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PAG LIN 1 1 Amend amendment S-5580, to the House amendment, S- 1 2 5574, to Senate File 2449, as amended, passed, and 1 3 reprinted by the Senate, as follows: 1 4 #1. By striking page 1, line 1, through page 27, 1 5 line 21, and inserting the following: 1 6 "Amend the House amendment, S-5574, to Senate File 1 7 2449, as amended, passed, and reprinted by the Senate, 1 8 as follows: 1 9 #1. By striking page 1, line 3, through page 6, 1 10 line 10, and inserting the following: 1 11 "# . By striking everything after the enacting 1 12 clause and inserting the following: 1 13 "DIVISION I 1 14 INCOME TAX INDEXATION 1 15 Section 1. Section 422.4, subsection 1, paragraphs 1 16 a and d, Code 1995, are amended to read as follows: 1 17 a. "Annual inflation factor" means an index, 1 18 expressed as a percentage, determined by the 1 19 department by October 15 of the calendar year 1 20 preceding the calendar year for which the factor is 1 21 determined, which reflects the purchasing power of the 1 22 dollar as a result of inflation during the fiscal year 1 23 ending in the calendar year preceding the calendar 1 24 year for which the factor is determined. In 1 25 determining the annual inflation factor, the 1 26 department shall use the annual percent change, but 1 27 not less than zero percent, in theimplicit price1 28deflator for the gross national productgross domestic 1 29 product price deflator computed for the second quarter 1 30 of the calendar year by the bureau of economic 1 31 analysis of the United States department of commerce 1 32 and shall addone-halfall of that percent change to 1 33 one hundred percent. The annual inflation factor and 1 34 the cumulative inflation factor shall each be 1 35 expressed as a percentage rounded to the nearest one- 1 36 tenth of one percent. The annual inflation factor 1 37 shall not be less than one hundred percent. 1 38 d. Notwithstanding the computation of the annual 1 39 inflation factor under paragraph "a", the annual 1 40 inflation factor is one hundred percent for any 1 41 calendar year in which the unobligated state general 1 42 fund balance on June 30 as certified by the director 1 43 of the department of management by October 10, is less 1 44 than sixty million dollars. Notwithstanding section 1 45 8.58, in determining the unobligated state general 1 46 fund balance on June 30, unobligated moneys in the 1 47 cash reserve fund and Iowa economic emergency fund on 1 48 June 30 shall be counted as part of the unobligated 1 49 state general fund balance for purposes of this 1 50 paragraph. 2 1 Sec. 2. Section 422.4, subsection 2, paragraph a, 2 2 Code 1995, is amended to read as follows: 2 3 a. "Annual standard deduction factor" means an 2 4 index, expressed as a percentage, determined by the 2 5 department by October 15 of the calendar year 2 6 preceding the calendar year for which the factor is 2 7 determined, which reflects the purchasing power of the 2 8 dollar as a result of inflation during the fiscal year 2 9 ending in the calendar year preceding the calendar 2 10 year for which the factor is determined. In 2 11 determining the annual standard deduction factor, the 2 12 department shall use the annual percent change, but 2 13 not less than zero percent, in theimplicit price2 14deflator for the gross national productgross domestic 2 15 product price deflator computed for the second quarter 2 16 of the calendar year by the bureau of economic 2 17 analysis of the United States department of commerce 2 18 and shall addone-halfall of that percent change to 2 19 one hundred percent. The annual standard deduction 2 20 factor and the cumulative standard deduction factor 2 21 shall each be expressed as a percentage rounded to the 2 22 nearest one-tenth of one percent. The annual standard 2 23 deduction factor shall not be less than one hundred 2 24 percent. 2 25 Sec. 3. This division of this Act, being deemed of 2 26 immediate importance, takes effect upon enactment and 2 27 applies to the computation of the annual inflation 2 28 factor and annual standard deduction factor for 2 29 calendar years beginning on or after January 1, 1996. 2 30 The department of revenue and finance shall adjust the 2 31 annual inflation factor and annual standard deduction 2 32 factor previously computed for the 1996 calendar year 2 33 to reflect the change made in the computation of those 2 34 factors in this Act. 2 35 DIVISION II 2 36 INHERITANCE TAX 2 37 Sec. 4. Section 450.9, subsections 2 and 3, Code 2 38 1995, are amended to read as follows: 2 39 2. Each son and daughter, including legally 2 40 adopted sons and daughters, or stepsons and 2 41 stepdaughters, or biological sons and daughters 2 42 entitled to inherit under the law of this state,fifty2 43 two hundred thousand dollars. 2 44 3. Father or mother,fifteenfifty thousand 2 45 dollars. 2 46 Sec. 5. Section 450.9, Code 1995, is amended by 2 47 adding the following new subsection after subsection 2 48 3: 2 49 NEW SUBSECTION. 3A. Each grandchild, fifty 2 50 thousand dollars. 3 1 Sec. 6. This division of this Act takes effect 3 2 July 1 following enactment of the division and applies 3 3 to the estates of decedents dying on or after that 3 4 date. 3 5 DIVISION III 3 6 HOMESTEAD, MILITARY, AND LOW-INCOME 3 7 TAX CREDIT AND REIMBURSEMENT 3 8 Sec. 7. Section 8.59, Code 1995, is amended to 3 9 read as follows: 3 10 8.59 APPROPRIATIONS FREEZE. 3 11 Notwithstanding contrary provisions of the Code, 3 12 the amounts appropriated under the applicable sections 3 13 of the Code for fiscal years commencing on or after 3 14 July 1, 1993, are limited to those amounts expended 3 15 under those sections for the fiscal year commencing 3 16 July 1, 1992. If an applicable section appropriates 3 17 moneys to be distributed to different recipients and 3 18 the operation of this section reduces the total amount 3 19 to be distributed under the applicable section, the 3 20 moneys shall be prorated among the recipients. As 3 21 used in this section, "applicable sections" means the 3 22 following sections: 53.50, 229.35, 230.8, 230.11, 3 23 405A.8, 411.20,425.1, 425.39, 426A.1,663.44, and 3 24 822.5. 3 25 Sec. 8. Section 425.1, subsection 1, Code 1995, is 3 26 amended to read as follows: 3 27 1. A homestead credit fund is created. There is 3 28 appropriated annually from the general fund of the 3 29 state to the department of revenue and finance to be 3 30 credited to the homestead credit fund,an amount3 31sufficientthe sum of one hundred fourteen million 3 32 four hundred thousand dollars to implement this 3 33 chapter. 3 34 The director of revenue and finance shall issue 3 35 warrants on the homestead credit fund payable to the 3 36 county treasurers of the several counties of the state 3 37 under this chapter. 3 38 Sec. 9. Section 425.17, subsection 2, paragraph b, 3 39 Code 1995, is amended to read as follows: 3 40 b. A person filing a claim forcredit or3 41 reimbursement under this division who has attained the 3 42 age of twenty-three years on or before December 31 of 3 43 the base year or was a head of household on December 3 44 31 of the base year, as defined in the Internal 3 45 Revenue Code, but has not attained the age or 3 46 disability status described in paragraph "a", and was 3 47 domiciled in this state during the entire base year, 3 48 and is domiciled in this state at the time the claim 3 49 is filed or at the time of the person's death in the 3 50 case of a claim filed by the executor or administrator 4 1 of the claimant's estate, and was not claimed as a 4 2 dependent on any other person's tax return for the 4 3 base year. 4 4 Sec. 10. Section 425.17, subsection 2, unnumbered 4 5 paragraph 2, Code 1995, is amended to read as follows: 4 6 "Claimant" under paragraph "a"or "b"includes a 4 7 vendee in possession under a contract for deed and may 4 8 include one or more joint tenants or tenants in 4 9 common. In the case of a claim for rent constituting 4 10 property taxes paid, the claimant shall have rented 4 11 the property during any part of the base year. If a 4 12 homestead is occupied by two or more persons, and more 4 13 than one person is able to qualify as a claimant, the 4 14 persons may determine among them who will be the 4 15 claimant. If they are unable to agree, the matter 4 16 shall be referred to the director of revenue and 4 17 finance not later than June 1 of each year and the 4 18 director's decision is final. 4 19 Sec. 11. Section 425.23, subsection 1, paragraph 4 20 b, Code 1995, is amended by striking the paragraph and 4 21 inserting in lieu thereof the following: 4 22 b. The reimbursement for a claimant described in 4 23 section 425.17, subsection 2, paragraph "b", shall be 4 24 determined as follows: 4 25 Percent of rent constituting 4 26 If the household property taxes paid allowed 4 27 income is: as a reimbursement: 4 28 $ 0 - 9,999.99 ............................ 50 4 29 10,000 - 13,999.99 ............................ 42 4 30 14,000 - 17,999.99 ............................ 35 4 31 18,000 - 20,999.99 ............................ 25 4 32 21,000 - 23,999.99 ............................ 17 4 33 24,000 - 26,999.99 ............................ 12 4 34 Sec. 12. Section 425.23, subsection 3, paragraph 4 35 a, Code 1995, is amended to read as follows: 4 36 a. A person who is eligible to file a claim for 4 37 credit for property taxes due and who has a household 4 38 income of six thousand dollars or less and who has an 4 39 unpaid special assessment levied against the homestead 4 40 may file a claim with the county treasurer that the 4 41 claimant had a household income of six thousand 4 42 dollars or less and that an unpaid special assessment 4 43 is presently levied against the homestead. The 4 44 department shall provide to the respective treasurers 4 45 the forms necessary for the administration of this 4 46 subsection. The claim shall be filed not later than 4 47 September 30 of each year. Upon the filing of the 4 48 claim, interest for late payment shall not accrue 4 49 against the amount of the unpaid special assessment 4 50 due and payable. The claim filed by the claimant 5 1 constitutes a claim for credit of an amount equal to 5 2 the actual amount due upon the unpaid special 5 3 assessment, plus interest, payable during the fiscal 5 4 year for which the claim is filed against the 5 5 homestead of the claimant.However, where the5 6claimant is an individual described in section 425.17,5 7subsection 2, paragraph "b", and the tentative credit5 8is determined according to the schedule in section5 9425.23, subsection 1, paragraph "b", subparagraph (2),5 10the claim filed constitutes a claim for credit of an5 11amount equal to one-half of the actual amount due and5 12payable during the fiscal year.The department of 5 13 revenue and finance shall, upon the filing of the 5 14 claim with the department by the treasurer, pay that 5 15 amount of the unpaid special assessment during the 5 16 current fiscal year to the treasurer. The treasurer 5 17 shall submit the claims to the director of revenue and 5 18 finance not later than October 15 of each year. The 5 19 director of revenue and finance shall certify the 5 20 amount of reimbursement due each county for unpaid 5 21 special assessment credits allowed under this 5 22 subsection. The amount of reimbursement due each 5 23 county shall be paid by the director of revenue and 5 24 finance on October 20 of each year, drawn upon 5 25 warrants payable to the respective treasurer. There 5 26 is appropriated annually from the general fund of the 5 27 state to the department of revenue and finance an 5 28 amount sufficient to carry out the provisions of this 5 29 subsection. The treasurer shall credit any moneys 5 30 received from the department against the amount of the 5 31 unpaid special assessment due and payable on the 5 32 homestead of the claimant. 