HOUSE JOINT RESOLUTION 2006

BY  PAULSEN, UPMEYER, ALONS, ANDERSON, ARNOLD, BALTIMORE, BAUDLER, BRANDENBURG, BYRNES, CHAMBERS, COWNIE, DE BOEF, DEYOE, DOLECHECK, DRAKE, FORRISTALL, FRY, GARRETT, GRASSLEY, HAGENOW, HAGER, HANUSA, HEATON, HEIN, HELLAND, HORBACH, HUSEMAN, IVERSON, JORGENSEN, KAUFMANN, KLEIN, KOESTER, LOFGREN, LUKAN, MASSIE, L. MILLER, MOORE, S. OLSON, PAUSTIAN, PEARSON, PETTENGILL, RAECKER, RASMUSSEN, RAYHONS, ROGERS, SANDS, SCHULTE, SCHULTZ, SHAW, J. SMITH, SODERBERG, SWEENEY, J. TAYLOR, TJEPKES, VAN ENGELENHOVEN, VANDER LINDEN, WAGNER, WATTS, WINDSCHITL, and WORTHAN

HOUSE JOINT RESOLUTION

A Joint Resolution proposing amendments to the Constitution of the State of Iowa relating to state budgeting by creating a state general fund expenditure limitation, providing for a taxpayers relief fund, requiring authorization for certain bonds, and restricting certain state revenue changes.

BE IT RESOLVED BY THE GENERAL ASSEMBLY OF THE STATE OF IOWA:

    Section 1.  The following amendment to the Constitution of the State of Iowa is proposed:
   The Constitution of the State of Iowa is amended by adding the following new section to new Article XIII:
ARTICLE XIII.
EXPENDITURE LIMITATION.
   General fund expenditure limitation.  SECTION 1.
   1.  For the purposes of this section:
   a.  “Adjusted revenue estimate” means the most recent revenue estimate determined before January 1, or a later and lesser revenue estimate determined before adjournment of the regular session of the general assembly, for the general fund for the following fiscal year as determined by a revenue estimating conference which shall be established by the general assembly by law, adjusted by subtracting estimated refunds payable from that estimated revenue and adding any available surplus in accordance with subsection 6. However, if the general assembly holds an extraordinary session prior to the commencement of the fiscal year to which the revenue estimate applies and before or during the extraordinary session the revenue estimating conference determines a lesser revenue estimate, the lesser estimate shall be used for the adjusted revenue estimate.
   b.  “General fund” means the principal operating fund of the state which shall be established by the general assembly by law.
   c.  “New revenues” means moneys which are received by the state due to increased tax rates or fees or newly created taxes or fees over and above those moneys which are received due to state taxes or fees which are in effect as of January 1 following the most recent meeting of the state revenue estimating conference. “New revenues” also includes moneys received by the general fund due to new transfers over and above those moneys received by the general fund due to transfers which are in effect as of January 1 following the most recent meeting of the state revenue estimating conference. The state revenue estimating conference shall determine the eligibility of transfers to the general fund which are to be considered as new revenue in determining the state general fund expenditure limitation.
   d.  “Surplus” means the cumulative excess of revenues and other financing sources over expenditures and other financing uses for the general fund at the end of a fiscal year.
   2.  A state general fund expenditure limitation is created and calculated in subsection 3, for each fiscal year beginning on or after July 1 following the effective date of this section.
   3.  Except as otherwise provided in this section, the state general fund expenditure limitation for a fiscal year shall be ninety-nine percent of the adjusted revenue estimate.
   4.  The state general fund expenditure limitation shall be used by the governor in the preparation and approval of the budget and by the general assembly in the budget process.
   5.  If a new revenue source is proposed, the budget revenue projection used for that new revenue source for the period beginning on the effective date of the new revenue source and ending in the fiscal year in which the source is included in the adjusted revenue estimate shall be ninety-five percent of the amount remaining after subtracting estimated refunds payable from the projected revenue from that source. If a new revenue source is established and implemented, the original state general fund expenditure limitation amount provided for in subsection 3 shall be readjusted to include ninety-five percent of the estimated revenue from that source.
   6.
  a.  (1)  If there is a surplus existing at the end of a fiscal year which exceeds ten percent of the adjusted revenue estimate of that fiscal year and the actual net revenue for the general fund exceeds the adjusted revenue estimate for that fiscal year, a portion of such surplus shall be transferred to a taxpayers trust fund. The maximum amount subject to transfer to the taxpayers trust fund shall be established by statute enacted for this purpose and shall not be less than one percent of the adjusted revenue estimate for the fiscal year in which the surplus exists. Except for temporary cash flow purposes, moneys in the taxpayers trust fund shall only be used in accordance with appropriations made for purposes of providing tax relief.
   (2)  After taking into account any transfer anticipated pursuant to subparagraph (1), the remaining surplus anticipated at the end of a fiscal year which exceeds ten percent of the adjusted revenue estimate of that fiscal year shall be included in the adjusted revenue estimate for the following fiscal year.
   b.  Any surplus equal to ten percent or less of the adjusted revenue estimate of the fiscal year may be included in the adjusted revenue estimate for the following fiscal year if approved in a bill receiving the affirmative votes of at least three-fifths of the members elected to each house of the general assembly.
   7.  If a bill or joint resolution provides for new revenue or appropriations bonding authority, or an expansion of existing revenue or appropriations bonding authority, which bonds are funded in whole or in part from revenues from the general fund or from another portion of the state treasury, the bill or joint resolution shall not become law unless approved by the affirmative votes of at least two-thirds of the members elected to each house of the general assembly. In addition, the state general fund expenditure limitation for the initial or subsequent fiscal year to which the bill or joint resolution applies shall include any appropriations of such revenues for the fiscal year.
   8.  The scope of the state general fund expenditure limitation under subsection 3 shall not include federal funds, donations, constitutionally dedicated moneys, and moneys expended from a state retirement system.
   9.  The governor shall submit and the general assembly shall pass a budget which does not exceed the state general fund expenditure limitation. The governor shall not approve or disapprove appropriation bills or items of appropriation bills passed by the general assembly in a manner that would cause the final budget approved by the governor to exceed the state general fund expenditure limitation.
   10.  The governor shall not submit and the general assembly shall not pass a budget which in order to balance assumes reversion of any part of the total of the appropriations included in the budget.
   11.  The state shall use consistent standards, in accordance with generally accepted accounting principles, for all state budgeting and accounting purposes.
   12.  The general assembly shall enact laws to implement this section.
    Sec. 2.  The following amendment to the Constitution of the State of Iowa is proposed:
   The Constitution of the State of Iowa is amended by adding the following new sections to new Article XIII:
ARTICLE XIII.
THREE-FIFTHS MAJORITY FOR TAX LAW CHANGES.
   Three-fifths majority to increase taxes.  SECTION 1.
  A bill containing provisions enacting, amending, or repealing the state income tax or enacting, amending, or repealing the state sales and use taxes, in which the aggregate fiscal impact of those provisions relating to those taxes results in a net increase in state tax revenues, as determined by the general assembly, shall require the affirmative votes of at least three-fifths of the members elected to each house of the general assembly for passage. This section does not apply to income tax or sales and use taxes imposed at the option of a local government.
   Three-fifths majority to enact new state tax.  SEC. 2.
  A bill that establishes a new state tax to be imposed by the state shall require the affirmative votes of at least three-fifths of the members elected to each house of the general assembly for passage.
   Enforcement of three-fifths majority requirement.  SEC. 3.
  A lawsuit challenging the proper enactment of a bill pursuant to section 1 or 2 shall be filed no later than one year following the enactment. Failure to file such a lawsuit within the one-year time limit shall negate the three-fifths majority requirement as it applies to the bill.
   Each bill to which section 1 or 2 applies shall include a separate provision describing the requirements for enactment prescribed by section 1 or 2.
   Implementation.  SEC. 4.
  The general assembly shall enact laws to implement sections 1 through 3.
    Sec. 3.  The foregoing proposed amendments to the Constitution of the State of Iowa are referred to the general assembly to be chosen at the next general election for members of the general assembly, and the Secretary of State is directed to cause them to be published for three consecutive months previous to the date of that election as provided by law.
EXPLANATION
   This resolution proposes two amendments within a new Article XIII to the Constitution of the State of Iowa which relates to state budgets and state revenues.
   The first amendment creates a state general fund expenditure limitation. The amount of the limitation is 99 percent of the adjusted revenue estimate. The amendment defines adjusted revenue estimate and requires that that estimate be determined by a revenue estimating conference which is to be created by the general assembly by law. The amendment requires that the expenditure limitation be used by the governor in preparation of the governor’s budget and by the general assembly in the budget process. The governor is prohibited from approving or disapproving of appropriations in a manner that would cause the final budget approved by the governor to exceed the expenditure limitation.
   The first amendment also provides that if a new revenue source is established and implemented, 95 percent of the estimate of that new revenue shall be included in the expenditure limitation.
   The first amendment provides that if there is a surplus existing at the end of a fiscal year which exceeds 10 percent of the adjusted revenue for the fiscal year and the actual net revenue for the general fund for the fiscal year exceeds the adjusted revenue estimate for the fiscal year, a portion of the surplus is required to be transferred to a taxpayers trust fund. The maximum transfer amount is required to be established by statute but cannot be less than 1 percent of the adjusted revenue estimate for the fiscal year. After taking into account any anticipated transfer to the taxpayers trust fund, the remaining amount of any surplus anticipated to exceed 10 percent of the adjusted revenue estimate is required to be included in the adjusted revenue estimate for the following fiscal year. Any surplus which is equal to 10 percent or less of the amount of the adjusted revenue estimate may be included in the following year’s adjusted revenue estimate if inclusion is approved in a bill by at least three-fifths of the members elected to each house of the general assembly.
   The first amendment requires that enactment of a bill or joint resolution providing for new or expanded authority to issue revenue or appropriations bonds funded in whole or in part from revenues from the general fund or from another portion of the state treasury requires a vote of at least two-thirds of the members elected to each house of the general assembly. In addition, the appropriations of such revenues are required to be included in the state general fund expenditure limitation for each applicable fiscal year.
   The first amendment also requires the state to use generally accepted accounting principles for state budgeting and accounting purposes. The amendment provides that the general assembly shall enact laws to implement the amendment.
   The second amendment contained in the resolution requires a three-fifths majority vote of the members elected to each house of the general assembly for certain tax law changes. The amendment provides that any bill that enacts, amends, or repeals the state income tax or the state sales and use tax, and which causes, in the aggregate, an increase in state tax revenues, as determined by the general assembly, must be adopted by at least three-fifths of the members elected to each house of the general assembly. The amendment also requires a three-fifths majority vote of the members elected to each house of the general assembly in order to enact a new state tax to be imposed by the state. A lawsuit challenging enactment of a bill subject to either three-fifths majority passage requirement must be filed no later than one year from the date of enactment of the bill. Finally, the amendment provides that the general assembly shall enact laws to implement the amendment.
   The resolution, if adopted, will be referred to the next general assembly. If the next general assembly adopts this resolution, the amendments will be submitted to the voters for their decision on ratification.