HF 773 (LSB 1563HV (3) 88)

HOUSE FILE 773

BY  COMMITTEE ON WAYS AND MEANS

(SUCCESSOR TO HSB 165)

A BILL FOR

An Act establishing budget limitations for counties and cities and including applicability provisions.
BE IT ENACTED BY THE GENERAL ASSEMBLY OF THE STATE OF IOWA:

    Section 1.  Section 23A.2, subsection 10, paragraph h, Code 2019, is amended to read as follows:
   h.  The performance of an activity listed in section 331.424, Code 2019, as a service for which a supplemental levy county may be certified include in its budget.
    Sec. 2.  Section 28M.5, subsections 1 and 2, Code 2019, are amended to read as follows:
   1.  The commission, with the approval of the board of supervisors of participating counties and the city council of participating cities in the chapter 28E agreement, may levy annually a tax not to exceed ninety-five cents per thousand dollars of the assessed value of all taxable property in a regional transit district to the extent provided in this section. The chapter 28E agreement may authorize the commission to levy the tax at different rates within the participating cities and counties in amounts sufficient to meet the revenue responsibilities of such cities and counties as allocated in the budget adopted by the commission. However, for a city participating in a regional transit district, the total of all the tax levies imposed in the city pursuant to section 384.12, subsection 10, and this section shall not exceed the aggregate of ninety-five cents per thousand dollars of the assessed value of all taxable property in the participating city.
   2.  If a regional transit district budget allocates revenue responsibilities to the board of supervisors of a participating county, the amount of the regional transit district levy that is the responsibility of the participating county shall be deducted from the maximum rates amount of taxes authorized to be levied by the county pursuant to section 331.423, subsections 1 and 2 subsection 3, paragraphs “b” and “c”, as applicable, unless the county meets its revenue responsibilities as allocated in the budget from other available revenue sources. However, for a regional transit district that includes a county with a population of less than three hundred thousand, the amount of the regional transit district levy that is the responsibility of such participating county shall be deducted from the maximum rate amount of taxes authorized to be levied by the county pursuant to section 331.423, subsection 1 3, paragraph “b”.
    Sec. 3.  Section 29C.17, subsection 2, paragraph a, Code 2019, is amended by striking the paragraph.
    Sec. 4.  Section 123.38, subsection 2, paragraph b, Code 2019, is amended to read as follows:
   b.  For purposes of this subsection, any portion of license or permit fees used for the purposes authorized in section 331.424, subsection 1, paragraph “a”, subparagraphs (1) and (2), Code 2019, and in section 331.424A, shall not be deemed received either by the division or by a local authority.
    Sec. 5.  Section 218.99, Code 2019, is amended to read as follows:
   218.99  Counties to be notified of patients’ personal accounts.
   The administrator in control of a state institution shall direct the business manager of each institution under the administrator’s jurisdiction which is mentioned in section 331.424, subsection 1, paragraph “a”, subparagraphs (1) and (2), and for which services are paid under section 331.424A, to quarterly inform the county of residence of any patient or resident who has an amount in excess of two hundred dollars on account in the patients’ personal deposit fund and the amount on deposit. The administrators shall direct the business manager to further notify the county of residence at least fifteen days before the release of funds in excess of two hundred dollars or upon the death of the patient or resident. If the patient or resident has no residency in this state or the person’s residency is unknown, notice shall be made to the director of human services and the administrator in control of the institution involved.
    Sec. 6.  Section 331.263, subsection 2, Code 2019, is amended to read as follows:
   2.  The governing body of the community commonwealth shall have the authority to levy county taxes and shall have the authority to levy city taxes to the extent the city tax levy authority is transferred by the charter to the community commonwealth. A city participating in the community commonwealth shall transfer a portion of the city’s tax levy authorized under section 384.1 or 384.12, whichever is applicable, to the governing body of the community commonwealth. The maximum rates amount of taxes authorized to be levied under sections section 384.1 and the maximum amount of taxes authorized to be levied under section 384.12 by a city participating in the community commonwealth shall be reduced by an amount equal to the rates of the same or similar taxes levied in the city by the governing body of the community commonwealth.
    Sec. 7.  Section 331.301, subsection 12, Code 2019, is amended to read as follows:
   12.  The board of supervisors may credit funds to a reserve for the purposes authorized by subsection 11 of this section; section 331.424, subsection 1, paragraph “a”, subparagraph (5); and section 331.441, subsection 2, paragraph “b”. Moneys credited to the reserve, and interest earned on such moneys, shall remain in the reserve until expended for purposes authorized by subsection 11 of this section; section 331.424, subsection 1, paragraph “a”, subparagraph (5); or section 331.441, subsection 2, paragraph “b”.
    Sec. 8.  Section 331.421, subsections 1 and 10, Code 2019, are amended by striking the subsections.
    Sec. 9.  Section 331.421, Code 2019, is amended by adding the following new subsection:
   NEW SUBSECTION.  7A.  “Item” means, in accordance with protests under chapter 24, a budgeted expenditure, appropriation, or cash reserve from a fund for a service area, program, program element, or purpose.
    Sec. 10.  Section 331.422, unnumbered paragraph 1, Code 2019, is amended to read as follows:
   Subject to this section and sections 331.423 through 331.426 331.424C or as otherwise provided by state law, the board of each county shall certify property taxes annually at its March session to be levied for county purposes as follows:
    Sec. 11.  Section 331.423, Code 2019, is amended by striking the section and inserting in lieu thereof the following:
   331.423  Property tax dollars —— maximums.
   1.  Annually, the board shall determine separate property tax levy limits to pay for general county services and rural county services in accordance with this section. The property tax levies separately certified for general county services and rural county services under section 331.434 shall not raise property tax dollars that exceed the amounts determined under this section.
