House File 2382 - Introduced HOUSE FILE 2382 BY COMMITTEE ON AGRICULTURE (SUCCESSOR TO HSB 601) A BILL FOR An Act relating to water quality by providing funding for 1 water quality financial assistance programs, extending the 2 period of time for collecting sales tax for deposit in the 3 secure an advanced vision for education fund, modifying 4 and specifying uses for funding received from the secure 5 an advanced vision for education fund, and modifying 6 allocations of state sales and use tax revenue collections. 7 BE IT ENACTED BY THE GENERAL ASSEMBLY OF THE STATE OF IOWA: 8 TLSB 5473HV (2) 86 tm/sc

H.F. 2382 DIVISION I 1 WATER QUALITY —— FUNDING 2 Section 1. Section 16.134, Code 2016, is amended to read as 3 follows: 4 16.134 Wastewater and drinking water treatment financial 5 assistance program. 6 1. The Iowa finance authority shall establish and 7 administer a wastewater and drinking water treatment financial 8 assistance program. The purpose of the program shall be to 9 provide financial assistance to enhance water quality. The 10 program shall be administered in accordance with rules adopted 11 by the authority pursuant to chapter 17A . For purposes of 12 this section , “program” means the wastewater and drinking water 13 treatment financial assistance program and “committee” means 14 the water quality financing review committee created in section 15 16.143 . 16 2. A wastewater and drinking water treatment financial 17 assistance fund is created and shall consist of appropriations 18 made to the fund and transfers of interest, earnings, and 19 moneys from other funds as provided by law. Moneys in the 20 fund are not subject to section 8.33 . Notwithstanding section 21 12C.7, subsection 2 , interest or earnings on moneys in the fund 22 shall be credited to the fund. 23 3. Financial assistance under the program shall be used to 24 install or upgrade wastewater treatment facilities and systems 25 and drinking water treatment facilities and systems , and for 26 engineering or technical assistance for facility planning and 27 design. 28 4. The authority committee shall distribute approve 29 financial assistance in from the fund in accordance with the 30 following: 31 a. The goal of the program shall be to base awards on the 32 impact of the grant combined with other sources of financing to 33 ensure that sewer rates do not exceed one and one-half percent 34 of a community’s median household income. 35 -1- LSB 5473HV (2) 86 tm/sc 1/ 22

H.F. 2382 b. a. Communities shall be eligible for financial 1 assistance by qualifying as Priority shall be given for 2 projects in which a disadvantaged community and is seeking 3 financial assistance for the installation or upgrade of 4 wastewater treatment facilities due to regulatory activity 5 by the department of natural resources and drinking water 6 treatment facilities . For purposes of this section , the term 7 “disadvantaged community” means the same as defined by the 8 department. 9 c. b. Priority shall be given to projects in which the 10 financial assistance is used to obtain with financing under the 11 water pollution control works and drinking water facilities 12 financing program pursuant to section 16.131 or other federal 13 or state financing. 14 d. c. Priority shall also be given to projects whose 15 completion will provide significant improvement to water 16 quality in the relevant watershed. 17 e. d. Priority shall also be given to communities that 18 employ an alternative wastewater treatment technology pursuant 19 to section 455B.199C . 20 f. e. Priority shall be also be given to those communities 21 where sewer or water rates are the highest as a percentage of 22 that community’s median household income. 23 g. f. Financial assistance in the form of grants shall be 24 issued on an annual basis. 25 h. g. An applicant shall not receive a grant that exceeds 26 five hundred thousand dollars. 27 5. The authority in cooperation with the department of 28 natural resources shall share provide information and resources 29 to the committee when the committee is determining the 30 qualifications of a community for financial assistance from the 31 fund. 32 6. The authority shall enter into agreements with financial 33 assistance recipients and distribute moneys under the program 34 pursuant to financial assistance determinations made by the 35 -2- LSB 5473HV (2) 86 tm/sc 2/ 22