5 33 Sec. 13. Section 425.24, Code 1995, is amended to 5 34 read as follows: 5 35 425.24 MAXIMUM PROPERTY TAX FOR PURPOSE OF CREDIT 5 36 OR REIMBURSEMENT. 5 37 In any case in which property taxes due or rent 5 38 constituting property taxes paid for any household 5 39 exceeds one thousand dollars or six hundred dollars in 5 40 the case of a claimant described in section 425.17, 5 41 subsection 2, paragraph "b", the amount of property 5 42 taxes due or rent constituting property taxes paid 5 43 shall be deemed to have been one thousand dollars or 5 44 six hundred dollars in the case of a claimant 5 45 described in section 425.17, subsection 2, paragraph 5 46 "b", for purposes of this division. 5 47 Sec. 14. Section 425.39, Code 1995, is amended to 5 48 read as follows: 5 49 1. The extraordinary property tax credit and 5 50 reimbursement fund is created. There is appropriated 6 1 annually from the general fund of the state to the 6 2 department of revenue and finance to be credited to 6 3 the extraordinary property tax credit and 6 4 reimbursement fund, from funds not otherwise 6 5 appropriated,an amount sufficientthe sum of twelve 6 6 million five hundred thousand dollars to implement 6 7 this division. 6 8 2. If the amount appropriated under subsection 1,6 9as limited by section 8.59,plus any supplemental 6 10 appropriation made for purposes of this section for a 6 11 fiscal year is insufficient to pay all claims in full, 6 12 the director shall pay, in full, all claims to be paid 6 13 during the fiscal year for reimbursement of rent 6 14 constituting property taxes paid or if moneys are 6 15 insufficient to pay all such claims on a pro rata 6 16 basis. If the amount of claims for credit for 6 17 property taxes due to be paid during the fiscal year 6 18 exceed the amount remaining after payment to renters, 6 19 the director of revenue and finance shall prorate the 6 20 payments to the counties for the property tax credit. 6 21 In order for the director to carry out the 6 22 requirements of this subsection, notwithstanding any 6 23 provision to the contrary in this division, claims for 6 24 reimbursement for rent constituting property taxes 6 25 paid filed before May 1 of the fiscal year shall be 6 26 eligible to be paid in full during the fiscal year and 6 27 those claims filed on or after May 1 of the fiscal 6 28 year shall be eligible to be paid during the following 6 29 fiscal year and the director is not required to make 6 30 payments to counties for the property tax credit 6 31 before June 15 of the fiscal year. 6 32 Sec. 15. Section 425.40, Code 1995, is amended to 6 33 read as follows: 6 34 425.40 LOW-INCOME FUND CREATED. 6 35 1. A low-incometax credit andrent reimbursement 6 36 fund is created. There is appropriated annually from 6 37 the general fund of the state to the low-income rent 6 38 reimbursement fund the sum of thirteen million five 6 39 hundred thousand dollars to fund rent reimbursements 6 40 under this division. 6 41 2. If the amount appropriated under subsection 1 6 42 plus any supplemental appropriation made for purposes 6 43 of this section for a fiscal year is insufficient to 6 44 pay all claims in full, the director shall pay, in6 45full, all claims to be paid during the fiscal year for6 46reimbursement of rent constituting property taxes paid6 47or if moneys are insufficient to payall such claims 6 48 on a pro rata basis.If the amount of claims for6 49credit for property taxes due to be paid during the6 50fiscal year exceed the amount remaining after payment7 1to renters, the director of revenue and finance shall7 2prorate the payments to the counties for the property7 3tax credit.In order for the director to carry out 7 4 the requirements of this subsection, notwithstanding 7 5 any provision to the contrary in this division, claims 7 6 for reimbursement for rent constituting property taxes 7 7 paid filed before May 1 of the fiscal year shall be 7 8 eligible to be paidin fullduring the fiscal year and 7 9 those claims filed on or after May 1 of the fiscal 7 10 year shall be eligible to be paid during the following 7 11 fiscal yearand the director is not required to make7 12payments to counties for the property tax credit7 13before June 15 of the fiscal year. 7 14 Sec. 16. Section 426A.1, Code 1995, is amended to 7 15 read as follows: 7 16 426A.1 APPROPRIATION. 7 17 There is appropriated from the general fund of the 7 18 state theamounts necessarysum of two million eight 7 19 hundred thousand dollars to fund the credits provided 7 20 under this chapter. 7 21 Sec. 17. This division of this Act takes effect 7 22 July 1, 1996, and applies to homestead, military 7 23 service, and low-income tax credit and rent 7 24 reimbursement claims payable in fiscal years beginning 7 25 on or after July 1, 1996. 7 26 DIVISION IV 7 27 SUBCHAPTER S CORPORATIONS 7 28 Sec. 18. Section 422.4, Code 1995, is amended by 7 29 adding the following new subsection: 7 30 NEW SUBSECTION. 15A. "Subchapter S corporation" 7 31 or "S corporation" means a corporation for which a 7 32 valid election under section 1362(a) of the Internal 7 33 Revenue Code is in effect. 7 34 Sec. 19. Section 422.5, subsection 1, paragraph j, 7 35 Code 1995, is amended to read as follows: 7 36 j. (1) The tax imposed upon the taxable income of 7 37 a nonresident shall be computed by reducing the amount 7 38 determined pursuant to paragraphs "a" through "i" by 7 39 the amounts of nonrefundable credits under this 7 40 division and by multiplying this resulting amount by a 7 41 fraction of which the nonresident's net income 7 42 allocated to Iowa, as determined in section 422.8, 7 43 subsection 2, paragraph "a", is the numerator and the 7 44 nonresident's total net income computed under section 7 45 422.7 is the denominator. This provision also applies 7 46 to individuals who are residents of Iowa for less than 7 47 the entire tax year. 7 48 (2) The tax imposed upon the taxable income of a 7 49 resident shareholder in a subchapter S corporation 7 50 which makes an election pursuant to section 422.36, 8 1 subsection 5, paragraph "b", to be taxed as a regular 8 2 corporation, shall be computed by reducing the amount 8 3 determined pursuant to paragraphs "a" through "i" by 8 4 the amounts of nonrefundable credits under this 8 5 division and by multiplying this resulting amount by a 8 6 fraction of which the resident's net income allocated 8 7 to Iowa, as determined in section 422.8, subsection 2, 8 8 paragraph "b", is the numerator and the resident's 8 9 total net income as computed under section 422.7 is 8 10 the denominator. This provision also applies to 8 11 individuals who are residents of Iowa for less than 8 12 the entire tax year. 8 13 (a) In the case of a resident or part-year 8 14 resident shareholder in a subchapter S corporation 8 15 which makes an election under section 422.36, 8 16 subsection 5, paragraph "b", to be taxed as a regular 8 17 corporation, a taxpayer must completely fill out the 8 18 return, determine the taxpayer's income tax as if the 8 19 taxpayer is not a resident shareholder in a 8 20 corporation which makes an election pursuant to 8 21 section 422.36, subsection 5, paragraph "b", and pay 8 22 the amount of tax which is owed. The taxpayer shall 8 23 then recompute the taxpayer's income tax liability 8 24 pursuant to this subparagraph on a special return. 8 25 This special return shall be filed with the regular 8 26 return and constitutes a claim for refund of the 8 27 difference between the amount of tax the taxpayer paid 8 28 on the regular return and the amount of tax determined 8 29 on the special return. However, if the amount of tax 8 30 determined on the special return exceeds the amount of 8 31 tax paid on the regular return, the taxpayer shall pay 8 32 the additional amount of tax which is owed on the 8 33 special return. 8 34 (b) For any tax year, the aggregate amount of 8 35 refund claims that shall be paid pursuant to this 8 36 subparagraph in excess of revenue gains shall not 8 37 exceed three million five hundred thousand dollars. 8 38 If, for a tax year, the aggregate amount of refund 8 39 claims filed pursuant to this subparagraph in excess 8 40 of revenue gains exceeds three million five hundred 8 41 thousand dollars, each claim for refund shall be paid 8 42 on a pro rata basis so that the aggregate amount of 8 43 refund claims in excess of revenue gains does not 8 44 exceed three million five hundred thousand dollars. 8 45 For purposes of the calculation of the three million 8 46 five hundred thousand dollar limitation provided by 8 47 this subparagraph subdivision, the department shall 8 48 take into account all revenue gains as well as revenue 8 49 losses resulting from the application of the following 8 50 provisions, including, without limitation, revenue 9 1 gains arising when the tax calculated under this 9 2 subparagraph is greater, revenue gains resulting from 9 3 the denial of tax credits under section 422.8, 9 4 subsection 6, revenue gains resulting from the 9 5 taxation of additional income under section 422.7, 9 6 subsection 35, and revenue gains resulting from the 9 7 imposition of corporate income taxes on corporations 9 8 making the election specified in section 422.36, 9 9 subsection 5, paragraph "b". In the case where refund 9 10 claims are not allowed in full, the amount of the 9 11 refund to which the taxpayer is entitled under this 9 12 subparagraph is the pro rata amount that was paid and 9 13 the taxpayer is not entitled to a refund of the unpaid 9 14 portion and is not entitled to carry that amount 9 15 forward or backward to another tax year. Taxpayers 9 16 shall not use refunds as estimated payments for the 9 17 succeeding tax year. The department shall determine 9 18 by July 1 of the tax year following the tax year for 9 19 which the refund claim is filed if the aggregate 9 20 amount of refund claims in excess of revenue gains 9 21 exceeds three million five hundred thousand dollars 9 22 for the tax year. Notwithstanding any provision, 9 23 interest shall not be due on any refund claims that 9 24 are paid by September 1 of the tax year following the 9 25 tax year for which the refund claim is filed. For 9 26 taxpayers that are fiscal year filers, the amount of 9 27 the refund claim allowed shall be in the same ratio as 9 28 the refund claims allowed for the tax year in which 9 29 the taxpayer's fiscal year began. 