The Iowa Senate passed a bill on Wednesday addressing local construction contracts, with Republicans in support arguing it tackles concerns over favoring unions, while opponents argue it would restrict local entities from improving workforce safety through training mandates.

Originally, Senate File 603 mainly focused on eliminating the state's taxable wage credit and altering the definition of "taxable wages" in Iowa law. The bill stipulates that Iowa employers wouldn't need to pay unemployment insurance taxes on wages for out-of-state workers, provided their home state has a reciprocity agreement with Iowa.

The Legislative Services Agency projects that these changes will result in a $394,000 annual increase to the Unemployment Compensation Trust Fund due to the elimination of the taxable wage credit. Additionally, three full-time positions handling the credit, funded by federal resources, would be impacted.

An amendment added by the House on Tuesday introduced changes related to workforce training, particularly the Registered Apprenticeship Act. The amendment would prevent state agencies and local governments from mandating apprenticeship training requirements for contractors, except when legally required. Local entities, such as cities, counties, and school districts, would also be prohibited from imposing additional “restrictions, qualifications, or requirements” on contractors, subcontractors, developers, and apprentices.

Republicans supporting the bill explained the added provision aimed to address concerns regarding local governments, particularly Des Moines, considering requiring contracts for private projects funded with tax increment financing (TIF) dollars to include certain conditions. Rep. Bobby Kaufmann, R-Wilton, argued the bill prevents local entities from favoring certain groups, such as unions or apprenticeship organizations, in contract bids.

“Belonging to a union is a great thing,” Kaufmann said. “Guess what? They can still bid on these contracts. They just can’t have a local entity — the city of Des Moines — decide that they’re a licensing entity. They’re not. They can still bid on these contracts. They just can’t have a local city — the city of Des Moines — thinking they’re the Legislature.”

However, Democrats and some Republicans contended that the bill’s language could have broader implications. Sen. Charlie McClintock, R-Alburnett, introduced an amendment on Wednesday to remove the House's changes, criticizing House Republicans for not presenting it as an independent bill. He expressed concerns that the changes would burden cities and counties as they engage in contracting.

“I was a mayor before I came here, years and years ago — nobody was complaining about this,” McClintock said. “I’ve not been approached by anyone to do this. I don’t think any of my colleagues have been approached by anyone to do this. I don’t see any urgency here to do this right now today, before we’ve had an opportunity to review this and make sure there’s not an issue.”

McClintock’s amendment was voted down 15-32. While proponents of the bill maintained that the changes were intended to address specific issues in Des Moines, several Democrats argued that the legislation would have broader consequences on local governments' ability to enforce worker safety or efficiency measures.

Sen. Bill Dotzler, D-Waterloo, emphasized that the bill undermines efforts to "protect the public from people trying to do stuff on the cheap," particularly regarding local governments’ preferences for apprenticeship programs in public contracts. He argued that Republicans were framing the issue as one about unions, though it had wider implications for worker training.

“This isn’t about union apprenticeships, it’s about apprenticeships, whether they’re non-union or union,” Dotzler said. “Why are we rushing through a bill, as Sen. McClintock said, where we haven’t had a chance to vet it properly? I think it’s because you heard the word union in there, and you’re against it.”

Sen. Thomas Townsend, D-Dubuque, added that many local governments impose restrictions to ensure local workers are hired for these jobs, preventing out-of-state labor from taking over.

“Because a lot of these jobs, when you go totally with low bid, totally with all this other stuff, without any other type of protections in there — you drive past there, and there’s not hardly a license plate from Iowa on those jobs,” Townsend said. “So where is that money going? It’s not going into the state of Iowa. It’s going other places.”

Sen. Cindy Winckler, D-Davenport, warned that the bill could create conflicts for local governments seeking federal Community Development Block Grants, which come with wage requirements that the bill would prevent them from imposing.

Sen. Jason Schultz, R-Schleswig, floor manager for the bill, countered that the measure is designed to “defend the status quo,” not alter existing procedures as Democrats suggested. He pointed to Iowa's strong economy and low unemployment rate, asserting that all workers deserve a fair opportunity to bid for contracts.

“This is a vote to keep things the way they are,” Schultz said. “Iowa’s doing pretty well. Economy is growing, unemployment is lower than the national average, and all of Iowa’s workers deserve the opportunity to have their employers go out look to to bid for jobs and to compete on a level playing field.”

The bill now heads to the governor for final approval.

Originally reported by Robin Opsahl in Iowa Capital Dispatch.