H.F. 2382 committee. The authority may use an amount of not more than 1 four percent of any moneys appropriated for deposit in the fund 2 for administration purposes. 3 7. By October 1 of each year, the authority shall submit 4 a report to the governor and the general assembly itemizing 5 expenditures under the program during the previous fiscal year. 6 8. a. Beginning September 1, 2026, and every ten years 7 thereafter, a program review committee is established for 8 purposes of reviewing the wastewater and drinking water 9 treatment financial assistance program. By December 1 of 10 the same year, the review committee shall file a report 11 with the governor and the general assembly that reviews the 12 effectiveness of the program during the prior ten fiscal years. 13 b. The program review committee shall consist of the 14 following members: 15 (1) The governor or the governor’s designee. 16 (2) The secretary of agriculture or the secretary’s 17 designee. 18 (3) The executive director of the authority or the executive 19 director’s designee. 20 (4) The director of the department of natural resources or 21 the director’s designee. 22 (5) Four members of the general assembly, with two from the 23 senate and two from the house of representatives and not more 24 than one member from each chamber being from the same political 25 party. The two senators shall be designated one member each 26 by the president of the senate, after consultation with the 27 majority leader of the senate, and by the minority leader of 28 the senate. The two representatives shall be designated one 29 member each by the speaker of the house of representatives, 30 after consultation with the majority leader of the house of 31 representatives, and by the minority leader of the house of 32 representatives. 33 c. Staffing services shall be provided by the authority. 34 Sec. 2. NEW SECTION . 16.142 Definitions. 35 -3- LSB 5473HV (2) 86 tm/sc 3/ 22

H.F. 2382 1. As used in this part, unless the context otherwise 1 requires: 2 a. “Committee” means the water quality financing review 3 committee created in section 16.143. 4 b. “Cost” means all costs, charges, expenses, or other 5 indebtedness incurred by a loan recipient and determined by 6 the committee as reasonable and necessary for carrying out 7 all works and undertakings necessary or incidental to the 8 accomplishment of any project. 9 c. “Eligible entity” means a municipality meeting the 10 requirements in section 16.146 or a landowner, as determined by 11 the committee, a public utility as defined in section 476.1, or 12 a rural water district or rural water association as defined 13 in section 357A.1. 14 d. “Loan recipient” means an eligible entity that has 15 received a loan under the program. 16 e. “Municipality” means a governmental body such as 17 a state agency or a political subdivision of the state. 18 Municipality includes but is not limited to a city, city 19 utility, county, soil and water conservation district, drainage 20 district, sanitary district, a subdistrict of any of the 21 foregoing districts, state agency, or other governmental body 22 or corporation empowered to provide sewage collection and 23 treatment services or drinking water, or any entity jointly 24 exercising governmental powers pursuant to chapter 28E or 28F, 25 or any other combination of two or more governmental bodies or 26 corporations acting jointly under the laws of this state in 27 connection with a project. 28 f. “Program” means the water quality financing program 29 created in this part. 30 g. “Project” means any combination of improvements, 31 structures, developments, tasks, actions, constructions, 32 modifications, operations, or practices designed to improve 33 water quality that are proposed by an eligible entity and 34 approved by the committee. “Project” includes but is not 35 -4- LSB 5473HV (2) 86 tm/sc 4/ 22

H.F. 2382 limited to any of the following: 1 (1) A project meeting the requirements of part 2 of this 2 subchapter. 3 (2) A project, operation, or practice undertaken or carried 4 out to address watershed protection, flood prevention, or water 5 quality improvement. 6 (3) A project meeting the requirements of a sponsor project 7 under section 455B.199. 8 Sec. 3. NEW SECTION . 16.143 Water quality financing review 9 committee. 10 1. A water quality financing review committee is created 11 consisting of the secretary of agriculture or the secretary’s 12 designee, the executive director of the authority or the 13 executive director’s designee, and the director of the 14 department of natural resources or the director’s designee. 15 2. The committee shall review and approve or deny 16 applications for financial assistance under the water quality 17 financing program established in section 16.144 and the 18 wastewater and drinking water treatment financial assistance 19 program established under section 16.134. 20 Sec. 4. NEW SECTION . 16.144 Water quality financing 21 program. 22 1. The authority, in cooperation with the department of 23 natural resources and the department of agriculture and land 24 stewardship, shall establish and administer a water quality 25 financing program. The purpose of the program shall be to 26 provide financial assistance to enhance the quality of surface 27 water and groundwater, particularly by providing financial 28 assistance for projects designed to improve water quality by 29 addressing collaborative projects between point and nonpoint 30 sources. 31 2. The authority shall determine the interest rate 32 and repayment terms for loans made under the program, in 33 cooperation with the department of natural resources and 34 the department of agriculture and land stewardship, and the 35 -5- LSB 5473HV (2) 86 tm/sc 5/ 22