9 30 Sec. 20. Section 422.5, subsection 1, paragraph k, 9 31 subparagraph (3), unnumbered paragraph 3, Code 1995, 9 32 is amended to read as follows: 9 33 In the case of a resident, including a resident 9 34 estate or trust, the state's apportioned share of the 9 35 state alternative minimum tax is one hundred percent 9 36 of the state alternative minimum tax computed in this 9 37 subsection. In the case of a resident or part-year 9 38 resident shareholder in a subchapter S corporation 9 39 which makes an election under section 422.36, 9 40 subsection 5, paragraph "b" to be taxed as a regular 9 41 corporation and a nonresident, including a nonresident 9 42 estate or trust, or an individual, estate, or trust 9 43 that is domiciled in the state for less than the 9 44 entire tax year, the state's apportioned share of the 9 45 state alternative minimum tax is the amount of tax 9 46 computed under this subsection, reduced by the 9 47 applicable credits in sections 422.10 through 422.12 9 48 and this result multiplied by a fraction with a 9 49 numerator of the sum of state net income allocated to 9 50 Iowa as determined in section 422.8, subsection 2, 10 1 paragraph "a" or "b", as applicable, plus tax 10 2 preference items, adjustments, and losses under 10 3 subparagraph (1) attributable to Iowa and with a 10 4 denominator of the sum of total net income computed 10 5 under section 422.7 plus all tax preference items, 10 6 adjustments, and losses under subparagraph (1). In 10 7 computing this fraction, those items excludable under 10 8 subparagraph (1) shall not be used in computing the 10 9 tax preference items. Married taxpayers electing to 10 10 file separate returns or separately on a combined 10 11 return must allocate the minimum tax computed in this 10 12 subsection in the proportion that each spouse's 10 13 respective preference items, adjustments, and losses 10 14 under subparagraph (1) bear to the combined preference 10 15 items, adjustments, and losses under subparagraph (1) 10 16 of both spouses. 10 17 Sec. 21. Section 422.7, Code Supplement 1995, is 10 18 amended by adding the following new subsection: 10 19 NEW SUBSECTION. 35. In determining gain or loss 10 20 from the sale or other disposition of stock of a 10 21 subchapter S corporation which makes an election 10 22 pursuant to section 422.36, subsection 5, paragraph 10 23 "b" to be taxed as a regular corporation, the basis of 10 24 a taxpayer in that stock shall be adjusted for Iowa 10 25 income tax purposes under rules of the director to 10 26 reflect any adjustment in Iowa income taxes paid by 10 27 the taxpayer pursuant to section 422.5, subsection 1, 10 28 paragraph "j", subparagraph (2). 10 29 Sec. 22. Section 422.8, subsection 2, Code 1995, 10 30 is amended to read as follows: 10 31 2. a. Nonresident's net income allocated to Iowa 10 32 is the net income, or portionthereofof the net 10 33 income, which is derived from a business, trade, 10 34 profession, or occupation carried on within this state 10 35 or income from any property, trust, estate, or other 10 36 source within Iowa. However, income derived from a 10 37 business, trade, profession, or occupation carried on 10 38 within this state and income from any property, trust, 10 39 estate, or other source within Iowa shall not include 10 40 distributions from pensions, including defined benefit 10 41 or defined contribution plans, annuities, individual 10 42 retirement accounts, and deferred compensation plans 10 43 or any earnings attributable thereto so long as the 10 44 distribution is directly related to an individual's 10 45 documented retirement and received while the 10 46 individual is a nonresident of this state. If a 10 47 business, trade, profession, or occupation is carried 10 48 on partly within and partly without the state, only 10 49 the portion of the net income which is fairly and 10 50 equitably attributable to that part of the business, 11 1 trade, profession, or occupation carried on within the 11 2 state is allocated to Iowa for purposes of section 11 3 422.5, subsection 1, paragraph "j", and section 422.13 11 4 and income from any property, trust, estate, or other 11 5 source partly within and partly without the state is 11 6 allocated to Iowa in the same manner, except that 11 7 annuities, interest on bank deposits and interest- 11 8 bearing obligations, and dividends are allocated to 11 9 Iowa only to the extent to which they are derived from 11 10 a business, trade, profession, or occupation carried 11 11 on within the state. 11 12 b. A resident's income allocated to Iowa is the 11 13 income determined under section 422.7 reduced by items 11 14 of income, loss, and expenses from a subchapter S 11 15 corporation which makes an election pursuant to 11 16 section 422.36, subsection 5, paragraph "b", to be 11 17 taxed as a regular corporation, which passes directly 11 18 to the shareholders under provisions of the Internal 11 19 Revenue Code, with the following adjustments: 11 20 (1) Add cash or value of property distributions 11 21 made to the extent paid from income upon which Iowa 11 22 income tax has not been paid as determined under rules 11 23 of the director. 11 24 (2) Subtract the amounts of distributions made in 11 25 subparagraph (1) that were, under rules of the 11 26 director, distributed to the shareholder to enable the 11 27 shareholder to pay federal income tax on items of 11 28 income, loss, and expenses from a subchapter S 11 29 corporation which makes an election pursuant to 11 30 section 422.36, subsection 5, paragraph "b", to be 11 31 taxed as a regular corporation, which pass directly to 11 32 the shareholders under provisions of the Internal 11 33 Revenue Code. 11 34 Sec. 23. Section 422.8, Code 1995, is amended by 11 35 adding the following new subsection: 11 36 NEW SUBSECTION. 6. If the resident or part-year 11 37 resident is a shareholder of a subchapter S 11 38 corporation which makes an election pursuant to 11 39 section 422.36, subsection 5, paragraph "b", to be 11 40 taxed as a regular corporation, subsections 1 and 3 do 11 41 not apply to any income taxes paid to another state or 11 42 foreign country on the income from the subchapter S 11 43 corporation. 11 44 Sec. 24. Section 422.32, subsection 4, Code 11 45 Supplement 1995, is amended to read as follows: 11 46 4. "Corporation" includes joint stock companies, 11 47 and associations organized for pecuniary profit, and 11 48 publicly traded partnerships and limited liability 11 49 companies taxed as corporations under the Internal 11 50 Revenue Code and any subchapter S corporation which 12 1 has in effect an election under section 422.36, 12 2 subsection 5, paragraph "b", to be taxed as a regular 12 3 corporation. 12 4 Sec. 25. Section 422.32, Code Supplement 1995, is 12 5 amended by adding the following new subsection: 12 6 NEW SUBSECTION. 11. The term "value-added 12 7 corporation" means a corporation that purchases, 12 8 receives, or holds personal property of any 12 9 description and which adds to its value by a process 12 10 of manufacturing, construction, processing, or 12 11 combining of different materials, and shall 12 12 specifically include the economic activity identified 12 13 in divisions C and D of the standard industrial 12 14 classification codes appearing in 13 C.F.R. ch. 1(1-1- 12 15 94 edition), with a view to selling the finished 12 16 product for gain or profit. A corporation engaged in 12 17 more than one business activity is a value-added 12 18 corporation if more than fifty percent of its gross 12 19 receipts, figured on a three-year annual average, or 12 20 such shorter period as the corporation shall have been 12 21 in existence, are from the processes previously 12 22 identified. 12 23 Sec. 26. Section 422.35, unnumbered paragraph 1, 12 24 Code Supplement 1995, is amended to read as follows: 12 25 The term "net income" means the taxable income 12 26 before the net operating loss deduction, as properly 12 27 computed for federal income tax purposes under the 12 28 Internal Revenue Code, or in the case of subchapter S 12 29 corporations that make an election pursuant to section 12 30 422.36, subsection 5, paragraph "b", "net income" 12 31 means the sum of all items of distributive shares of 12 32 income, loss, and expenses of the corporation as 12 33 determined under rules of the director, with the 12 34 following adjustments: 12 35 Sec. 27. Section 422.36, subsection 5, Code 1995, 12 36 is amended to read as follows: 12 37 5. a.WhereUnless an election is made under 12 38 paragraph "b" to be taxed under this division, where a 12 39 corporation is not subject to income tax and the 12 40 stockholders ofsuchthe corporation are taxed on the 12 41 corporation's income underthe provisions ofthe 12 42 Internal Revenue Code, the same tax treatmentshall12 43apply to suchapplies to the corporation andsuchthe 12 44 stockholders for Iowa income tax purposes. 12 45 b. A subchapter S corporation which is a value- 12 46 added corporation which does business both within and 12 47 without the state may elect to be taxed as a regular 12 48 corporation under this division. The election shall 12 49 be made not later than the due date for filing its 12 50 return for the first taxable year for which the 13 1 election is to be effective, including any extensions 13 2 beyond that date, on a form provided by the director 13 3 and signed by the shareholders holding more than one- 13 4 half of the shares of stock of the corporation on the 13 5 last day of the first taxable year for which the 13 6 election is to be effective. The election shall be 13 7 effective for that taxable year and for subsequent 13 8 taxable years until revoked. 13 9 c. The corporation may revoke its election under 13 10 paragraph "b" by a revocation made not later than the 13 11 due date for filing its return for the taxable year 13 12 for which the revocation is to be effective, including 13 13 any extensions beyond that date, on a form provided by 13 14 the director and signed by shareholders holding more 13 15 than one-half of the shares of stock of the 13 16 corporation on the last day of the first taxable year 13 17 for which the revocation is to be effective. However, 13 18 a corporation that has made an election under 13 19 paragraph "b" shall not be eligible to make an 13 20 election under this paragraph for revocation of the 13 21 election under paragraph "b" for any taxable year 13 22 before its fourth taxable year following the first 13 23 taxable year for which the election under paragraph 13 24 "b" was effective, unless the director consents to the 13 25 revocation. 13 26 Sec. 28. This division of this Act, being deemed 13 27 of immediate importance, takes effect upon enactment 13 28 and applies retroactively to January 1, 1996, for tax 13 29 years of individuals beginning on or after that date 13 30 and for tax years of corporations ending on or after 13 31 that date. 13 32 DIVISION V 13 33 QUALIFIED VENTURE CAPITAL COMPANY 13 34 Sec. 29. NEW SECTION. 15E.175 DEFINITIONS. 13 35 As used in this section and sections 15E.176 and 13 36 15E.177: 13 37 1. "Iowa business" means a business or industry, 13 38 incorporated or unincorporated, which meets all the 13 39 following criteria: 13 40 a. Has or will have, within thirty days after a 13 41 loan or investment is made by a qualified venture 13 42 capital company, at least fifty percent of its 13 43 employees or assets located in Iowa and agrees to 13 44 maintain at least fifty percent of its employees or 13 45 assets in Iowa following investment in the business by 13 46 a qualified venture capital company. 13 47 b. A business which is unable to raise equity 13 48 capital or obtain financing from conventional sources 13 49 in order to remain viable or to commence or expand its 13 50 ability to provide goods or services. 14 1 2. "Qualified venture capital company" means a 14 2 corporation, limited liability company, or a general 14 3 or limited partnership with its principal place of 14 4 business located within this state, which meets all of 14 5 the following requirements: 14 6 a. Has an initial private capitalization of not 14 7 less than twenty million dollars. 14 8 b. Is organized by the Iowa business investment 14 9 corporation, organized under division XV of this 14 10 chapter, to directly or indirectly through its 14 11 subsidiaries or affiliates invest in debt and equity 14 12 securities of Iowa businesses. 