Former President Herbert Hoover once pointed out that government behaves somewhat like a plant—it just keeps growing. Iowa’s Governor Kim Reynolds (R) echoed this sentiment, noting that bureaucracies naturally expand over time.
This observation has led Reynolds to prioritize government reform throughout her time in office. She believes that fiscal conservatism should go beyond just cutting taxes; it includes limiting government spending and downsizing its scope.
Fiscal policy has played a significant role in her agenda. “We’ve cut taxes. Iowans are saving over $24 billion over ten years,” she stated. The state has eliminated taxes on retirement income, and there’s no inheritance tax now. Starting January 2025, Iowans will enjoy a flat tax of 3.8%, contrasting sharply with the previous 8.98% from six years ago.
Iowa’s reforms have resulted in the elimination of progressive income taxes, along with a nearly 60% reduction in the highest tax rate.
These changes are based on straightforward budgeting practices that focus on controlling spending and enhancing government efficiency. As a result, the budget remains stable with surpluses, a fully funded taxpayer relief account boasting $3.6 billion, and considerable room for tax cuts.
During her state address, Reynolds unveiled the Iowa Doge Task Force, which is modeled after previous reform attempts. “Doge was doing Doge before it was cool,” she quipped.
Before launching this task force, Reynolds successfully passed two significant reform laws for state government.
“It’s been nearly 40 years since we conducted a comprehensive review of state operations,” she acknowledged. “Bureaucracy has ballooned over the decades, straying from its essential functions, which has hindered our effectiveness and service delivery to Iowans.”
Both reform initiatives aim to streamline government operations and improve service efficiency. “We’ve transformed how the state engages with citizens, businesses, and entrepreneurs,” Reynolds remarked. “We consolidated institutions from 37 to 16, removed 1,200 unnecessary regulations, and revamped outdated systems while incorporating technology.” These reforms have already saved taxpayers $217 million, surpassing initial estimates within just 18 months.
Iowa previously had 256 boards and committees, with 83 now gone and others merged. In spearheading this reform, Reynolds posed fundamental questions that all policymakers should consider at any level of government.
“What is each agency’s main mission? How is it funded? What assets do we control? Is the agency’s program effective? How does our structure compare with other states? Where are the inconsistencies? What can be trimmed?” These inquiries align with the principles of priority-based budgeting, as detailed in the ALEC State Budget Reform Toolkit.
Ultimately, Reynolds recognizes that sustainable tax reform requires conservative budgeting. “But just cutting taxes isn’t sufficient,” she explained. “You need to ensure that these cuts can last, especially if you want to maintain them. The resulting growth can help, but controlling spending is equally crucial.” This perspective seems to be a lesson still ungrasped by many states and the federal government.
As she approaches the 2026 legislative session, Reynolds has identified property tax reform as a top priority. Tackling property taxes is often daunting across the country. Yet, she is aware that local governments must also embrace fiscal conservatism and reform to alleviate property tax burdens.
At the heart of the collection goal, it’s essential to address spending through priority-based budgeting. Regardless of tax changes, it’s government spending that fuels high taxation.