H.F. 2382 authority shall enter into loan agreements with eligible 1 entities in compliance with and subject to the terms and 2 conditions of the program as described in this part. 3 3. The authority may charge loan recipients fees and assess 4 costs against such recipients necessary for the continued 5 operation of the program. Such fees and costs shall not exceed 6 the costs directly associated with the administration of the 7 program. Fees and costs collected pursuant to this subsection 8 shall be deposited in the appropriate fund or account created 9 in section 16.145. 10 4. The program shall be administered by the authority in 11 accordance with rules adopted by the authority pursuant to 12 chapter 17A. 13 5. a. Beginning September 1, 2026, and every ten years 14 thereafter, a program review committee is established for 15 purposes of reviewing the water quality financing program. By 16 December 1 of the same year, the review committee shall file a 17 report with the governor and the general assembly that reviews 18 the effectiveness of the program during the prior ten fiscal 19 years. 20 b. The program review committee shall consist of the 21 following members: 22 (1) The governor or the governor’s designee. 23 (2) The secretary of agriculture or the secretary’s 24 designee. 25 (3) The executive director of the authority or the executive 26 director’s designee. 27 (4) The director of the department of natural resources or 28 the director’s designee. 29 (5) Four members of the general assembly, with two from the 30 senate and two from the house of representatives and not more 31 than one member from each chamber being from the same political 32 party. The two senators shall be designated one member each 33 by the president of the senate, after consultation with the 34 majority leader of the senate, and by the minority leader of 35 -6- LSB 5473HV (2) 86 tm/sc 6/ 22

H.F. 2382 the senate. The two representatives shall be designated one 1 member each by the speaker of the house of representatives, 2 after consultation with the majority leader of the house of 3 representatives, and by the minority leader of the house of 4 representatives. 5 c. Staffing services shall be provided by the authority. 6 Sec. 5. NEW SECTION . 16.145 Water quality financing program 7 fund —— appropriation —— other funds. 8 1. a. A water quality financing program fund is created 9 and shall consist of appropriations made to the fund, transfers 10 to the fund pursuant to section 423.2, subsection 11, and 11 transfers of interest, earnings, and moneys from other 12 funds as provided by law. The fund shall be administered by 13 the authority as a revolving fund. Moneys in the fund are 14 appropriated to the authority for purposes of the program. 15 Notwithstanding section 8.33, moneys in the fund that remain 16 unencumbered or unobligated at the close of a fiscal year shall 17 not revert but shall remain available for expenditure for the 18 purposes designated. Notwithstanding section 12C.7, subsection 19 2, interest or earnings on moneys in the fund shall be credited 20 to the fund. 21 b. The authority shall use the moneys in the fund to provide 22 financial assistance to eligible entities under the program. 23 The authority may provide financial assistance in the form 24 deemed most convenient for the efficient financing of projects, 25 including loans, forgivable loans, or grants. The authority 26 shall administer the fund and the program in such a manner 27 as to provide a permanent source of water quality project 28 financial assistance to eligible entities. 29 c. The authority may annually use an amount of not more 30 than one percent of the moneys in the fund for administrative 31 purposes. 32 2. a. The authority may establish and maintain other 33 funds and accounts determined to be necessary to carry out the 34 purposes of the program and shall provide for the funding, 35 -7- LSB 5473HV (2) 86 tm/sc 7/ 22