   2.  For purposes of this section, unless the context otherwise requires:
   a.  “Annual growth factor” means one hundred two percent.
   b.  “Boundary adjustment” means annexation, severance, incorporation, or discontinuance as those terms are defined in section 368.1.
   c.  “Budget year” is the fiscal year beginning during the calendar year in which a budget is certified.
   d.  “Current fiscal year” is the fiscal year ending during the calendar year in which a budget is certified.
   e.  “Net new valuation taxes” means the amount of property tax dollars equal to the current fiscal year’s levy rate in the county for general county services or for rural county services, as applicable, multiplied by the net increase from the current fiscal year to the budget year in taxable valuation due to the following, the amount of each as certified by the county auditor to the department of management by January 1 preceding the applicable fiscal year, excluding amounts attributable to a valuation release:
   (1)  New construction.
   (2)  Additions or improvements to existing structures that are not normal and necessary repairs under section 441.21, subsection 8.
   (3)  Net boundary adjustment.
   (4)  A municipality no longer dividing tax revenues in an urban renewal area as provided in section 403.19 or a community college no longer dividing revenues as provided in section 260E.4.
   (5)  That portion of taxable property located in an urban revitalization area on which an exemption was allowed and such exemption has expired.
   (6)  New exemptions for existing properties and the expiration or removal of property exemptions.
   f.  “Valuation release” means the valuation that is released in any one year from either a division of revenue under section 260E.4 or an urban renewal area for which taxes were being divided under section 403.19 if the property for the valuation being released remains subject to the division of revenue under section 260E.4 or remains part of the urban renewal area that is subject to a division of revenue under section 403.19.
   3.  a.  For the fiscal year beginning July 1, 2020, and subsequent fiscal years, the maximum amount of property tax dollars which may be certified for levy by a county for general county services and rural county services shall be the maximum property tax dollars calculated under paragraphs “b” and “c”, respectively. The amount of property tax dollars calculated under this subsection and determined under subsection 4 includes those amounts received by the county as replacement taxes under chapter 437A or 437B.
   b.  The maximum property tax dollars that may be levied for general county services is an amount equal to the sum of the following:
   (1)  The annual growth factor times the current fiscal year’s actual property tax dollars certified for levy for general county services.
   (2)  The amount of net new valuation taxes in the county.
   (3)  The amount of the additions for general county services approved under section 331.424 for the budget year, if applicable.
   c.  The maximum property tax dollars that may be levied for rural county services is an amount equal to the sum of the following:
   (1)  The annual growth factor times the current fiscal year’s actual property tax dollars certified for levy for rural county services. 
   (2)  The amount of net new valuation taxes in the unincorporated area of the county. 
   (3)  The amount of the additions for rural county services approved under section 331.424 for the budget year, if applicable.
   4.  a.  For purposes of calculating maximum property tax dollars for general county services for the fiscal year beginning July 1, 2020, only, the term “current fiscal year’s actual property tax dollars” shall mean the total amount of property tax dollars certified by the county for general county services for the fiscal year beginning July 1, 2019, or the fiscal year beginning July 1, 2018, whichever is greater, including amounts certified under section 331.424, subsection 1, Code 2019.
   b.  For purposes of calculating maximum property tax dollars for rural county services for the fiscal year beginning July 1, 2020, only, the term “current fiscal year’s actual property tax dollars” shall mean the total amount of property tax dollars certified by the county for rural county services for the fiscal year beginning July 1, 2019, or the fiscal year beginning July 1, 2018, whichever is greater, including amounts certified under section 331.424, subsection 2, Code 2019.
   c.  For purposes of calculating maximum property tax dollars for a fiscal year beginning on or after July 1, 2021, a county for which the county’s taxes were not certified back by the department of management under section 24.17 for the current fiscal year due to an act or omission of the county, the current fiscal year’s actual property tax dollars certified for levy shall be equal to the amount certified for levy for the fiscal year immediately preceding the current fiscal year or the amount under paragraph “a” or “b”, if applicable.
   5.  Property taxes certified for mental health and disabilities services in section 331.424A, a unified law enforcement district under chapter 28E, subchapter II, the emergency services fund in section 331.424C, the debt service fund in section 331.430, and any capital projects fund established by the county for deposit of bond, loan, or note proceeds, are not counted against the maximum amount of property tax dollars that may be certified for a budget year under subsection 3. 
   6.  The department of management, in consultation with the county finance committee, shall adopt rules to administer this section. The department shall prescribe forms to be used by counties when making calculations required by this section. 
    Sec. 12.  NEW SECTION.  331.423A  Ending fund balance.
   1.  a.  Budgeted ending fund balances for a budget year in excess of twenty-five percent of budgeted expenditures in either the general fund or rural services fund for that budget year shall be nonspendable or be restricted, committed, or assigned for a specific purpose.
   b.  In a protest to the county budget under section 331.436, the county shall have the burden of proving that the budgeted balances in excess of twenty-five percent are reasonably likely to be appropriated for the restricted, committed, or assigned specific purpose. The excess budgeted balance for the specific purpose shall be considered an increase in an item in the budget for purposes of section 24.28.