14 13 c. Seeks approval from the federal small business 14 14 administration to establish a small business 14 15 investment company that is incorporated in Iowa and 14 16 maintains its principal place of business in this 14 17 state the purpose of which includes increasing the 14 18 availability of funds for investment in and loans to 14 19 Iowa businesses. 14 20 d. Will provide or arrange for managerial and 14 21 other advice, assistance, and support for Iowa 14 22 businesses. 14 23 e. Does not invest funds under this division for 14 24 the expansion of operations of an Iowa business in 14 25 another state. 14 26 3. "Taxpayer" means an entity subject to tax under 14 27 chapter 422, division III, chapter 422, division V, or 14 28 chapter 432. 14 29 4. "Tax year" means for entities subject to the 14 30 state corporate income tax or the state franchise tax 14 31 under chapter 422, division III or V, respectively, 14 32 the tax year as defined for those divisions or means 14 33 for insurance companies subject to the gross premiums 14 34 tax under chapter 432, the calendar year for which the 14 35 premiums are taxed. 14 36 Sec. 30. NEW SECTION. 15E.176 TAX CREDITS. 14 37 1. For tax years beginning on or after January 1, 14 38 1997, there is allowed a credit against that tax 14 39 imposed under the corporate income tax in chapter 422, 14 40 division III, the franchise tax in chapter 422, 14 41 division V, or the gross premiums tax in chapter 432, 14 42 for investments made by the taxpayer in a qualified 14 43 venture capital company whose purpose includes 14 44 establishing or expanding Iowa business. 14 45 2. The amount of credit allowed under subsection 14 46 1, subject to subsection 4, is computed as follows: 14 47 a. The amount of the qualified venture capital 14 48 company's investment in Iowa businesses is divided by 14 49 the amount of new cash invested in the qualified 14 50 venture capital company. 15 1 b. The resulting percentage, which shall not 15 2 exceed fifty percent, is multiplied by the amount of 15 3 the taxpayer's investment in the qualified venture 15 4 capital company. 15 5 c. The amount of the credit is equal to ten 15 6 percent of the product determined in paragraph "b". 15 7 d. The qualified venture capital company shall 15 8 compute as of the end of the qualified venture capital 15 9 company's tax year the amounts under paragraph "c" for 15 10 each tax year the qualified venture capital company is 15 11 entitled to the credit. 15 12 3. The qualified venture capital company is 15 13 allowed the credit as computed each year in subsection 15 14 2 for up to ten consecutive years beginning with the 15 15 first year for which the credit is taken. 15 16 If the amount of the credit exceeds the qualified 15 17 venture capital company's tax liability for the tax 15 18 year, the excess may be credited to the tax liability 15 19 for the following five tax years or until depleted, 15 20 whichever is the earlier, and is in addition to any 15 21 other credit allowed under this section. 15 22 4. Notwithstanding the amount of credit computed 15 23 in subsection 2, the total amount of credits for all 15 24 qualified venture capital companies that shall be 15 25 allowed under subsection 1 for any fiscal year of the 15 26 qualified venture capital company shall not exceed one 15 27 million two hundred fifty thousand dollars and for all 15 28 fiscal years of the qualified venture capital company 15 29 shall not exceed twelve million five hundred thousand 15 30 dollars. In determining if the credit allowed has 15 31 exceeded the fiscal year limit, credits carried over 15 32 from a previous tax year are not counted. 15 33 5. The credit provided for in subsection 2, to the 15 34 extent not previously utilized, shall be freely 15 35 transferable to and by subsequent transferees for a 15 36 period of ten years from the date the credit is first 15 37 available to the qualified venture capital company. 15 38 Sec. 31. NEW SECTION. 15E.177 COORDINATION OF 15 39 RESOURCES. 15 40 If a qualified venture capital company is organized 15 41 by the Iowa business investment corporation on or 15 42 before December 31, 1997, within ninety days following 15 43 its organization, the qualified venture capital 15 44 company shall develop and submit a written proposal to 15 45 the shareholders of each business development finance 15 46 corporation organized pursuant to division XIII of 15 47 this chapter, calling for the investment of all the 15 48 assets of each business development finance 15 49 corporation in securities of the qualified venture 15 50 capital company. A notice of a special meeting of the 16 1 shareholders of the business development finance 16 2 corporation and the written proposal made to the 16 3 business development finance corporation by the 16 4 qualified venture capital company shall be delivered 16 5 to the shareholders of each business development 16 6 finance corporation entitled to vote at the special 16 7 shareholders meeting not less than ten nor more than 16 8 sixty days before the meeting date given by the 16 9 qualified venture capital company. Action on the 16 10 written proposal by the board of directors of the 16 11 business development finance corporation or any other 16 12 person shall not be required to call the special 16 13 meeting or authorize voting on the written proposal by 16 14 the shareholders of the business development finance 16 15 corporation. If at the special meeting of 16 16 shareholders of the business development finance 16 17 corporation or any recesses thereof, a majority of the 16 18 shareholders present or represented at the special 16 19 meeting approve the investment proposed by the 16 20 qualified venture capital company, the business 16 21 development finance corporation shall immediately make 16 22 such an investment of all of its assets. The 16 23 investment by a business development finance 16 24 corporation of all of its assets in the qualified 16 25 venture capital corporation shall not be considered a 16 26 sale of assets other than in the usual and regular 16 27 course of business and division XIII of the Iowa 16 28 business development finance Act shall not apply to 16 29 the transaction. The qualified venture capital 16 30 company may make additional proposals as often as it 16 31 desires to the shareholders of each business 16 32 development finance corporation that did not approve 16 33 the initial investment proposal. Except for the 16 34 requirement that a written proposal be presented to 16 35 the shareholders within ninety days of the 16 36 organization of the qualified venture capital company, 16 37 the provisions of this section shall apply to all 16 38 additional proposals. 16 39 Sec. 32. Section 422.33, Code Supplement 1995, is 16 40 amended by adding the following new subsection: 16 41 NEW SUBSECTION. 9. There is allowed as a credit 16 42 against the tax determined in subsection 1 for a tax 16 43 year an amount equal to the qualified venture capital 16 44 credit as provided in section 15E.176. 16 45 Notwithstanding any other provision, the credit 16 46 allowed for in this subsection shall be applied prior 16 47 to all other credits allowed the taxpayer. The 16 48 taxpayer shall not receive for the same investment a 16 49 credit under subsection 8 and this subsection. 16 50 Sec. 33. Section 422.60, Code Supplement 1995, is 17 1 amended by adding the following new subsection: 17 2 NEW SUBSECTION. 4. There is allowed as a credit 17 3 against the tax determined in this division for a tax 17 4 year an amount equal to the qualified venture capital 17 5 credit as provided in section 15E.176. 17 6 Notwithstanding any other provision, the credit 17 7 allowed for in this subsection shall be applied prior 17 8 to all other credits allowed the taxpayer. The 17 9 allocation of revenues to a city or county under 17 10 section 422.65 shall be determined as if the credit 17 11 under this subsection had not been taken. 17 12 Sec. 34. Section 432.1, Code 1995, is amended by 17 13 adding the following new subsection: 17 14 NEW SUBSECTION. 5. There is allowed as a credit 17 15 against the tax determined in subsection 1 or 2 for a 17 16 tax year an amount equal to the qualified venture 17 17 capital credit as provided in section 15E.176. 17 18 Notwithstanding any other provision, the credit 17 19 allowed for in this subsection shall be applied prior 17 20 to all other credits allowed the taxpayer. 17 21 Sec. 35. 1992 Iowa Acts, chapter 1244, section 1, 17 22 subsection 2, paragraph e, unnumbered paragraph 1, as 17 23 amended by 1993 Iowa Acts, chapter 180, section 46, as 17 24 amended by 1994 Iowa Acts, chapter 1201, section 29, 17 25 is amended to read as follows: 17 26 For transfer to the treasurer of state for the 17 27 purpose of facilitating the organization and private 17 28 capitalization of the small business investment 17 29 company or other entity under sections 15E.169 through 17 30 15E.171. If the small business investment company or 17 31 another entity for which the funds are to be used is 17 32 not organizedwithin thirty-six months of the17 33effective date of this Act, unused funds shall revert 17 34 to the general fund of the state, however, if such an 17 35 entity is organized, the unused funds shall be 17 36 transferred irrevocably to the qualified venture 17 37 capital company or other entity for which the funds 17 38 are to be used: 17 39 .................................................. $ 200,000 17 40 Sec. 36. APPLICABILITY. This division of this Act 17 41 applies for tax years of entities subject to the state 17 42 corporate income tax or franchise tax which begin on 17 43 or after January 1, 1997. This division of this Act 17 44 applies for calendar years beginning on or after 17 45 January 1, 1997, for entities subject to the gross 17 46 premiums tax under chapter 432. 17 47 DIVISION VI 17 48 FAMILY FARM FEEDING OPERATIONS 17 49 Sec. 37. NEW SECTION. 175A.1 SHORT TITLE. 17 50 This chapter shall be known and may be cited as the 18 1 "Iowa Family Farm Animal Feeding Operations 18 2 Preservation Act". 18 3 Sec. 38. NEW SECTION. 175A.2 PURPOSE. 18 4 The purpose of this chapter is to address a grave 18 5 threat to traditional farmers who produce animals in 18 6 this state and who face capitalization barriers and 18 7 the consolidation of animal agriculture, which results 18 8 in fewer individuals engaged in farming. These 18 9 conditions result in a loss in population, 18 10 unemployment and a movement of persons from rural 18 11 communities to urban areas accompanied by added costs 18 12 to communities for the creation of new public 18 13 facilities and services. It is therefore necessary to 18 14 assist small and medium sized family farm animal 18 15 feeding operations in order to expand such operations 18 16 and preserve a way of life which has traditionally 18 17 supported Iowa's economy and communities. 18 18 Sec. 39. NEW SECTION. 175A.3 DEFINITIONS. 18 19 1. "Animal feeding operation" means the same as 18 20 defined in section 455B.161. 18 21 2. "Animal feeding operation structure" means the 18 22 same as defined in section 455B.161. 18 23 3. "Animal weight capacity" means the same as 18 24 defined in section 455B.161. 18 25 4. "Authority" means the agricultural development 18 26 authority established pursuant to section 175.3. 18 27 5. "Family farm animal feeding operation" or 18 28 "operation" means an animal feeding operation located 18 29 on the land where the owner of the operation also 18 30 engages in farming activities other than animal 18 31 feeding operation activities, if all of the following 18 32 criteria are satisfied: 18 33 a. The total animal weight capacity of all animals 18 34 other than bovine animals owned by the person is two 18 35 hundred thousand pounds or less, and the total animal 18 36 weight capacity of bovine animals owned by the person 18 37 is four hundred thousand pounds or less. 18 38 b. A person holding an interest in the animal 18 39 feeding operation owns all animals confined and fed in 18 40 the animal feeding operation. 