H.F. 2382 administration, investment, restrictions, and disposition of 1 the funds and accounts. 2 b. Moneys appropriated to and used by the authority for 3 purposes of paying the costs and expenses associated with 4 the administration of the program shall be administered as 5 determined by the authority. 6 c. All moneys transferred to the authority pursuant to 7 section 423.2, subsection 11, shall be deposited and held in 8 a fund or account established and maintained pursuant to this 9 section for purposes of the program. 10 3. The funds or accounts held by the authority, or a trustee 11 acting on behalf of the authority pursuant to a trust agreement 12 related to the program, shall not be considered part of the 13 general fund of the state, are not subject to appropriation for 14 any other purpose by the general assembly, and in determining 15 a general fund balance shall not be included in the general 16 fund of the state, but shall remain in the funds and accounts 17 maintained by the authority or trustee pursuant to a trust 18 agreement. Funds and accounts held by the authority, or a 19 trustee acting on behalf of the authority pursuant to a trust 20 agreement related to the program, are separate dedicated funds 21 and accounts under the administration and control of the 22 authority and subject to section 16.31. 23 4. By October 1 of each year, the authority shall submit 24 a report to the governor and the general assembly itemizing 25 expenditures from the fund during the previous fiscal year. 26 Sec. 6. NEW SECTION . 16.146 Eligible entities —— agreements 27 required. 28 1. An eligible entity may apply to the authority for 29 financial assistance under the program by submitting a plan 30 that meets the following requirements: 31 a. The plan includes one or more projects that substantially 32 improve water quality in the local area or watershed. Projects 33 shall be in accordance with the latest version of the document 34 entitled “Iowa Nutrient Reduction Strategy” initially presented 35 -8- LSB 5473HV (2) 86 tm/sc 8/ 22

H.F. 2382 in November 2012 by the department of agriculture and land 1 stewardship, the department of natural resources, and Iowa 2 state university of science and technology. 3 b. The plan describes in detail the manner in which the 4 projects will be financed and undertaken, including, as 5 applicable, the sources of revenue directed to financing the 6 improvements as well as the municipalities or landowners that 7 will be receiving the revenues and how such revenues will be 8 spent on the projects. 9 2. The committee shall review and approve or deny 10 applications for financial assistance. The provision of 11 financial assistance under the program shall take into account, 12 as applicable, the number of municipalities or landowners 13 comprising an eligible entity and the eligible entity’s 14 financing capacity. The committee shall score applications 15 for financial assistance according to rules adopted pursuant 16 to this part. The committee shall only provide financial 17 assistance to eligible entities that have sufficient financing 18 capacity and that submit an appropriate plan designed to 19 improve water quality. 20 3. An approved eligible entity shall enter into an agreement 21 with the authority for the provision of financial assistance. 22 The agreement shall include standard terms for the receipt 23 of program moneys and any other terms the authority deems 24 necessary or convenient for the efficient administration of the 25 program. 26 Sec. 7. NEW SECTION . 161A.101 Water quality infrastructure 27 cost-share program. 28 1. The division shall establish and administer a water 29 quality infrastructure cost-share program. The program 30 shall provide financial assistance on a cost-share basis to 31 landowners for installing infrastructure projects designed to 32 improve the water quality of the watershed in which the land 33 is located. In order to be eligible for financial assistance, 34 a proposed project must be designed to reduce the transport of 35 -9- LSB 5473HV (2) 86 tm/sc 9/ 22

H.F. 2382 nutrients to water from nonpoint sources within watersheds in 1 accordance with the latest revision of the document entitled 2 “Iowa Nutrient Reduction Strategy” initially presented in 3 November 2012 by the department of agriculture and land 4 stewardship, the department of natural resources, and Iowa 5 state university of science and technology. The division 6 shall review proposed projects submitted by applicants, 7 negotiate project details with applicants, and approve or 8 deny applications. The division shall score applications 9 for financial assistance according to rules adopted pursuant 10 to this section. The division shall adopt rules pursuant to 11 chapter 17A necessary for the administration of the program. 12 2. A water quality infrastructure cost-share fund is 13 created within the state treasury under the control of the 14 division. Moneys in the fund shall consist of appropriations 15 made to the fund, transfers to the fund pursuant to section 16 423.2, subsection 11, and transfers of interest, earnings, 17 and moneys from other funds as provided by law. Moneys in 18 the fund are appropriated to the division for purposes of the 19 program. The department may use up to four percent of the 20 moneys credited to the fund each fiscal year for purposes of 21 administrative costs. Notwithstanding section 8.33, moneys in 22 the fund that remain unencumbered or unobligated at the close 23 of a fiscal year shall not revert but shall remain available 24 for expenditure for the purposes designated. Notwithstanding 25 section 12C.7, subsection 2, interest or earnings on moneys in 26 the fund shall be credited to the fund. 27 3. By October 1 of each year, the department shall submit 28 a report to the governor and the general assembly itemizing 29 expenditures under the program during the previous fiscal year. 30 4. a. Beginning September 1, 2026, and every ten years 31 thereafter, a program review committee is established for 32 purposes of reviewing the water quality infrastructure 33 cost-share program. By December 1 of the same year, the review 34 committee shall file a report with the governor and the general 35 -10- LSB 5473HV (2) 86 tm/sc 10/ 22