   2.  a.  For a county that has, as of June 30, 2019, reduced its actual ending fund balance to less than twenty-five percent of actual expenditures, additional property taxes may be computed and levied as provided in this subsection. The additional property tax levy amount is an amount not to exceed twenty-five percent of actual expenditures from the general fund and rural services fund for the fiscal year beginning July 1, 2018, minus the combined ending fund balances for those funds for that year.
   b.  The amount of the additional property taxes shall be apportioned between the general fund and the rural services fund. However, the amount apportioned for general county services and for rural county services shall not exceed for each fund twenty-five percent of actual expenditures for the fiscal year beginning July 1, 2018.
   c.  All or a portion of additional property tax dollars may be levied for the purpose of increasing cash reserves for general county services and rural county services in the budget year. The additional property tax dollars authorized under this subsection but not levied may be carried forward as unused ending fund balance taxing authority until and for the fiscal year beginning July 1, 2025. The amount carried forward shall not exceed twenty-five percent of the maximum amount of property tax dollars available in the current fiscal year. Additionally, property taxes that are levied as unused ending fund balance taxing authority under this subsection may be the subject of a protest under section 331.436, and the amount will be considered an increase in an item in the budget for purposes of section 24.28. The amount of additional property taxes levied under this subsection shall not be included in the computation of the maximum amount of property tax dollars which may be certified and levied under section 331.423.
    Sec. 13.  Section 331.424, Code 2019, is amended by striking the section and inserting in lieu thereof the following:
   331.424  Authority to levy beyond maximum property tax dollars.
   1.  a.  The board may, by resolution and subject to the petition and election provisions of this section, annually certify additions to the maximum amount of property tax dollars to be levied pursuant to section 331.423, subsection 3, paragraph “b”, subparagraph (3), or section 331.423, subsection 3, paragraph “c”, subparagraph (3), if the board publishes the notice of the proposed action, including a statement of the amount and purpose of the proposed additions, the requirements and deadlines for filing a petition under paragraph “b”, the resulting consequences and processes if a petition is filed under paragraph “b”, and the time and place of a public meeting at which the board proposes to take action on the proposal. At the meeting, the board shall receive oral or written objections from any resident or property owner of the county. After all objections have been received and considered, the board may, following twenty days after the meeting and subject to paragraph “b”, take action on the proposal or abandon the proposal. A resolution under this section approving additions to the maximum amount of property tax dollars must be effective not later than January 31 preceding the fiscal year for which the addition is applicable.
   b.  If at any time within twenty days after the meeting under paragraph “a”, a petition is filed with the county auditor signed by eligible electors of the county equal in number to the lesser of two thousand or twenty percent of the persons in the county who voted for the office of president of the United States at the last preceding general election that had such office on the ballot, but not less than ten eligible electors, asking that the question of levying an additional amount be submitted to the registered voters of the county, the board shall either by resolution declare the proposal to be abandoned or shall direct the county commissioner of elections to call a special election upon the question. If, however, a valid petition is filed under this section and the notice requirement of subsection 2, paragraph “a”, cannot be satisfied, the board shall declare the proposal to be abandoned. 
   2.  The special election, if called, may be held on a Tuesday other than the dates specified in section 39.2, subsection 4, paragraph “a”, but not later than the second Tuesday in March and is subject to the following:
   a.  The board must give at least thirty-two days’ notice to the county commissioner of elections that the special election is to be held. In no case, however, shall a notice be given to the county commissioner of elections after January 31 for an election on a proposition to exceed the statutory limits during the fiscal year beginning following the current fiscal year.
   b.  The proposition submitted to voters may propose authority for the board to certify additions to the maximum amount of property tax dollars for up to two fiscal years. The proposition is approved if it receives a favorable majority of the votes cast on the proposition. 
   c.  The proposition to be submitted shall be substantially in the following form:
  Vote “yes” or “no” on the following: 

  Shall the county of ........ levy for an additional $... each year for ... years beginning July 1, ...., in excess of the statutory limits otherwise applicable for the (general county services or rural services) fund? 

   d.  The canvass shall be held beginning at 1:00 p.m. on the second day which is not a holiday following the special election.
   e.  Notice of the special election shall be published at least once in a newspaper as specified in section 331.305 prior to the date of the special election. The notice shall appear as early as practicable after the board has voted to submit a proposition to the voters to levy additional property tax dollars.
   3.  Registered voters in the county may vote on the proposition to increase property taxes for the general fund in excess of the statutory limit. Registered voters residing outside the corporate limits of a city within the county may vote on the proposition to increase property taxes for the rural services fund in excess of the statutory limit.
    Sec. 14.  Section 331.424A, subsection 6, Code 2019, is amended to read as follows:
   6.  For each fiscal year, the county shall certify a levy for payment of services. For each fiscal year, county revenues from taxes imposed by the county credited to the county services fund shall not exceed an amount equal to the county budgeted amount for the fiscal year. A levy certified under this section is not subject to the appeal provisions of section 331.426 or to any other provision in law authorizing a county to exceed, increase, or appeal a property tax levy limit.
    Sec. 15.  Section 331.427, subsection 3, paragraph l, Code 2019, is amended to read as follows:
   l.  Services listed in section 331.424, subsection 1, Code 2019, and section 331.554.
    Sec. 16.  Section 331.428, subsection 2, paragraph d, Code 2019, is amended to read as follows:
   d.  Services listed under section 331.424, subsection 2, Code 2019.
