 Fiscal Policy Report Card on America’s Governors. Chris Edwards, the Kilts Family Chair in Fiscal Studies at CATO, praised Governor Reynolds, stating that she “has been a lean budgeter and dedicated tax reformer since entering office in 2017.” Her fiscal record extends beyond responsible budgeting and tax reform; it includes state government reform and reducing regulatory burdens. Reynolds’ leadership demonstrates that fiscal conservatism is making Iowa’s economy more competitive and creating more opportunities.
Iowa’s success stands in stark contrast to the policies of neighboring Minnesota, where Governor Tim Walz received the lowest ranking on CATO’s index. Edwards pointed out that Walz’s 2023 biennial budget increased spending by 36% and raised multiple taxes, including business, payroll, vehicle, and individual income taxes. “His F grade is well-deserved,” Edwards remarked, noting that Walz and the DFL legislature spent an $18 billion surplus and implemented $10 billion in tax increases.
Despite Iowa’s achievements, the state is often overlooked, though that perception is beginning to shift. In addition to being honored by the CATO Institute, Governor Reynolds received the Tax Foundation’s Distinguished Service Award and was named a Public Official of the Year by Governing magazine. According to Iowa Senate Majority Leader Jack Whitver, “Governor Reynolds really lays out a very aggressive, bold, and conservative agenda.”
A cornerstone of Reynolds’ leadership is conservative budgeting, which has laid the foundation for historic tax reforms. Edwards noted that Iowa’s general fund spending has grown by just 2.3% annually since Reynolds took office. Once known for having some of the highest income tax rates in the nation—nearly 9% for individuals and 12% for corporations—Iowa has significantly reformed its tax system. Starting in January 2025, the state will implement a flat individual income tax of 3.8% and reduce its corporate tax rate to 7.1%, with plans to lower it further to a flat 5.5%. Iowa’s flat tax rate will be the sixth lowest in the country, and Reynolds has expressed her ultimate goal of eliminating the income tax entirely.
These tax reforms have been supported by responsible budgeting, resulting in a budget surplus and fully funded reserve accounts. Iowa’s Taxpayer Relief Fund has a balance of $3.7 billion.
In addition to tax reform, Reynolds has spearheaded efforts to streamline state government. As she put it, “Like any large organization, government is marked by bureaucracy’s natural tendency to grow. If that growth isn’t constantly checked and rechanneled toward its core function, it quickly takes on a life of its own.” In the first major government reform effort in nearly 40 years, Iowa reduced its 37 cabinet-level agencies down to 16 and consolidated various boards and commissions. Reynolds has also introduced regulatory reforms aimed at reducing the state’s regulatory burden.
Governor Reynolds’ leadership continues to showcase the success of conservative fiscal policies, making Iowa a model for effective governance.
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