H.F. 2382 assembly that reviews the effectiveness of the program during 1 the prior ten fiscal years. 2 b. The program review committee shall consist of the 3 following members: 4 (1) The governor or the governor’s designee. 5 (2) The secretary of agriculture or the secretary’s 6 designee. 7 (3) The executive director of the authority or the executive 8 director’s designee. 9 (4) The director of the department of natural resources or 10 the director’s designee. 11 (5) Four members of the general assembly, with two from the 12 senate and two from the house of representatives and not more 13 than one member from each chamber being from the same political 14 party. The two senators shall be designated one member each 15 by the president of the senate, after consultation with the 16 majority leader of the senate, and by the minority leader of 17 the senate. The two representatives shall be designated one 18 member each by the speaker of the house of representatives, 19 after consultation with the majority leader of the house of 20 representatives, and by the minority leader of the house of 21 representatives. 22 c. Staffing services shall be provided by the authority. 23 Sec. 8. Section 423.2, subsection 11, paragraph b, 24 subparagraph (3), Code 2016, is amended by striking the 25 subparagraph and inserting in lieu thereof the following: 26 (3) (a) Of the one-sixth of the remaining revenues: 27 (i) Beginning July 1, 2016, transfer to the secure an 28 advanced vision for education fund created in section 423F.2, 29 the sum of the amount transferred to the secure an advanced 30 vision for education fund pursuant to this subparagraph for 31 the fiscal year beginning July 1, 2015, plus ten million 32 dollars. Beginning July 1, 2017, the amount transferred to the 33 secure an advanced vision for education fund pursuant to this 34 subparagraph subdivision shall increase each fiscal year by ten 35 -11- LSB 5473HV (2) 86 tm/sc 11/ 22

H.F. 2382 million dollars. 1 (ii) Following the transfer under subparagraph subdivision 2 (i), transfer any remaining amount as follows: 3 (A) Fifteen percent to the wastewater and drinking water 4 treatment financial assistance fund created in section 16.134. 5 (B) Thirty-five percent to the water quality financing 6 program fund created in section 16.145. 7 (C) Fifty percent to the division of soil conservation 8 and water quality of the department of agriculture and land 9 stewardship for purposes of the water quality infrastructure 10 cost-share program created in section 161A.101, assisting 11 landowners with implementing water quality practices on a 12 cost-share basis as provided in chapter 161A, and water quality 13 demonstration projects. 14 (b) This subparagraph (3) is repealed January 1, 2050. 15 Sec. 9. Section 423.2, subsection 14, Code 2016, is amended 16 to read as follows: 17 14. The sales tax rate of six percent is reduced to five 18 percent beginning on January 1, 2030 2050 . 19 Sec. 10. Section 423.5, subsection 5, Code 2016, is amended 20 to read as follows: 21 5. The use tax rate of six percent is reduced to five 22 percent beginning on January 1, 2030 2050 . 23 Sec. 11. Section 423.43, subsection 1, paragraph b, Code 24 2016, is amended to read as follows: 25 b. Subsequent to the deposit into the general fund of 26 the state and after the transfer of such revenues collected 27 under chapter 423B , the department shall transfer one-sixth of 28 such remaining revenues to the secure an advanced vision for 29 education fund created in section 423F.2 funds specified in 30 section 423.2, subsection 11, paragraph “b” , subparagraph (3), 31 in amounts proportionate to the transfers in section 423.2, 32 subsection 11, paragraph “b” , subparagraph (3) . This paragraph 33 is repealed December 31, 2029 January 1, 2050 . 34 Sec. 12. Section 423F.1, Code 2016, is amended to read as 35 -12- LSB 5473HV (2) 86 tm/sc 12/ 22

