Senate File 222 - Introduced SENATE FILE BY HOGG Passed Senate, Date Passed House, Date Vote: Ayes Nays Vote: Ayes Nays Approved A BILL FOR 1 An Act relating to the Iowa economic emergency fund and the cash 2 reserve fund by increasing the maximum balances of the funds 3 and authorizing a contingent appropriation. 4 BE IT ENACTED BY THE GENERAL ASSEMBLY OF THE STATE OF IOWA: 5 TLSB 2255SS 82 6 jp/es/88 PAG LIN 1 1 Section 1. Section 8.55, subsection 2, paragraph a, Code 1 2 2007, is amended to read as follows: 1 3 a. The maximum balance of the fund is the amount equal to 1 4two and one=halften percent of the adjusted revenue estimate 1 5 for the fiscal year. If the amount of moneys in the Iowa 1 6 economic emergency fund is equal to the maximum balance, 1 7 moneys in excess of this amount shall be transferred to the 1 8 general fund. 1 9 Sec. 2. Section 8.55, subsection 3, paragraph a, Code 1 10 2007, is amended to read as follows: 1 11 a. Except as provided in paragraphs "b", "bb", and "c", 1 12 the moneys in the Iowa economic emergency fund shall only be 1 13 used pursuant to an appropriation made by the general 1 14 assembly. An appropriation shall only be made for the fiscal 1 15 year in which the appropriation is made. The moneys shall 1 16 only be appropriated by the general assembly for emergency 1 17 expenditures. 1 18 Sec. 3. Section 8.55, subsection 3, Code 2007, is amended 1 19 by adding the following new paragraph: 1 20 NEW PARAGRAPH. bb. There is appropriated from the Iowa 1 21 economic emergency fund to the general fund of the state an 1 22 amount sufficient to reduce or prevent an overdraft on or 1 23 deficit in the general fund of the state for the fiscal year 1 24 in which the appropriation is made. The appropriation made in 1 25 this paragraph shall not exceed an amount equal to twenty 1 26 percent of the unobligated and unencumbered balance in the 1 27 fund on the date the appropriation is made and is contingent 1 28 upon all of the following having occurred: 1 29 (1) The governor projects that the appropriation is 1 30 necessary to preclude implementation of or to reduce the 1 31 amount of the uniform reductions in appropriations otherwise 1 32 required pursuant to section 8.31 to prevent an overdraft on 1 33 or deficit in the general fund of the state. 1 34 (2) The governor projects that without the appropriation, 1 35 the balance of the general fund of the state at the close of 2 1 the fiscal year will be negative. 2 2 (3) The general assembly is not in regular or 2 3 extraordinary session. 2 4 (4) The governor has issued an official proclamation and 2 5 has notified the co=chairpersons of the fiscal committee of 2 6 the legislative council and the legislative services agency 2 7 verifying the contingencies addressed in subparagraphs (1) 2 8 through (3) and outlining the reasons why the appropriation 2 9 authorized in this paragraph "bb" is necessary to prevent an 2 10 overdraft on or deficit in the general fund of the state. The 2 11 appropriation amount shall be identified in the proclamation. 2 12 The effective date of the appropriation is the date the 2 13 proclamation is published in the Iowa administrative bulletin. 2 14 Sec. 4. Section 8.56, subsection 4, paragraph b, Code 2 15 2007, is amended to read as follows: 2 16 b. In addition to the requirements of paragraph "a", an 2 17 appropriation shall not be made from the cash reserve fund 2 18 which would cause the fund's balance to be less thanthree and 2 19 three=fourthsfive percent of the adjusted revenue estimate 2 20 for the year for which the appropriation is made unless the 2 21 bill or joint resolution is approved by vote of at least 2 22 three=fifths of the members of both chambers of the general 2 23 assembly and is signed by the governor. 