    Sec. 17.  Section 331.429, subsection 1, paragraphs a and b, Code 2019, are amended to read as follows:
   a.  Transfers from the general fund not to exceed in any year the dollar equivalent of a tax of sixteen and seven-eighths cents per thousand dollars of assessed value on all taxable property in the county multiplied by the ratio of current taxes actually collected and apportioned for the general basic county services levy to the total general basic county services levy for the current year, and an amount equivalent to the moneys derived by the general fund from military service tax credits under chapter 426A, manufactured or mobile home taxes under section 435.22, and delinquent taxes for prior years collected and apportioned to the general basic county services fund in the current year, multiplied by the ratio of sixteen and seven-eighths cents to three dollars and fifty cents. The limit on transfers in this paragraph applies only to property tax revenue and is not a limit on transfers of revenue generated from sources other than property taxes.
   b.  Transfers from the rural services fund not to exceed in any year the dollar equivalent of a tax of three dollars and three-eighths cents per thousand dollars of assessed value on all taxable property not located within the corporate limits of a city in the county multiplied by the ratio of current taxes actually collected and apportioned for the rural county services basic levy to the total rural county services basic levy for the current year and an amount equivalent to the moneys derived by the rural services fund from military service tax credits under chapter 426A, manufactured or mobile home taxes under section 435.22, and delinquent taxes for prior years collected and apportioned to the rural county services basic fund in the current year, multiplied by the ratio of three dollars and three-eighths cents to three dollars and ninety-five cents. The limit on transfers in this paragraph applies only to property tax revenue and is not a limit on transfers of revenue generated from sources other than property taxes.
    Sec. 18.  Section 331.434, unnumbered paragraph 1, Code 2019, is amended to read as follows:
   Annually, the board of each county, subject to section 331.403, subsection 4, sections 331.423 through 331.426 331.424C, and other applicable state law, shall prepare and adopt a budget, certify taxes, and provide appropriations as follows:
    Sec. 19.  Section 331.434, subsection 7, Code 2019, is amended to read as follows:
   7.  Taxes levied by a county whose budget is certified after March 15 shall be limited to the prior year’s budget amount. However, this penalty may be waived by the director of the department of management if the county demonstrates that the March 15 deadline was missed because of circumstances beyond the control of the county or as the result of an election held under section 331.424.
    Sec. 20.  Section 364.25, Code 2019, is amended to read as follows:
   364.25  Retiree health care.
   A city may provide health or medical insurance coverage or supplemental health or medical insurance coverage to retired employees of the city. A city providing health or medical insurance coverage pursuant to this section may establish such requirements or restrictions concerning the coverage provided as the city may adopt. If coverage is provided, the cost of the health or medical insurance coverage may be paid from moneys held in a trust and agency fund established pursuant to section 384.6, or out of an appropriation from the city general fund for this purpose.
    Sec. 21.  Section 331.435, unnumbered paragraph 1, Code 2019, is amended to read as follows:
   The board may amend the adopted county budget, subject to sections 331.423 through 331.426 331.424C and other applicable state law, to permit increases in any class of proposed expenditures contained in the budget summary published under section 331.434, subsection 3.
    Sec. 22.  Section 373.10, Code 2019, is amended to read as follows:
   373.10  Taxing authority.
   The metropolitan council shall have the authority to levy city taxes to the extent the city tax levy authority is transferred by the charter to the metropolitan council. A member city shall transfer a portion of the city’s tax levy authorized under section 384.1 or 384.12, whichever is applicable, to the metropolitan council. The maximum rates amount of taxes authorized to be levied under sections section 384.1 and the taxes authorized to be levied under section 384.12 by a member city shall be reduced by an amount equal to the rates of the same or similar taxes levied in the city by the metropolitan council.
    Sec. 23.  Section 384.1, Code 2019, is amended by striking the section and inserting in lieu thereof the following:
   384.1  Property tax dollars —— maximum.
   1.  A city shall certify taxes to be levied by the city on all taxable property within the city limits, for all city government purposes. Annually, the city council may certify a basic levy for city government purposes, subject to the limitation on property tax dollars provided in this section.
   2.  For purposes of this section, unless the context otherwise requires:
   a.  “Annual growth factor” means one hundred two percent.
   b.  “Boundary adjustment” means annexation, severance, incorporation, or discontinuance as those terms are defined in section 368.1.
   c.  “Budget year” is the fiscal year beginning during the calendar year in which a budget is certified.
   d.  “Current fiscal year” is the fiscal year ending during the calendar year in which a budget is certified.
   e.  “Net new valuation taxes” means the amount of property tax dollars equal to the current fiscal year’s levy rate in the city for the general fund plus, for the fiscal year beginning July 1, 2020, only, the levy rates in the city under sections 384.6 and 384.8, Code 2019, multiplied by the net increase from the current fiscal year to the budget year in taxable valuation due to the following, the amount of each as certified by the county auditor to the department of management by January 1 preceding the applicable fiscal year, excluding amounts attributable to a valuation release:
   (1)  New construction.
   (2)  Additions or improvements to existing structures that are not normal and necessary repairs under section 441.21, subsection 8.
   (3)  Net boundary adjustment.
   (4)  A municipality no longer dividing tax revenues in an urban renewal area as provided in section 403.19 or a community college no longer dividing revenues as provided in section 260E.4.
   (5)  That portion of taxable property located in an urban revitalization area on which an exemption was allowed and such exemption has expired.
   (6)  New exemptions for existing properties and the expiration or removal of property exemptions.
   f.  “Valuation release” means the valuation that is released in any one year from either a division of revenue under section 260E.4 or an urban renewal area for which taxes were being divided under section 403.19 if the property for the valuation being released remains subject to the division of revenue under section 260E.4 or remains part of the urban renewal area that is subject to a division of revenue under section 403.19.