18 41 c. The person who owns the animal feeding 18 42 operation raises and harvests crops in the same or an 18 43 adjoining county where the animal feeding operation is 18 44 located. 18 45 d. The person who owns the animal feeding 18 46 operation is one of the following: 18 47 (1) A natural person. 18 48 (2) A general partnership composed exclusively of 18 49 natural persons. 18 50 e. Each person who holds an interest in the animal 19 1 feeding operation resides in this state. 19 2 f. The animal feeding operation is located 19 3 entirely within the state. 19 4 6. "Farming" means the same as defined in section 19 5 175.2. 19 6 7. "Lending institution" means a bank, trust 19 7 company, mortgage company, national banking 19 8 association, savings and loan association, life 19 9 insurance company, any state or federal governmental 19 10 agency or instrumentality, including without 19 11 limitation the federal land bank or any of its local 19 12 associations, or any other financial institution or 19 13 entity authorized to make farm operating loans in this 19 14 state. 19 15 8. "Low or moderate net worth" means: 19 16 a. For an individual, an aggregate net worth of 19 17 the individual and the individual's spouse and minor 19 18 children of less than two hundred thousand dollars. 19 19 b. For any general partnership, an aggregate net 19 20 worth of all partners, including each partner's net 19 21 capital in the partnership, and of each partner's 19 22 spouse and minor children of less than three hundred 19 23 thousand dollars. However, the aggregate net worth of 19 24 each partner and that partner's spouse and minor 19 25 children shall not exceed two hundred thousand 19 26 dollars. 19 27 9. "Net worth" means a person's total assets minus 19 28 total liabilities as determined in accordance with 19 29 generally accepted accounting principles with 19 30 appropriate exceptions and exemptions reasonably 19 31 related to an equitable determination of a person's 19 32 net worth. Assets shall be valued at fair market 19 33 value. 19 34 10. "Note" means a bond anticipation note or other 19 35 obligation or evidence of indebtedness issued by the 19 36 authority pursuant to this chapter. 19 37 11. "Secured loan" means a financial obligation 19 38 secured by a chattel mortgage, security agreement, or 19 39 other instrument creating a lien on an interest in 19 40 depreciable agricultural property. 19 41 Sec. 40. NEW SECTION. 175A.4 ASSISTANCE 19 42 PROGRAMS. 19 43 1. The authority shall administer programs under 19 44 this section to assist family farm animal feeding 19 45 operations. The department of revenue and finance 19 46 shall assist the authority in administering this 19 47 section. 19 48 2. In order to assist a family farm animal feeding 19 49 operation in financing the operation, including by 19 50 assisting in whole or in part the acquisition of 20 1 animals, or the purchase of agricultural land, the 20 2 purchase of agricultural improvements or depreciable 20 3 agricultural property, the construction of buildings, 20 4 facilities, or animal feeding operation structures, 20 5 related to the operation, the authority shall do all 20 6 of the following: 20 7 a. Cooperate with any other state agency or the 20 8 federal government, including supplementing assistance 20 9 provided by another state agency and the federal 20 10 government. 20 11 b. Administer other programs provided under 20 12 chapter 175, including supplementing assistance 20 13 provided by other programs. 20 14 c. Provide certification necessary to allow owners 20 15 of operations to claim an income tax credit as 20 16 provided in section 175A.5, and a property tax 20 17 exemption pursuant to section 427.1. 20 18 d. Administer the following programs: 20 19 (1) A loan guarantee program to provide for 20 20 guaranteeing of all or part of a loan made to the 20 21 operation. 20 22 (2) An interest buy-down program, in which the 20 23 authority contracts with a participating lending 20 24 institution to reduce the interest rate charged on a 20 25 loan to the operation. The authority shall determine 20 26 the amount that the rate is reduced by considering the 20 27 lending institution's customary loan rate for the type 20 28 of loan sought as certified to the authority by the 20 29 lending institution. As part of the contract, in 20 30 order to reimburse the lending institution for the 20 31 reduction of the interest rate on the loan, the 20 32 authority may agree to grant the lending institution 20 33 any amount foregone by reducing the interest rate on 20 34 that portion of the loan which is three hundred 20 35 thousand dollars or less. However, the amount 20 36 reimbursed shall not be more than fifty percent of the 20 37 amount of interest foregone by the lending institution 20 38 on the loan. 20 39 3. The amount of assistance awarded to a family 20 40 farm animal feeding operation shall be based on the 20 41 extent to which the following apply: 20 42 a. The operation has a low or moderate net worth. 20 43 b. The owner of the family farm animal feeding 20 44 operation utilizes a computer or recordkeeping system 20 45 designed to monitor herd performance, as approved by 20 46 Iowa state university. 20 47 c. The person managing the operation is actively 20 48 engaged in improving the management of the operation, 20 49 which may include participating in the livestock 20 50 producers assistance program provided pursuant to 21 1 section 266.39D, or employing a person qualified by 21 2 the American registry of professional animal science, 21 3 who is actively engaged in the profession of 21 4 consulting with livestock producers for the purpose of 21 5 increasing production or enhancing performance of 21 6 livestock. 21 7 4. In order to participate in a program 21 8 administered under this section, all of the following 21 9 must apply: 21 10 a. The family farm animal feeding operation or any 21 11 person holding an interest in the operation is not 21 12 classified as a habitual violator as provided in 21 13 section 455B.191. 21 14 b. The assistance provided by the authority under 21 15 this section is not used to construct, repair, or 21 16 expand an anaerobic lagoon or earthen manure storage 21 17 basin as defined in section 455B.161. 21 18 5. a. The authority shall adopt rules to 21 19 administer this section, including the enforcement of 21 20 terms of a contract to which the authority is a party. 21 21 The authority may require a lending institution or a 21 22 family farm animal feeding operation to submit 21 23 evidence satisfactory to the authority that the 21 24 lending institution or operation has complied with the 21 25 authority's requirements. 21 26 b. The authority may inspect any records of a 21 27 lending institution or a family farm animal feeding 21 28 operation which are pertinent to the administration of 21 29 a program. In order to assure compliance with this 21 30 section and rules adopted pursuant to this section, 21 31 the authority may establish by rule appropriate 21 32 enforcement provisions, including but not limited to, 21 33 the payment of civil penalties by a lending 21 34 institution or operation. The authority may also 21 35 enforce the provisions of this section or terms of the 21 36 contract by bringing an action in any court of 21 37 competent jurisdiction to recover damages. 21 38 6. A lending institution and the borrower 21 39 participating in a program under this section shall 21 40 each pay to the authority one-half of an origination 21 41 fee which shall not exceed one percent of the loan. 21 42 In addition, the lending institution shall pay a fee 21 43 equal to twenty-five basis points on the loan to the 21 44 authority on an annual basis. 21 45 7. The fact that the family farm animal feeding 21 46 operation or the person who owns the operation has 21 47 received assistance, monetary or otherwise, from the 21 48 authority shall not prevent the operation from being 21 49 eligible for assistance under programs available under 21 50 this section. 22 1 Sec. 41. NEW SECTION. 175A.5 INCOME TAX CREDIT. 22 2 1. A family farm animal feeding operation which 22 3 receives at least ten thousand dollars in assistance 22 4 under section 175A.4 as certified by the authority 22 5 under section 175A.4 shall be entitled to receive a 22 6 tax credit equal to ten percent of all new investments 22 7 made in the operation not later than the tax year 22 8 following the tax year in which the operation receives 22 9 assistance under section 175A.4. 22 10 2. For purposes of this section, "new investment" 22 11 means the capitalized cost of all real and personal 22 12 property related to the family farm animal feeding 22 13 operation, including animals; buildings and animal 22 14 feeding operation structures qualifying under this 22 15 section; equipment; and other improvements to the 22 16 operation, purchased or otherwise acquired or 22 17 relocated to the operation. "New investment" does not 22 18 include intangible property, or furniture and 22 19 furnishings. For the purposes of this section, 22 20 capitalized cost of property shall be determined in 22 21 accordance with accounting methods used by the 22 22 taxpayer in determining the taxpayer's income for 22 23 state tax purposes. 22 24 3. Any credit in excess of the tax liability for 22 25 the tax year may be applied to the tax liability for 22 26 the following ten years or until depleted, whichever 22 27 occurs first. 22 28 4. The department of revenue and finance shall 22 29 adopt any rules necessary to administer this section. 22 30 Sec. 42. NEW SECTION. 175A.6 FAMILY FARM ANIMAL 22 31 FEEDING OPERATION FUND. 22 32 1. A family farm animal feeding operation fund is 22 33 created within the state treasury under the control of 22 34 the authority. The fund shall consist of any moneys 22 35 appropriated by the general assembly, fees paid to the 22 36 authority, and any other moneys available to and 22 37 obtained or accepted by the authority from the federal 22 38 government or private sources for placement in the 22 39 fund. Moneys shall be deposited in the fund as 22 40 provided in section 175A.7. Not more than one hundred 22 41 fifty thousand dollars shall be available annually 22 42 from the fund for administration of section 175A.4. 22 43 The assets of the fund shall be used by the authority 22 44 only for carrying out the purposes of section 175A.1 22 45 and section 427.1, subsection 28. 22 46 2. In administering the fund the authority may do 22 47 all of the following: 22 48 a. Contract, sue and be sued, and adopt 22 49 administrative rules necessary to administer this 22 50 section. However, the authority shall not in any 23 1 manner directly or indirectly pledge the credit of the 23 2 state. 23 3 b. Authorize payment from the fund for costs, 23 4 commissions, attorney fees, and other reasonable 23 5 expenses, including expenses related to carrying out 23 6 duties necessary for administering programs provided 23 7 for under section 175A.4, including for guaranteeing 23 8 loans, and for the recovery of loan moneys guaranteed 23 9 or the management of property acquired in connection 23 10 with such loans. 