2 24 Sec. 5. Section 8.57, subsection 1, paragraph a, Code 2 25 2007, is amended to read as follows: 2 26 a. The "cash reserve goal percentage" for fiscal years 2 27 beginning on or after July 1,20042007, isseven and one=half2 28 ten percent of the adjusted revenue estimate. For each fiscal 2 29 year in which the appropriation of the surplus existing in the 2 30 general fund of the state at the conclusion of the prior 2 31 fiscal year pursuant to paragraph "b" was not sufficient for 2 32 the cash reserve fund to reach the cash reserve goal 2 33 percentage for the current fiscal year, there is appropriated 2 34 from the general fund of the state an amount to be determined 2 35 as follows: 3 1 (1) If the balance of the cash reserve fund in the current 3 2 fiscal year is not more thansix and one=halfnine percent of 3 3 the adjusted revenue estimate for the current fiscal year, the 3 4 amount of the appropriation under this lettered paragraph is 3 5 one percent of the adjusted revenue estimate for the current 3 6 fiscal year. 3 7 (2) If the balance of the cash reserve fund in the current 3 8 fiscal year is more thansix and one=halfnine percent but 3 9 less thanseven and one=halften percent of the adjusted 3 10 revenue estimate for that fiscal year, the amount of the 3 11 appropriation under this lettered paragraph is the amount 3 12 necessary for the cash reserve fund to reachseven and 3 13 one=halften percent of the adjusted revenue estimate for the 3 14 current fiscal year. 3 15 (3) The moneys appropriated under this lettered paragraph 3 16 shall be credited in equal and proportionate amounts in each 3 17 quarter of the current fiscal year. 3 18 EXPLANATION 3 19 This bill relates to the Iowa economic emergency fund and 3 20 the cash reserve fund by increasing the maximum balances of 3 21 the funds and authorizes a contingent appropriation. 3 22 Current law establishes the maximum balance of the Iowa 3 23 economic emergency fund under Code section 8.55 for a fiscal 3 24 year at 2.5 percent of the adjusted revenue estimate for the 3 25 fiscal year under the state general fund expenditure 3 26 limitation law. Under the expenditure limitation law, the 3 27 adjusted revenue estimate is calculated from the appropriate 3 28 estimate issued for a fiscal year by the revenue estimating 3 29 conference, and subtracting tax revenues and adding new 3 30 revenue. Current law establishes the maximum balance of the 3 31 cash reserve fund under Code section 8.56 for a fiscal year by 3 32 applying the cash reserve goal percentage under Code section 3 33 8.57 to the adjusted revenue estimate for the fiscal year. 3 34 Under current law, the cash reserve goal percentage is 7.5 3 35 percent. The bill changes the applicable percentages used to 4 1 establish the maximum balances for both funds to 10 percent. 4 2 The bill includes a conforming amendment to language for 4 3 the cash reserve fund in Code section 8.56 which prohibits an 4 4 appropriation from the fund which would cause the fund balance 4 5 to fall below a percentage equal to one half of the maximum 4 6 percentage. The bill increases that percentage from 3.75 to 5 4 7 percent. 4 8 The bill also amends the Iowa economic emergency fund 4 9 provisions to authorize a new contingent appropriation of up 4 10 to 20 percent of the available balance of the Iowa economic 4 11 emergency fund to the general fund of the state. An existing 4 12 contingent appropriation for a similar purpose may only be 4 13 made at the close of the fiscal year. The new appropriation 4 14 is contingent upon the following: the governor projecting 4 15 that the appropriation is necessary to preclude the governor 4 16 from ordering an across=the=board appropriation reduction in 4 17 accordance with Code section 8.31, the governor projecting 4 18 that without the appropriation the balance of the general fund 4 19 will be negative at the close of the fiscal year, the general 4 20 assembly is not in regular or extraordinary session, and the 4 21 governor verifies these contingencies in an official 4 22 proclamation which states the reasons why the appropriation is 4 23 necessary to prevent an overdraft on or deficit in the general 4 24 fund of the state. 4 25 The proclamation is required to identify the amount of the 4 26 appropriation and the appropriation takes effect on the date 4 27 the proclamation is published in the Iowa administrative 4 28 bulletin. 4 29 LSB 2255SS 82 4 30 jp:nh/es/88