   3.  a.  For the fiscal year beginning July 1, 2020, and subsequent fiscal years, the maximum amount of property tax dollars which may be certified for levy by a city for the general fund shall be the maximum property tax dollars calculated under paragraph “b”. The amount of property tax dollars calculated under this subsection and determined under subsection 4 includes those amounts received by the city as replacement taxes under chapter 437A or 437B.
   b.  The maximum property tax dollars that may be levied for deposit in the general fund is an amount equal to the sum of the following:
   (1)  The annual growth factor times the current fiscal year’s actual property tax dollars certified for levy for the general fund.
   (2)  The amount of net new valuation taxes in the city.
   (3)  The amount of the additions approved under section 384.12A for the budget year, if applicable.
   4.  a.  For purposes of calculating maximum property tax dollars for the city general fund for the fiscal year beginning July 1, 2020, only, the term “current fiscal year’s actual property tax dollars” shall mean the sum of the total amount of property tax dollars certified by the city for the city’s general fund plus the total amount of property tax dollars certified for the city’s trust and agency fund under section 384.6, subsection 1, Code 2019, for the city’s emergency fund under section 384.8, Code 2019, and for the levies authorized under section 384.12, subsections 8, 10, 11, 12, 13, and 17, Code 2019, for the fiscal year beginning July 1, 2018, or the fiscal year beginning July 1, 2019, whichever is greater.
   b.  For purposes of calculating maximum property tax dollars for a fiscal year beginning on or after July 1, 2021, a city for which the city’s taxes were not certified back by the department of management under section 24.17 for the current fiscal year due to an act or omission of the city, the current fiscal year’s actual property tax dollars certified for levy shall be equal to the amount certified for levy for the fiscal year immediately preceding the current fiscal year or the amount under paragraph “a”, if applicable.
   5.  Property taxes certified for a unified law enforcement district under chapter 28E, subchapter II, deposit in the debt service fund in section 384.4, capital improvements reserve fund in section 384.7, any capital projects fund established by the city for deposit of bond, loan, or note proceeds, and property taxes collected from a levy in section 384.12, are not counted against the maximum amount of property tax dollars that may be certified for a fiscal year under subsection 3.
   6.  Notwithstanding the maximum amount of taxes a city may certify for levy, the tax levied by a city on tracts of land and improvements on the tracts of land used and assessed for agricultural or horticultural purposes shall not exceed three dollars and three-eighths cents per thousand dollars of assessed value in any year. Improvements located on such tracts of land and not used for agricultural or horticultural purposes and all residential dwellings are subject to the same rate of tax levied by the city on all other taxable property within the city. 
   7.  The department of management, in consultation with the city finance committee, shall adopt rules to administer this section. The department shall prescribe forms to be used by cities when making calculations required by this section. 
    Sec. 24.  NEW SECTION.  384.1A  Ending fund balance.
   1.  a.  Budgeted ending fund balances for a budget year in excess of twenty-five percent of budgeted expenditures from the general fund for that budget year shall be nonspendable or be restricted, committed, or assigned for a specific purpose.
   b.  In a protest to the city budget under section 384.19, the city shall have the burden of proving that the budgeted balances in excess of twenty-five percent are reasonably likely to be appropriated for the restricted, committed, or assigned specific purpose. The excess budgeted balance for the specific purpose shall be considered an increase in an item in the budget for purposes of section 24.28.
   2.  a.  For a city that has, as of June 30, 2019, reduced its ending fund balance to less than twenty-five percent of actual expenditures, additional property taxes may be computed and levied as provided in this subsection. The additional property tax levy amount is an amount not to exceed the difference between twenty-five percent of actual expenditures for city government purposes for the fiscal year beginning July 1, 2018, minus the ending fund balance for that year.
   b.  All or a portion of additional property tax dollars may be levied for the purpose of increasing cash reserves for city government purposes in the budget year. The additional property tax dollars authorized under this subsection but not levied may be carried forward as unused ending fund balance taxing authority until and for the fiscal year beginning July 1, 2025. The amount carried forward shall not exceed twenty-five percent of the maximum amount of property tax dollars available in the current fiscal year. Additionally, property taxes that are levied as unused ending fund balance taxing authority under this subsection may be the subject of a protest under section 384.19, and the amount will be considered an increase in an item in the budget for purposes of section 24.28. The amount of additional property tax dollars levied under this subsection shall not be included in the computation of the maximum amount of property tax dollars which may be certified and levied under section 384.1.
    Sec. 25.  Section 384.3, Code 2019, is amended to read as follows:
   384.3  General fund.
   All moneys received for city government purposes from taxes and other sources must be credited to the general fund of the city, except that moneys received for the purposes of the debt service fund, the trust and agency funds, the capital improvements reserve fund, the emergency fund and other funds established by state law must be deposited as otherwise required or authorized by state law. All moneys received by a city from the federal government must be reported to the department of management who shall transmit a copy to the legislative services agency.
    Sec. 26.  NEW SECTION.  384.3B  Employee benefits and retirement contributions —— city general fund.
   A city may include within the city’s basic levy for city government purposes, an amount necessary, subject to the limitation on property tax dollars in section 384.1, property taxes for the following purposes, with such taxes accounted for as provided by the city finance committee:
   1.  Pension and related benefits of the city’s employees.
   2.  A city may make contributions to a retirement system other than the Iowa public employees’ retirement system for its city manager, or city administrator performing the duties of city manager, in an annual amount not to exceed the amount that would have been contributed by the employer under section 97B.11.