H.F. 2382 follows: 1 423F.1 Legislative intent. 2 It is the intent of the general assembly that the extension 3 of the increase in the state sales, services, and use taxes 4 under chapter 423, subchapters II and III , from five percent 5 to six percent on July 1, 2008 to January 1, 2050 , shall be 6 used solely for purposes of providing revenues to local school 7 districts under this chapter to be used solely for school 8 infrastructure purposes or school district property tax relief 9 and water quality efforts . 10 Sec. 13. Section 423F.3, subsection 7, Code 2016, is amended 11 to read as follows: 12 7. The general assembly shall not alter the purposes as 13 stated in section 423F.1 for which the revenues received under 14 this section may be used from infrastructure and property tax 15 relief purposes and water quality efforts to any other purpose 16 unless the bill is approved by a vote of at least two-thirds 17 of the members of both chambers of the general assembly and is 18 signed by the governor. 19 Sec. 14. Section 423F.6, Code 2016, is amended to read as 20 follows: 21 423F.6 Repeal. 22 This chapter is repealed December 31, 2029 January 1, 2050 . 23 DIVISION II 24 SECURE AN ADVANCED VISION FOR EDUCATION FUND 25 Sec. 15. Section 257.2, subsection 2, Code 2016, is amended 26 by striking the subsection. 27 Sec. 16. Section 257.4, subsection 1, paragraph a, Code 28 2016, is amended by adding the following new subparagraph: 29 NEW SUBPARAGRAPH . (10) The amount of revenue received from 30 the secure an advanced vision for education fund and approved 31 by the school district for reducing the school district’s 32 additional property tax levy pursuant to a revenue purpose 33 statement adopted under section 423F.3. 34 Sec. 17. NEW SECTION . 257.14A District cost per pupil 35 -13- LSB 5473HV (2) 86 tm/sc 13/ 22

H.F. 2382 equity —— budget adjustment. 1 1. The board of directors of a school district with a 2 regular program district cost per pupil that is less than the 3 highest regular program district cost per pupil among all 4 school districts in the state for the same budget year that 5 wishes to receive the budget adjustment under this section may 6 adopt a resolution by May 15 preceding the budget year and 7 shall notify the department of management of the adoption of 8 the resolution and the amount of the budget adjustment to be 9 received. 10 2. a. For budget years beginning on or after July 1, 11 2017, each school district that satisfies the requirements of 12 subsection 1 shall be eligible for a budget adjustment for that 13 budget year in an amount not to exceed the difference between 14 the school district’s regular program district cost per pupil 15 and the highest regular program district cost per pupil among 16 all school districts in the state multiplied by the district’s 17 budget enrollment. The resolution adopted under subsection 1 18 may specify a budget adjustment amount that is less than the 19 maximum amount authorized under this paragraph “ a ”. 20 b. The school district shall fund the budget adjustment 21 solely using moneys from its distribution of moneys received 22 from the secure an advanced vision for education fund under 23 Code section 423F.3 and authorized for such purpose by a 24 revenue purpose statement. Amounts used to fund the budget 25 adjustment shall be excluded from collective bargaining and 26 shall be used solely for instructional expenditures and shall 27 supplement, not supplant, existing school district funding for 28 instructional expenditures. 29 3. A budget adjustment received under this section shall 30 not affect the eligibility for or amount of any other budget 31 adjustment authorized by law for the same budget year. In 32 addition, a budget adjustment under this section shall be 33 limited to the budget year for which the adjustment was 34 authorized and shall not be included in any computation of a 35 -14- LSB 5473HV (2) 86 tm/sc 14/ 22