23 11 3. Payments of interest, recaptures of awards, or 23 12 repayments of moneys provided in assistance under 23 13 section 175A.4 shall be deposited into the fund. 23 14 Section 8.33 does not apply to any moneys in the fund 23 15 until June 30, 2001. Notwithstanding section 12C.7, 23 16 interest or earnings on investments or time deposits 23 17 of the moneys in the fund shall be credited to the 23 18 fund. 23 19 4. The fund is subject to an annual audit as 23 20 provided by the authority. Moneys in the fund, which 23 21 may be subject to warrants written by the director of 23 22 revenue and finance, shall be drawn upon the written 23 23 requisition of the authority's executive director. 23 24 Sec. 43. NEW SECTION. 175A.7 STANDING 23 25 APPROPRIATION. 23 26 For each fiscal year of the fiscal period beginning 23 27 July 1, 1996, and ending June 30, 2002, there is 23 28 appropriated twelve million dollars from the general 23 29 fund of the state to the family farm animal feeding 23 30 operation fund created in section 175A.6. 23 31 Sec. 44. Section 427.1, Code Supplement 1995, is 23 32 amended by adding the following new subsection: 23 33 NEW SUBSECTION. 28. The property of a family farm 23 34 animal feeding operation as defined in section 175A.3, 23 35 which receives at least ten thousand dollars in 23 36 assistance awarded and certified by the agricultural 23 37 development authority under section 175A.4 shall be 23 38 exempt from taxation for a period of five years, to 23 39 the extent provided in this subsection. 23 40 a. The exemption shall apply as follows: 23 41 (1) It begins on January 1 of the year following 23 42 the year in which the family farm animal feeding 23 43 operation receives assistance under section 175A.4. 23 44 (2) It is limited to the market value, as defined 23 45 in section 441.21, of the property of the family farm 23 46 animal feeding operation. If the property of the 23 47 family farm animal feeding operation is assessed with 23 48 other property as a unit, the exemption shall be 23 49 limited to the net market value of the property of the 23 50 family farm animal feeding operation determined as of 24 1 the assessment date. 24 2 b. In order to receive the exemption, the owner of 24 3 the operation must file for the exemption with the 24 4 assessing authority not later than the first of 24 5 February of the first year for which the exemption 24 6 applies, on forms provided by the agricultural 24 7 development authority. The application shall provide 24 8 a description of the family farm animal feeding 24 9 operation subject to the exemption. The application 24 10 shall be accompanied by a certificate of assistance 24 11 provided by the agricultural development authority. 24 12 c. The assessing authority shall retain a 24 13 permanent file of current exemptions filed in the 24 14 assessing authority's office. Not later than July 6 24 15 of each year, the assessing authority shall remit a 24 16 statement certifying the total amount of exemptions 24 17 allowed under this subsection. After receiving the 24 18 certification, the agricultural development authority 24 19 shall draw warrants on the family farm animal feeding 24 20 operation fund created in section 175A.6 which shall 24 21 be payable to the county treasurer in the amount 24 22 certified by the assessing authority, and shall mail 24 23 the warrants to the county treasurers on August 15 of 24 24 each year. However, if the family farm animal feeding 24 25 operation fund does not have sufficient moneys 24 26 available to pay in full the total of the amounts 24 27 certified to the agricultural development authority, 24 28 the authority shall prorate unobligated and 24 29 unencumbered moneys in the fund to the county 24 30 treasurers. 24 31 d. If the county treasurer has received a 24 32 percentage amount of the amount certified to the 24 33 agricultural development authority, the county 24 34 treasurer shall for the following fiscal year grant 24 35 each exemption from the previous fiscal year an 24 36 exemption equal to the percentage amount which the 24 37 county treasurer was reimbursed for that exemption 24 38 unless the reimbursement for that exemption is fully 24 39 funded by February 1 preceding the next fiscal year. 24 40 Sec. 45. FUTURE REPEAL. 24 41 1. Sections 175A.5 and 175A.7 are repealed. 24 42 2. Section 427.1, subsection 28, is amended by 24 43 striking the subsection. 24 44 3. This section takes effect on July 1, 2002. 24 45 4. Notwithstanding this section, an income tax 24 46 credit granted pursuant to section 175A.5, or a 24 47 property tax exemption provided under section 427.1, 24 48 subsection 28, shall continue in effect and shall be 24 49 administered and enforced until its expiration as 24 50 provided in this division of this Act. 25 1 DIVISION VII 25 2 FAMILY FARM AND AGRICULTURAL LAND TAX CREDITS 25 3 Sec. 46. Section 425A.1, Code 1995, is amended to 25 4 read as follows: 25 5 425A.1 FAMILY FARM TAX CREDIT FUND. 25 6 The family farm tax credit fund is created in the 25 7 office of the treasurer of state. There shall be 25 8transferredappropriated annually to the fund the 25 9first ten million dollars of the amount annually25 10appropriated to the agricultural land credit fund,25 11provided in section 426.1sum of thirty-five million 25 12 dollars. Any balance in the fund on June 30 shall 25 13 revert to the general fund. 25 14 Sec. 47. Section 425A.2, subsection 4, Code 1995, 25 15 is amended to read as follows: 25 16 4. "Designated person" means one of the following: 25 17 a. If the owner is an individual, the designated 25 18 person includes the owner of the tractor a person25 19related to the owner as, the owner's spouse,parent,25 20grandparent,the owner's child, grandchild,or 25 21 stepchild, and their spouses, or the owner's relative 25 22 within the third degree of consanguinity, and the 25 23 relative's spouse. 25 24 b. If the owner is a partnership, a partner, or 25 25 the partner's spouse. 25 26 c. If the owner is a family farm corporation, a 25 27 family member who is a shareholder of the family farm 25 28 corporation or the shareholder's spouse. 25 29 d. If the owner is an authorized farm corporation, 25 30 a shareholder who owns at least fifty-one percent of 25 31 the stock of the authorized farm corporation or the 25 32 shareholder's spouse. 25 33 e. If the owner is an individual who leases the 25 34 tract to a family farm corporation, a shareholder of 25 35 the corporation if the combined stock of the family 25 36 farm corporation owned by the owner of the tract and 25 37 persons related to the owner as enumerated in 25 38 paragraph "a" is equal to at least fifty-one percent 25 39 of the stock of the family farm corporation. 25 40 f. If the owner is an individual who leases the 25 41 tract to a partnership, a partner if the combined 25 42 partnership interest owned by the owner of the tract 25 43 and persons related to the owner as enumerated in 25 44 paragraph "a" is equal to at least fifty-one percent 25 45 of the ownership interest of the partnership. 25 46 Sec. 48. Section 426.1, Code 1995, is amended to 25 47 read as follows: 25 48 426.1 AGRICULTURAL LAND CREDIT FUND. 25 49 There is created as a permanent fund in the office 25 50 of the treasurer of state a fund to be known as the 26 1 agricultural land credit fund, and for the purpose of 26 2 establishing and maintaining this fund for each fiscal 26 3 year there is appropriatedtheretoto the fund from 26 4 funds in the general fund not otherwise appropriated 26 5 the sum ofthirty-ninetwenty-nine million one hundred 26 6 thousand dollarsof which the first ten million26 7dollars shall be transferred to and deposited into the26 8family farm tax credit fund created in section 425A.1. 26 9 Any balance in said fund on June 30 shall revert to 26 10 the general fund. 26 11 Sec. 49. This division of this Act, being deemed 26 12 of immediate importance, takes effect upon enactment 26 13 and applies to family farm tax credits and 26 14 agricultural land credits allowed for property taxes 26 15 due and payable in fiscal years beginning on or after 26 16 July 1, 1996. 26 17 DIVISION VIII 26 18 SCHOOL FUNDING 26 19 Sec. 50. Section 257.1, subsection 2, unnumbered 26 20 paragraph 2, Code Supplement 1995, is amended to read 26 21 as follows: 26 22 For the budget year commencing July 1,19911996, 26 23 and for each succeeding budget year the regular 26 24 program foundation base per pupil is eighty-three 26 25 percent of the regular program state cost per pupil,26 26except that the regular program foundation base per26 27pupil for the portion of weighted enrollment that is26 28additional enrollment because of special education is26 29seventy-nine percent of the regular program state cost26 30per pupil. For the budget year commencing July 1, 26 3119911996, and for each succeeding budget year the 26 32 special education support services foundation base is 26 33seventy-nineeighty-three percent of the special 26 34 education support services state cost per pupil. The 26 35 combined foundation base is the sum of the regular 26 36 program foundation base and the special education 26 37 support services foundation base. 26 38 Sec. 51. EFFECTIVE DATE. This division of this 26 39 Act, being deemed of immediate importance, takes 26 40 effect upon enactment for calculating state foundation 26 41 aid for school budget years commencing on or after 26 42 July 1, 1996. 26 43 DIVISION IX 26 44 BOND ELECTIONS 26 45 Sec. 52. Section 75.1, Code 1995, is amended to read as 26 46 follows: 26 47 75.1 BONDS – ELECTION – VOTE REQUIRED. 26 48 1. When a proposition to authorize an issuance of bonds by 26 49 a county, township, school corporation, city, or by any local 26 50 board or commission, is submitted to the electors,suchthe 27 1 propositionshall not be deemed carried or adopted, anything27 2in the statutes to the contrary notwithstanding, unlessis 27 3 adopted if the vote in favor ofsuch authorizationthe 27 4 proposition is equal to at least sixty percent of the total 27 5 vote cast for and againstsaidthe proposition atsaidthe 27 6 election. 27 7 2. Notwithstanding subsection 1, if the annual levy of 27 8 property tax to pay principal and interest on bonds issued by 27 9 a county, school corporation, or city is to be offset with 27 10 revenue from a local income surtax pursuant to section 76.21, 27 11 the proposition shall so state and the proposition is adopted 27 12 if the vote in favor of the proposition is equal to a majority 27 13 of the total vote cast for and against the proposition at the 27 14 election. However, a bond issuance proposition proposing 27 15 imposition of an income surtax shall not be presented to the 27 16 electors if in the first year the income surtax is imposed the 27 17 total of all income surtaxes authorized by law and imposed in 27 18 that year on any taxpayer in the political subdivision 27 19 imposing the surtax would exceed twenty percent. Upon request 27 20 of the governing authority, the department of management shall 27 21 certify the cumulative rate of income surtax being imposed in 27 22 the political subdivision. 27 23 3. All ballots cast and not counted as a vote for or 27 24 against the proposition shall not be used in computing the 27 25 total vote cast for and againstsaidthe proposition. 27 26 4. When a proposition to authorize an issuance of bonds 27 27 has been submitted to the electors under this section and the 27 28 proposal fails to gain approval by the required percentage of 27 29 votes, such proposal, or any proposal which incorporates any 27 30 portion of the defeated proposal, shall not be submitted to 27 31 the electors for a period ofsixtwelve months from the date 27 32 of such regular or special election. 