   3.  If a police chief or fire chief has submitted a written request to the board of trustees to be exempt from chapter 411, authorized in section 411.3, subsection 1, a city shall make contributions for the chief, in an amount not to exceed the amount that would have been contributed by the city under section 411.8, subsection 1, paragraph “a”, to the international city management association retirement corporation.
   4.  A city which has contracted with another city or governmental entity for the provision of public safety services, including but not limited to police protection, fire protection, ambulance, or hazardous materials response, may, pursuant to contract, make contributions for pension and related employee benefits for personnel of the other city or governmental entity providing such services to the city. The city may make such contributions in an annual amount not to exceed the amount of contributions for pension and related employee benefits that would otherwise be paid by the other city or governmental entity for such personnel.
    Sec. 27.  Section 384.6, Code 2019, is amended to read as follows:
   384.6  Trust and agency funds.
   A city may establish trust and agency funds for the following purposes:
   1.  Accounting for pension and related employee benefit funds as provided by the city finance committee. A city may certify taxes to be levied for a trust and agency fund in the amount necessary to meet its obligations.
   a.  A city may make contributions to a retirement system other than the Iowa public employees’ retirement system for its city manager, or city administrator performing the duties of city manager, in an annual amount not to exceed the amount that would have been contributed by the employer under section 97B.11.
   b.  If a police chief or fire chief has submitted a written request to the board of trustees to be exempt from chapter 411, authorized in section 411.3, subsection 1, a city shall make contributions for the chief, in an amount not to exceed the amount that would have been contributed by the city under section 411.8, subsection 1, paragraph “a”, to the international city management association retirement corporation.
   c.  A city which has contracted with another city or governmental entity for the provision of public safety services, including but not limited to police protection, fire protection, ambulance, or hazardous materials response, may, pursuant to contract, make contributions for pension and related employee benefits for personnel of the other city or governmental entity providing such services to the city. The city may make such contributions in an annual amount not to exceed the amount of contributions for pension and related employee benefits that would otherwise be paid by the other city or governmental entity for such personnel.
   2.  1.  Accounting for gifts received by the city for a particular purpose.
   3.  2.  Accounting for money and property received and handled by the city as trustee or custodian or in the capacity of an agent.
    Sec. 28.  Section 384.12, subsections 8, 10, 11, 12, 13, and 17, Code 2019, are amended by striking the subsections.
    Sec. 29.  NEW SECTION.  384.12A  Authority to levy beyond maximum property tax dollars.
   1.  a.  The city council may, by resolution and subject to the petition and election provisions of this section, annually certify additions to the maximum amount of property tax dollars to be levied pursuant to section 384.1, subsection 3, paragraph “b”, subparagraph (3), if the city council publishes notice of the proposed action, including a statement of the amount and purpose of the proposed additions, the requirements and deadlines for filing a petition under paragraph “b”, the resulting consequences and processes if a petition is filed under paragraph “b”, and the time and place of a public meeting at which the city council proposes to take action on the proposal. At the meeting, the council shall receive oral or written objections from any resident or property owner of the city. After all objections have been received and considered, the council may, following twenty days after the meeting and subject to paragraph “b”, take action on the proposal or abandon the proposal. A resolution under this section approving additions to the maximum amount of property tax dollars must be effective not later than January 31 preceding the fiscal year for which the addition is applicable.
   b.  If, at any time within twenty days after the meeting under paragraph “a”, a petition is filed with the city clerk signed by eligible electors of the city equal in number to the lesser of two thousand or twenty percent of the persons in the city who voted for the office of president of the United States at the last preceding general election that had such office on the ballot, but not less than ten eligible electors, asking that the question of levying an additional amount be submitted to the registered voters of the city, the city council shall either by resolution declare the proposal to be abandoned or shall direct the county commissioner of elections to call a special election upon the question. If, however, a valid petition is filed under this section and the notice requirement of subsection 2, paragraph “a”, cannot be satisfied, the council shall declare the proposal to be abandoned. 
   2.  The special election, if called, may be held on a Tuesday other than the dates specified in section 39.2, subsection 4, paragraph “b”, but not later than the second Tuesday in March and is subject to the following:
   a.  The city council must give at least thirty-two days’ notice to the county commissioner of elections that the special election is to be held. In no case, however, shall a notice be given to the county commissioner of elections after January 31 for an election on a proposition to exceed the statutory limits during the fiscal year beginning following the current fiscal year.
   b.  The proposition submitted to voters may propose authority for the city council to certify additions to the maximum amount of property tax dollars for up to two fiscal years. The proposition is approved if it receives a favorable majority of the votes cast on the proposition. 
   c.  The proposition to be submitted shall be substantially in the following form:
  Vote “yes” or “no” on the following: 

  Shall the city of ........ levy for an additional $... each year for ... years beginning next July 1, ...., in excess of the statutory limits otherwise applicable for the city general fund?

   d.  The canvass shall be held beginning at 1:00 p.m. on the second day which is not a holiday following the special election.
   e.  Notice of the special election shall be published at least once in a newspaper as specified in section 362.3 prior to the date of the special election. The notice shall appear as early as practicable after the city council has voted to submit a proposition to the voters to levy additional property tax dollars.
    Sec. 30.  Section 384.15, subsection 1, Code 2019, is amended to read as follows:
   1.  Promulgate rules relating to budget amendments and the procedures for transferring moneys between funds, and other rules necessary or desirable in order to exercise its powers and perform its duties, including rules necessary to implement section 384.6, subsection 1 384.3B. The committee’s rules are subject to chapter 17A as applicable.