H.F. 2382 school district’s cost for any future budget year. 1 4. a. For purposes of this section, “instructional 2 expenditures” means any of the following: 3 (1) Textbooks, as defined in section 301.1. 4 (2) Library books. 5 (3) Other instructional materials and equipment used 6 directly by students. 7 b. “Instructional expenditures” does not include the 8 salary, benefits, or other compensation of any school district 9 employee. 10 Sec. 18. Section 423F.3, subsection 1, paragraph d, Code 11 2016, is amended to read as follows: 12 d. For any authorized school infrastructure purpose or 13 project of the school district as defined in subsection 6 , 14 excluding purposes specified in subsection 6, paragraph “0d” , if 15 the total cost of the authorized infrastructure purpose does 16 not exceed one million dollars . 17 Sec. 19. Section 423F.3, subsection 3, paragraphs b and d, 18 Code 2016, are amended to read as follows: 19 b. If the board of directors intends to use funds for 20 purposes or projects other than those listed in paragraph 21 “a” , or change the use of funds to purposes or projects other 22 than those listed in paragraph “a” , the board shall adopt 23 a revenue purpose statement or amend an existing revenue 24 purpose statement , subject to approval of the electors, listing 25 the proposed use of the funds. If the board of directors 26 intends to use funds for a school infrastructure purpose or 27 project that was approved by the board on or after July 1, 28 2016, the total cost of which exceeds one million dollars, 29 the board shall adopt a revenue purpose statement or amend 30 an existing revenue purpose statement, subject to approval 31 of the electors, to specifically authorize the use of funds 32 for that school infrastructure purpose or project. Both the 33 ballot presented to the electors and the revenue purpose 34 statement shall describe each school infrastructure purpose or 35 -15- LSB 5473HV (2) 86 tm/sc 15/ 22

H.F. 2382 project that has a total cost exceeding one million dollars, 1 specify the estimated commencement and completion dates for 2 each such purpose or project, and specify a maximum amount of 3 funds received under this section that may be used for each 4 such purpose or project. School districts shall submit the 5 statement to the voters no later than sixty days prior to the 6 expiration of any existing revenue purpose statement or change 7 in use not included in the existing revenue purpose statement. 8 d. The board secretary shall notify the county commissioner 9 of elections of the intent to take an issue to the voters 10 pursuant to paragraph “b” or “c” . The county commissioner of 11 elections shall publish the notices required by law for special 12 or general elections, and the election shall be held on a date 13 specified in section 39.2, subsection 4 , paragraph “c” . A 14 majority of those voting on the question must favor approval 15 of the revenue purpose statement. However, if the proposed 16 revenue purpose statement or proposed amendment to an existing 17 revenue purpose statement authorizes the use of funds received 18 from the secure an advanced vision for education fund for a 19 school infrastructure purpose or project the cost of which 20 exceeds one million dollars, sixty percent of those voting 21 on the question must favor approval. If the proposal is not 22 approved, the school district shall not submit the same or new 23 revenue purpose statement to the electors for a period of six 24 months from the date of the previous election. 25 Sec. 20. Section 423F.3, subsection 6, Code 2016, is amended 26 by adding the following new paragraph: 27 NEW PARAGRAPH . 0d. For school budget years beginning on or 28 after July 1, 2017, “school infrastructure” includes any of the 29 following if specified in a revenue purpose statement approved 30 at election: 31 (1) If a school district’s average transportation costs 32 per pupil exceed the state average transportation costs per 33 pupil determined under section 257.31, subsection 17, paragraph 34 “c” , the payment of school district transportation costs not 35 -16- LSB 5473HV (2) 86 tm/sc 16/ 22

H.F. 2382 to exceed an amount equal to the district’s actual enrollment 1 for the school year multiplied by the difference between the 2 district’s average transportation costs per pupil and the state 3 average transportation costs per pupil for the school year. 4 (2) Funding a district cost per pupil equity budget 5 adjustment under section 257.14A. 6 (3) Reduction of the school district’s additional property 7 tax levy under section 257.4. 8 EXPLANATION 9 The inclusion of this explanation does not constitute agreement with 10 the explanation’s substance by the members of the general assembly. 11 This bill relates to water quality by providing funding for 12 water quality financial assistance programs, extending the 13 period of time for collecting sales tax for deposit in the 14 secure an advanced vision for education (SAVE) fund, modifying 15 and specifying uses for funding received from the secure an 16 advanced vision for education fund, and modifying allocations 17 of state sales and use tax revenue collections. The bill is 18 organized by divisions. 19 WATER QUALITY —— FUNDING. The bill creates a water quality 20 financing review committee to review and approve applications 21 for financial assistance under the water quality financing 22 program and the wastewater and drinking water treatment 23 financial assistance program. 24 The bill amends the wastewater treatment financial 25 assistance program administered by the Iowa finance authority. 26 Currently, the program provides financial assistance to install 27 or upgrade wastewater treatment facilities and systems, and 28 for engineering or technical assistance for facility planning 29 and design. Awards of financial assistance are made by the 30 authority. The bill adds drinking water treatment facilities 31 and systems to the program and provides that the water quality 32 financing review committee shall approve financial assistance. 33 The bill adds reporting and review requirements to the program. 34 The bill creates a water quality financing program to 35 -17- LSB 5473HV (2) 86 tm/sc 17/ 22