27 33 Sec. 53. Section 76.1, Code 1995, is amended to read as 27 34 follows: 27 35 76.1 MANDATORY RETIREMENT. 27 36Hereafter issuesIssues of bondsof every kind and27 37characterby counties, cities, and school corporations shall 27 38 be consecutively numbered. The annual levy of property tax, 27 39 or combination of property tax levy and income surtax imposed 27 40 as provided in section 76.19, shall be sufficient to pay the 27 41 interest and approximatelysuchthat portion of the principal 27 42 of the bonds as will retire them in a period not exceeding 27 43twentytwenty-two years from date of issue. Each issue of 27 44 bonds shall be scheduled to mature serially in the same order 27 45 as numbered. 27 46 Sec. 54. Section 76.2, Code 1995, is amended to read as 27 47 follows: 27 48 76.2 MANDATORY LEVY – OBLIGATIONS IN ANTICIPATION OF 27 49 LEVY. 27 50 The governing authority of these political subdivisions 28 1 before issuing bonds shall, by resolution, provide for the 28 2 assessment of an annual levy upon all the taxable property in 28 3 the political subdivision, or the assessment of an annual 28 4 property tax levy and imposition of an income surtax under 28 5 section 76.19, sufficient to pay theinterest andprincipal 28 6 and interest of the bonds within a period named not exceeding 28 7twenty yearsthat provided in section 76.1. A certified copy 28 8 of this resolution shall be filed with the county auditor or 28 9 the auditors of the counties in which the political 28 10 subdivision is located; and the filing shall make it a duty of 28 11 the auditors to enter annually this levy for collection from 28 12 the taxable property within the boundaries of the political 28 13 subdivision until funds are realized to pay the bonds in full. 28 14 The property tax levy shall continue to be made against 28 15 property that is severed from the political subdivision and 28 16 the income surtax shall continue to be imposed upon the 28 17 residents of any area severed from the political subdivision 28 18 after the filing of the resolution until funds are realized to 28 19 pay the bonds in full. 28 20 Ifthea resolution which does not include imposition of an 28 21 income surtax is filed prior to April 1, or May 1,if the 28 22 political subdivision is a school district, the annual levy 28 23 shall begin with the tax levy for collection commencing July 1 28 24 of that year. If the resolution is filed after April 1, or 28 25 May 1,in the case of a school district, or if the resolution 28 26 includes imposition of an income surtax, the annual property 28 27 tax levy shall begin with the tax levy for collection in the 28 28 next succeeding fiscal year. If the resolution includes the 28 29 imposition of a local income surtax and it is filed with the 28 30 department of revenue and finance prior to August 1, the 28 31 imposition of the surtax is retroactive to January 1 of that 28 32 calendar year. If the resolution is filed with the department 28 33 of revenue and finance on or after August 1, the imposition of 28 34 the income surtax begins on January 1 of the next calendar 28 35 year. However, the governing authority of a political 28 36 subdivision may adjust a levy of taxes made under this section 28 37 for the purpose of adjusting the annual levies and collections 28 38 and income surtax rate for property severed from the political 28 39 subdivision, subject to the approval of the director of the 28 40 department of management. 28 41 If funds, including reserves and amounts available for 28 42 temporary transfer, arefound to beinsufficient to pay in 28 43 full any installment of principal or interest, a public issuer 28 44 of bonds may anticipate the next levy of property taxes 28 45 pursuant to this section or the imposition of an income surtax 28 46 under section 76.19 in the manner provided in chapter 74, 28 47 whether the taxes so anticipated are to be collected in the 28 48 same or a future fiscal year. 28 49 To further secure the payment of the bonds, the governing 28 50 authority shall, by resolution, provide for the assessment of 29 1 an annual levy of a standby tax upon all taxable property 29 2 within the political subdivision. A copy of the resolution 29 3 shall be sent to the county auditor of each county in which 29 4 the political subdivision is located. The revenues from the 29 5 standby tax shall be deposited in a special fund and shall be 29 6 expended only for the payment of principal and interest on the 29 7 bonds issued as provided in this section, when the revenue 29 8 from an income surtax as provided in section 76.19 is 29 9 insufficient. Reserves shall not be built up in this fund in 29 10 anticipation of a projected default. The governing authority 29 11 shall adjust the annual standby property tax levy for each 29 12 year to reflect the amount of revenues in the special fund and 29 13 the amount of principal and interest which is due in that 29 14 year. 29 15 Sec. 55. Section 76.4, Code 1995, is amended to read as 29 16 follows: 29 17 76.4 PERMISSIVE APPLICATION OF FUNDS. 29 18WheneverIf the governing authority ofsucha political 29 19 subdivisionshall havehas on hand funds derived fromany29 20othera source other than taxation which may be appropriated 29 21 to the payment either ofinterest orprincipal or interest, or 29 22 both principal and interest of such bonds,suchthe funds may 29 23 besoappropriated and used and the property tax levy and 29 24 income surtax rate, if imposed, for the payment of the bonds 29 25 correspondingly reduced. 29 26 Sec. 56. Section 76.7, Code 1995, is amended to read as 29 27 follows: 29 28 76.7 PARTICULAR BONDS AFFECTED – PAYMENT. 29 29 Counties, cities, and school corporations may at any time 29 30or timesextend or renew any legal indebtedness or any part 29 31thereofof the indebtedness theymayhave represented by bonds 29 32 or certificates wheresuchthe indebtedness is payable from a 29 33 limited annual property tax or from a voted annual property 29 34 tax, or from an income surtax imposed under section 76.19, and 29 35 may by resolution fund or refund thesamelegal indebtedness 29 36 and issue bondsthereforrunning not more than twenty years to 29 37 be known as funding or refunding bonds, and make provision for 29 38 the payment of the principal and interestthereoffrom the 29 39 proceeds of an annual property tax, or annual property tax and 29 40 income surtax, for the period covered bysuchthe bonds 29 41 similar to the tax authorized by law or by the electors for 29 42 the payment of the indebtednesssoextended or renewed. 29 43 Sec. 57. NEW SECTION. 76.19 INCOME SURTAX. 29 44 1. An income surtax may be imposed by a political 29 45 subdivision as provided in this section, but only if 29 46 authorized by the electors as provided in section 75.1. 29 47 2. The income surtax shall be imposed upon state income 29 48 taxes computed under section 422.5, less credits allowed in 29 49 sections 422.11A, 422.11B, 422.11C, 422.12, and 422.12B, and 29 50 shall be imposed upon the state income tax for each calendar 30 1 year, or for a taxpayer's fiscal year ending during the second 30 2 half of that calendar year or the first half of the succeeding 30 3 calendar year, and shall be imposed on all taxpayers residing 30 4 in the political subdivision on the last day of the applicable 30 5 tax year, and on taxpayers residing in areas severed from the 30 6 political subdivision as provided in section 76.2. 30 7 3. The income surtax shall be imposed to collect an amount 30 8 that is equivalent to sixty percent of the sum of the prin- 30 9 cipal and interest of the bonds over the life of the bonds. 30 10 The rate of the income surtax may be adjusted in any year for 30 11 the sole purpose of ensuring that an amount equivalent to 30 12 sixty percent of the principal and interest over the life of 30 13 the bonds is collected. 30 14 4. At the time of the annual levy under section 76.2, the 30 15 governing authority of the political subdivision shall also 30 16 provide in the resolution for the imposition of the income 30 17 surtax and shall certify to the department of management such 30 18 sum expressed in dollars. The department shall determine the 30 19 rate of income surtax to be imposed based upon the most recent 30 20 available figures from state income taxes paid by taxpayers 30 21 residing in the political subdivision. The department shall 30 22 continue to make such calculations and certify the income 30 23 surtax rate to the county auditor or the auditors of the 30 24 counties in which the political subdivision is located with 30 25 adjustments as provided in this section until the principal 30 26 and interest on the bonds are paid in full. On or before 30 27 November 1 of each year in which the income surtax is 30 28 collected the director of revenue and finance shall deposit 30 29 with the treasurer of the political subdivision the entire 30 30 amount of income surtax collected from taxpayers residing in 30 31 the political subdivision. 30 32 5. The costs of administration shall be determined by the 30 33 department of revenue and finance, and shall be based on a 30 34 share of the total cost of administering the department, in 30 35 the same proportion as the amount of income surtax collected 30 36 is to the amount of state income taxes collected. 30 37 6. The director of revenue and finance shall administer 30 38 the income surtax imposed under this chapter and sections 30 39 422.4, 422.20 to 422.31, 422.68, and 422.72 to 422.75 shall 30 40 apply with respect to administration of the income surtax. 30 41 Sec. 58. NEW SECTION. 76.20 INCOME TAX RETURNS. 30 42 An income surtax imposed under section 76.19 shall be made 30 43 a part of the Iowa individual income tax return subject to the 30 44 conditions and restrictions set forth in section 422.21. The 30 45 director of revenue and finance shall provide on income tax 30 46 returns a requirement that each person required to file a re- 30 47 turn numerically identify the city of residence of the tax- 30 48 payer and the merged area in which the taxpayer resides. 30 49 Sec. 59. NEW SECTION. 76.21 PROPERTY TAX CREDIT – 30 50 AGRICULTURAL AND RESIDENTIAL PROPERTY. 31 1 Local income surtax revenues collected under section 76.19 31 2 shall be used to offset the annual levy of property tax on 31 3 property assessed as agricultural or residential property. 31 4 The surtax shall be distributed in the following manner: 31 5 Upon receipt of the revenues collected from the income 31 6 surtax, the county treasurer shall notify the county auditor 31 7 of the amount of income surtax revenues received. The auditor 31 8 shall determine the amount to be credited to each parcel of 31 9 real property located in the political subdivision and 31 10 assessed as agricultural or residential, and shall enter such 31 11 amount upon the tax lists as a credit against the tax levied 31 12 on each parcel of real property assessed as agricultural or 31 13 residential. The county treasurer shall show on each tax 31 14 receipt the amount of tax credit to be applied against 31 15 property taxes payable in the fiscal year following the year 31 16 in which the surtax was collected for each parcel of real 31 17 property assessed as agricultural or residential. In case of 31 18 change of ownership, the credit shall remain with the parcel. 31 19 The amount of the credit funded by revenues from the income 31 20 surtax imposed under section 76.19 shall be an amount equal to 31 21 a pro rata share based upon the ratio of the taxable value of 31 22 each parcel to receive the credit to the total taxable value 31 23 of the property to receive the credit. 