    Sec. 31.  Section 384.16, subsection 6, Code 2019, is amended to read as follows:
   6.  Taxes levied by a city whose budget is certified after March 15 shall be limited to the prior year’s budget amount. However, this penalty may be waived by the director of the department of management if the city demonstrates that the March 15 deadline was missed because of circumstances beyond the control of the city or as the result of an election held under section 384.12A.
    Sec. 32.  Section 384.18, subsection 1, paragraph c, Code 2019, is amended to read as follows:
   c.  To permit transfers from the debt service fund, the capital improvements reserve fund, the emergency fund, or other funds established by state law, to any other city fund, unless specifically prohibited by state law.
    Sec. 33.  Section 384.19, Code 2019, is amended by adding the following new subsection:
   NEW SUBSECTION.  5.  For purposes of a tax protest filed under this section and in accordance with the provisions of chapter 24, “item” means a budgeted expenditure, appropriation, or cash reserve from a fund for a service area, program, program element, or purpose.
    Sec. 34.  Section 384.110, Code 2019, is amended to read as follows:
   384.110  Insurance, self-insurance, and risk pooling funds.
   A city may credit funds to a fund or funds for the purposes authorized by section 364.4, subsection 5; section 384.12, subsection 17; or section 384.24, subsection 3, paragraph “s”. Moneys credited to the fund or funds, and interest earned on such moneys, shall remain in the fund or funds until expended for purposes authorized by section 364.4, subsection 5; section 384.12, subsection 17; or section 384.24, subsection 3, paragraph “s”.
    Sec. 35.  Section 386.8, Code 2019, is amended to read as follows:
   386.8  Operation tax.
   A city may establish a self-supported improvement district operation fund, and may certify taxes not to exceed the rate limitation as established in the ordinance creating the district, or any amendment thereto, each year to be levied for the fund against all of the property in the district, for the purpose of paying the administrative expenses of the district, which may include but are not limited to administrative personnel salaries, a separate administrative office, planning costs including consultation fees, engineering fees, architectural fees, and legal fees and all other expenses reasonably associated with the administration of the district and the fulfilling of the purposes of the district. The taxes levied for this fund may also be used for the purpose of paying maintenance expenses of improvements or self-liquidating improvements for a specified length of time with one or more options to renew if such is clearly stated in the petition which requests the council to authorize construction of the improvement or self-liquidating improvement, whether or not such petition is combined with the petition requesting creation of a district. Parcels of property which are assessed as residential property for property tax purposes are exempt from the tax levied under this section except residential properties within a duly designated historic district. A tax levied under this section is not subject to the levy limitation in section 384.1.
    Sec. 36.  Section 386.9, Code 2019, is amended to read as follows:
   386.9  Capital improvement tax.
   A city may establish a capital improvement fund for a district and may certify taxes, not to exceed the rate established by the ordinance creating the district, or any subsequent amendment thereto, each year to be levied for the fund against all of the property in the district, for the purpose of accumulating moneys for the financing or payment of a part or all of the costs of any improvement or self-liquidating improvement. However, parcels of property which are assessed as residential property for property tax purposes are exempt from the tax levied under this section except residential properties within a duly designated historic district. A tax levied under this section is not subject to the levy limitations in section 384.1 or 384.7.
    Sec. 37.  Section 400.8, subsection 1, Code 2019, is amended to read as follows:
   1.  The commission, when necessary under the rules, including minimum and maximum age limits, which shall be prescribed and published in advance by the commission and posted in the city hall, shall hold examinations for the purpose of determining the qualifications of applicants for positions under civil service, other than promotions, which examinations shall be practical in character and shall relate to matters which will fairly test the mental and physical ability of the applicant to discharge the duties of the position to which the applicant seeks appointment. The physical examination of applicants for appointment to the positions of police officer, police matron, or fire fighter shall be held in accordance with medical protocols established by the board of trustees of the fire and police retirement system established by section 411.5 and shall be conducted in accordance with the directives of the board of trustees. However, the prohibitions of section 216.6, subsection 1, paragraph “d”, regarding tests for the presence of the antibody to the human immunodeficiency virus shall not apply to such examinations. The board of trustees may change the medical protocols at any time the board so determines. In the event of a conflict between the medical protocols established under this section and the minimum entrance requirements of the Iowa law enforcement academy under section 80B.11, the medical protocols established under this section shall control. The physical examination of an applicant for the position of police officer, police matron, or fire fighter shall be conducted after a conditional offer of employment has been made to the applicant. An applicant shall not be discriminated against on the basis of height, weight, sex, or race in determining physical or mental ability of the applicant. Reasonable rules relating to strength, agility, and general health of applicants shall be prescribed. The costs of the physical examination required under this subsection shall be paid from the trust and agency general fund of the city.
    Sec. 38.  Section 411.6, subsection 5, paragraph b, Code 2019, is amended to read as follows:
   b.  If a member in service or the chief of the police or fire departments becomes incapacitated for duty as a natural or proximate result of an injury or disease incurred in or aggravated by the actual performance of duty at some definite time or place or while acting, pursuant to order, outside the city by which the member is regularly employed, the member, upon being found to be temporarily incapacitated following a medical examination as directed by the city, is entitled to receive the member’s full pay and allowances from the city’s general fund or trust and agency fund until reexamined as directed by the city and found to be fully recovered or until the city determines that the member is likely to be permanently disabled. If the temporary incapacity of a member continues more than sixty days, or if the city expects the incapacity to continue more than sixty days, the city shall notify the system of the temporary incapacity. Upon notification by a city, the system may refer the matter to the medical board for review and consultation with the member’s treating physician during the temporary incapacity. Except as provided by this paragraph, the board of trustees of the statewide system has no jurisdiction over these matters until the city determines that the disability is likely to be permanent.