H.F. 2382 provide financial assistance in the form of loans, forgivable 1 loans, and grants to enhance the quality of surface water and 2 groundwater, particularly by providing financial assistance 3 for projects designed to reduce the amount of contamination 4 by addressing collaborative projects between point and 5 nonpoint sources. The program is administered by the Iowa 6 finance authority in cooperation with the department of 7 natural resources and the department of agriculture and land 8 stewardship. The bill creates a water quality financing 9 program fund administered by the authority to provide financial 10 assistance under the program. The bill allows the authority 11 to establish and maintain other funds and accounts necessary 12 to carry out the purposes of the program. Moneys in the water 13 quality financing program fund are not part of the general fund 14 and are not included in determining the balance of the general 15 fund of the state. Under the program, an eligible entity is 16 a municipality, as defined in the bill, a landowner, a public 17 utility, a rural water district, or rural water association. 18 The bill provides certain application requirements regarding a 19 plan for water quality improvement and financing and requires 20 loan recipients to enter into agreements with the authority for 21 terms of the financial assistance. The bill includes reporting 22 and review requirements. 23 The bill establishes a water quality infrastructure 24 cost-share program to provide financial assistance on a 25 cost-share basis to landowners for installing infrastructure 26 projects designed to improve the water quality of the watershed 27 in which the land is located. In order to be eligible for 28 financial assistance, a proposed project must be designed 29 to reduce the transport of nutrients to water from nonpoint 30 sources within watersheds in accordance with the latest 31 revision of the document entitled “Iowa Nutrient Reduction 32 Strategy” initially presented in November 2012 by the 33 department of agriculture and land stewardship, the department 34 of natural resources, and Iowa state university of science 35 -18- LSB 5473HV (2) 86 tm/sc 18/ 22

H.F. 2382 and technology. The division of soil conservation and water 1 quality of the department of agriculture and land stewardship 2 shall review proposed projects submitted by applicants, 3 negotiate project details with applicants, and approve 4 applications. The bill creates a water quality infrastructure 5 cost-share fund under the control of the division to provide 6 financial assistance under the program. The bill includes 7 reporting and review requirements. 8 Code section 423.2 imposes a state tax of 6 percent upon 9 the sales price of all sales of tangible personal property, 10 consisting of goods, wares, merchandise, and other items 11 designated by statute, sold at retail in the state to 12 consumers, except as otherwise provided by Code chapter 423. 13 Generally, by operation of law, a sale subject to the sales tax 14 is also subject to the use tax. Following certain specified 15 transfers, one-sixth of the remaining state sales tax revenue 16 from the 6 percent tax is transferred to the SAVE fund created 17 in Code section 423F.2. Moneys in the SAVE fund are allocated 18 to school districts on a per pupil basis to be used for 19 infrastructure and property tax relief purposes specified in 20 Code chapter 423F. Under current law, the sales tax rate of 6 21 percent is reduced to 5 percent on January 1, 2030, and Code 22 chapter 423F, along with other corresponding provisions, is 23 repealed December 31, 2029. 24 The bill extends the imposition of the sales tax at the 25 6 percent rate, the allocation to the SAVE fund, and the 26 statutory repeal of Code chapter 423F until January 1, 2050. 27 The bill amends the legislative intent provision that describes 28 the purpose of increasing the state sales tax from 5 to 6 29 percent to include water quality efforts. 30 The bill also divides the revenues currently transferred to 31 the SAVE fund. Currently, after certain transfers are made, 32 one-sixth of the remaining revenues are transferred to the SAVE 33 fund. Beginning July 1, 2016, the bill transfers an amount to 34 the SAVE fund equal to the sum of the amount transferred to the 35 -19- LSB 5473HV (2) 86 tm/sc 19/ 22