    Sec. 39.  Section 411.15, Code 2019, is amended to read as follows:
   411.15  Hospitalization and medical attention.
   Cities shall provide hospital, nursing, and medical attention for the members of the police and fire departments of the cities, when injured while in the performance of their duties as members of such department, and shall continue to provide hospital, nursing, and medical attention for injuries or diseases incurred while in the performance of their duties for members receiving a retirement allowance under section 411.6, subsection 6. Cities may fund the cost of the hospital, nursing, and medical attention required by this section through the purchase of insurance, by self-insuring the obligation, or through payment of moneys into a local government risk pool established for the purpose of covering the costs associated with the requirements of this section. However, the cost of the hospital, nursing, and medical attention required by this section shall not be funded through an employee-paid health insurance policy. The cost of the hospital, nursing, and medical attention required by this section shall be paid from moneys held in a trust and agency fund established pursuant to section 384.6, the city’s general fund or out of the appropriation for the department to which the injured person belongs or belonged; provided that any amounts received by the injured person from any other source for such specific purposes, shall be deducted from the amount paid by the city under the provisions of this section.
    Sec. 40.  REPEAL.  Sections 331.425, 331.426, and 384.8, Code 2019, are repealed.
    Sec. 41.  APPLICABILITY.  This Act applies to fiscal years beginning on or after July 1, 2020.
EXPLANATION
The inclusion of this explanation does not constitute agreement with
the explanation’s substance by the members of the general assembly.
   This bill removes the property tax levy rate limitations on the general and rural funds for counties and on the general fund for cities and substitutes a limitation on the maximum amount of property tax dollars that may be certified for levy by a county or city for those funds for fiscal years beginning on or after July 1, 2020. For the fiscal year beginning July 1, 2020, and subsequent fiscal years, the maximum amount of property tax dollars which may be certified for levy shall be an amount equal to the sum of the following: (1) the current fiscal year’s actual property tax dollars certified by the county or city multiplied by the annual growth factor, defined in the bill to be 102 percent; (2) the amount of net new valuation taxes, as defined in the bill; and (3) the amount of additions to the levy approved by resolution of the governing body of the city or county, subject to a voter referendum, if the referendum is requested by a petition signed by a specified amount of electors.
   Property taxes certified for mental health and disabilities services in Code section 331.424A, a unified law enforcement district under Code chapter 28E, the emergency services fund in Code section 331.424C, the debt service fund in Code section 331.430, and any capital projects fund established by the county for deposit of bond, loan, or note proceeds, are not counted against the maximum amount of property tax dollars that may be certified for levy by a county.
   Property taxes certified for a unified law enforcement district under Code chapter 28E, deposit in the debt service fund in Code section 384.4, capital improvements reserve fund in Code section 384.7, any capital projects fund established by the city for deposit of bond, loan, or note proceeds, and property taxes collected from a levy in Code section 384.12, as amended in the bill, are not counted against the maximum amount of property tax dollars that may be certified for levy by a city.
   The bill establishes an amount to be used by each county or city, as applicable, in order to calculate the maximum property tax dollars that may be certified for the fiscal year beginning July 1, 2020. For counties, that amount includes the total amount of property tax dollars certified by the county for general county services or for rural county services, as applicable, including those amounts certified under Code section 331.424, Code 2019 (supplemental levies). For cities, that amount includes the sum of the total amount of property tax dollars certified by the city for the city’s general fund plus the total amount of property tax dollars certified for the city’s trust and agency fund under Code section 384.6, subsection 1, Code 2019, for the city’s emergency fund under Code section 384.8, Code 2019, and for the levies authorized under Code section 384.12, subsections 8, 10, 11, 12, 13, and 17, Code 2019.
   The bill also provides that the city’s employee benefits expenditures, currently levied as part of the city’s trust and agency funds under Code section 384.6, shall be levied for under new Code section 384.3B and are subject to the limitation on property tax dollars established in the bill.
   The bill specifies certain requirements for ending fund balances for counties and cities. The bill provides that budgeted ending fund balances in certain specified funds for a budget year in excess of 25 percent of budgeted expenditures shall be nonspendable or be restricted, committed, or assigned for a specific purpose.
   In a protest to the county or city budget, the county or city, as applicable, has the burden of proving that the budgeted balances in excess of 25 percent are reasonably likely to be appropriated for the restricted, committed, or assigned specific purpose.
   The bill also allows for additional property taxes to be levied in certain fiscal years for those counties or cities that have, as of June 30, 2019, reduced their actual ending fund balance to less than 25 percent of actual expenditures. Such additional property tax dollars authorized but not levied may be carried forward as unused ending fund balance taxing authority until and for the fiscal year beginning July 1, 2025. However, the amount carried forward shall not exceed 25 percent of the maximum amount of property tax dollars available in the current fiscal year. The amount of such additional property taxes levied shall not, however, be included in the computation of the maximum amount of property tax dollars which may be certified and levied in future budget years.
   The bill also makes conforming amendments to other provisions of the Code.
   The bill applies to fiscal years beginning on or after July 1, 2020.