31 24 Sec. 60. NEW SECTION. 76.22 DESIGNATION OF TAX. 31 25 An income surtax imposed under section 76.19 by a school 31 26 district shall be designated as a school debt service income 31 27 surtax, an income surtax imposed by a merged area shall be 31 28 designated as a merged area debt service income surtax, an 31 29 income surtax imposed under section 76.19 by a city shall be 31 30 designated a city debt service income surtax, and an income 31 31 surtax imposed under section 76.19 by a county shall be 31 32 designated a county debt service income surtax. 31 33 Sec. 61. Section 260C.21, Code 1995, is amended to read as 31 34 follows: 31 35 260C.21 ELECTION TO INCUR INDEBTEDNESS. 31 36 1. No indebtedness shall be incurred under section 260C.19 31 37 until authorized by an election. A proposition to incur 31 38 indebtedness and issue bonds for community college purposes 31 39 shall be deemedcarriedadopted in a merged area if approved 31 40 by a sixty percent majority of all voters voting on the 31 41 proposition in the area. However, if the board elects to 31 42 offset the annual property tax levy with revenues from a local 31 43 income surtax pursuant to section 76.21, the ballot 31 44 proposition to authorize the issuance of the bonds shall be 31 45 submitted to the electorate pursuant to section 75.1, 31 46 subsection 2. 31 47 2. Notwithstanding subsection 1, if the costs of utilities 31 48 are paid by a community college with funds derived from the 31 49 levy authorized under section 260C.22, the community college 31 50 may use the general fund moneys that would have been used to 32 1 pay the costs of utilities for capital expenditures, may 32 2 invest the funds, or may incur indebtedness without an 32 3 election, provided that the payments on the indebtedness 32 4 incurred, and any interest on the indebtedness, can be made 32 5 using general funds of the community college and the total 32 6 payments on the principal and interest on the indebtedness do 32 7 not exceed the amount of the costs of the utilities. 32 8 Sec. 62. Section 296.1, Code 1995, is amended to read as 32 9 follows: 32 10 296.1 INDEBTEDNESS AUTHORIZED. 32 11 Subject to the approval of the voters thereof, school 32 12 districts areherebyauthorized to contract indebtedness and 32 13 to issue general obligation bonds to provide funds to defray 32 14 the cost of purchasing, building, furnishing, reconstructing, 32 15 repairing, improving or remodeling a schoolhouse or 32 16 schoolhouses and additions thereto, gymnasium, stadium, field 32 17 house, school bus garage, teachers' or superintendent's home 32 18 or homes, and procuring a site or sites therefor, or 32 19 purchasing land to add to a site already owned, or procuring 32 20 and improving a site for an athletic field, or improving a 32 21 site already owned for an athletic field, and for any one or 32 22 more of such purposes. Taxes for the payment ofsaidthe 32 23 bonds shall be levied or imposed in accordance with chapter 32 24 76, andsaidthe bonds shall mature withina period not32 25exceeding twenty years from date of issuethe period provided 32 26 in section 76.1, shall bear interest at a rate or rates not 32 27 exceeding that permitted by chapter 74A and shall be of such 32 28 form as the board of directors ofsuchthe school district 32 29 shall by resolution provide, but the aggregate indebtedness of 32 30 any school district shall not exceed five percent of the 32 31 actual value of the taxable property withinsaidthe school 32 32 district, as ascertained by the last preceding state and 32 33 county tax lists. 32 34 Sec. 63. Section 296.6, Code 1995, is amended to read as 32 35 follows: 32 36 296.6 BONDS. 32 37 If the vote in favor of the issuance of such bonds is equal 32 38 to at least sixty percent of the total vote cast for and 32 39 againstsaidthe proposition atsaidthe election, the board 32 40 of directors shall issue thesamebonds and make provision for 32 41 paymentthereofof the bonds. However, if the board of 32 42 directors of a school district elects to offset the annual 32 43 property tax levy with revenues from an income surtax pursuant 32 44 to section 76.21, the ballot proposition to authorize the 32 45 issuance of the bonds shall be submitted to the electorate 32 46 pursuant to section 75.1, subsection 2. 32 47 Sec. 64. Section 298.14, unnumbered paragraph 1, Code 32 48 1995, is amended to read as follows: 32 49 For each fiscal year, the cumulative total of the percents 32 50 of surtax approved by the board of directors of a school 33 1 district and collected by the department of revenue and 33 2 finance under sections 257.21, 257.29, 279.54, and 298.2, and 33 3 the enrichment surtax under section 442.15, Code 1989, and an 33 4 income surtax collected by a political subdivision under 33 5 chapter 422D, shall not exceed twenty percent. In addition, 33 6 if an income surtax is imposed under section 76.19, the 33 7 cumulative total of percents of surtax imposed on any taxpayer 33 8 in a school district under sections 76.19, 257.21, 257.29, 33 9 279.54, 298.2, 442.15, Code 1989, and chapter 422D shall not 33 10 exceed twenty percent in the first year in which one or more 33 11 of these income surtaxes is imposed. 33 12 Sec. 65. Section 298.18, unnumbered paragraph 2, Code 33 13 1995, is amended to read as follows: 33 14 The amount estimatedand certified to apply onto pay 33 15 principal and interest for any one year shall not exceed an 33 16 amount that could be raised by a property tax levy equal to 33 17 two dollars and seventy cents per thousand dollars of the 33 18 assessed valuation of the taxable property of the school 33 19 corporation except as hereinafter provided. 33 20 Sec. 66. Section 298.18, unnumbered paragraph 4, Code 33 21 1995, is amended to read as follows: 33 22 The amount estimatedand certified to apply onto pay 33 23 principal and interest for any one year may exceed an amount 33 24 that could be raised by a property tax levy equal to two 33 25 dollars and seventy cents per thousand dollars of assessed 33 26 value by the amount approved by the voters of the school 33 27 corporation, but not exceeding four dollars and five cents per 33 28 thousand of the assessed value of the taxable property within 33 29 any school corporation, provided that thequalifiedregistered 33 30 voters of such school corporation have first approved such 33 31 increased amount at a special election, which may be held at 33 32 the same time as the regular school election. The proposition 33 33 submitted to the voters at such special election shall be in 33 34 substantially the following form: 33 35 Sec. 67. Section 298.18, unnumbered paragraph 6, Code 33 36 1995, is amended to read as follows: 33 37 Notice of the election shall be given by the county 33 38 commissioner of elections according to section 49.53. The 33 39 election shall be held on a date not less than four nor more 33 40 than twenty days after the last publication of the notice. At 33 41suchthe election the ballot used for the submission ofsaid33 42 the proposition shall be in substantially the form for 33 43 submitting special questions at general elections. The county 33 44 commissioner of elections shall conduct the election pursuant 33 45 to the provisions of chapters 39 to 53 and certify the results 33 46 to the board of directors.SuchThe proposition shall not be 33 47 deemedcarried oradopted unless the vote in favor ofsuchthe 33 48 proposition is equal to at least sixty percent of the total 33 49 vote cast for and againstsaidthe proposition atsaidthe 33 50 election.WheneverHowever, if the board of directors of a 34 1 school district elects to offset the annual property tax levy 34 2 with revenues from an income surtax pursuant to section 76.21, 34 3 the ballot proposition shall be submitted to the electorate 34 4 pursuant to section 75.1, subsection 2. If such a proposition 34 5 has been approved by the voters of a school corporation as 34 6 hereinbefore provided, no further approval of the voters of 34 7suchthe school corporation shall be required as a result of 34 8 any subsequent change in the boundaries ofsuchthe school 34 9 corporation. 34 10 Sec. 68. Section 298.22, unnumbered paragraph 1, Code 34 11 1995, is amended to read as follows: 34 12All of saidThe bonds shall be substantially in the form 34 13 provided for county bonds, but subject to changes that will 34 14 conform them to the action of the boardproviding therefor;34 15 shallrun not more than twenty yearsmature within the period 34 16 provided in section 76.1, and may be sooner paid if so 34 17 nominated in the bond; bear a rate of interest not exceeding 34 18 that permitted by chapter 74A, payable semiannually; be signed 34 19 by the president and countersigned by the secretary of the 34 20 board of directors; and shall not be disposed of for less than 34 21 par value, nor issued for other purposes than this chapter 34 22 provides. 34 23 Sec. 69. Section 331.442, subsection 4, Code Supplement 34 24 1995, is amended to read as follows: 34 25 4. The proposition of issuing bonds for a general county 34 26 purpose is notcarried oradopted unless the vote in favor of 34 27 the proposition is equal to at least sixty percent of the 34 28 total vote cast for and against the proposition at the 34 29 election. However, if the board elects to offset the annual 34 30 property tax levy with revenues from a local income surtax 34 31 pursuant to section 76.21, the ballot proposition to authorize 34 32 the issuance of the bonds shall be submitted to the electorate 34 33 pursuant to section 75.1, subsection 2. If the proposition of 34 34 issuing the general county purpose bonds is approved by the 34 35 voters, the board may proceed with the issuance of the bonds. 34 36 Sec. 70. Section 331.442, subsection 5, paragraph a, 34 37 unnumbered paragraph 1, Code Supplement 1995, is amended to 34 38 read as follows: 34 39 Notwithstanding subsection 2, a board, in lieu of calling 34 40 an election, may institute proceedings for the issuance of 34 41 bonds for a general county purpose by causing a notice of the 34 42 proposal to issue the bonds, including a statement of the 34 43 amount and purpose of the bonds, the type or types of debt 34 44 service tax to be levied or imposed to pay principal and 34 45 interest on the bonds, and the right to petition for an 34 46 election, to be published as provided in section 331.305 at 34 47 least ten days prior to the meeting at which it is proposed to 34 48 take action for the issuance of the bonds subject to the 34 49 following limitations: 34 50 Sec. 71. Section 331.447, subsection 1, Code Supplement 35 1 1995, is amended to read as follows: 35 2 1. Taxes for the payment of general obligation bonds shall 35 3 be levied or imposed in accordance with chapter 76, and the 35 4 bonds are payable fromthe levy of unlimited ad valorem taxes35 5on all the taxable property within the county through its debt35 6service fund required by section 331.430a debt service 35 7 property tax or combination of a debt service property tax and 35 8 a debt service local income surtax, unlimited as to amount, 35 9 except that: 35 10 a. The amount estimatedand certified to applyto pay on 35 11 principal and interest for any one year shall not exceed an 35 12 amount that could be raised by a debt service property tax 35 13 levy equal to the maximum rate of tax, if any, provided by 35 14 this division for the purpose for which the bonds were issued. 35 15 If general obligation bonds are issued for different 35 16 categories, as provided in section 331.445, the maximum rate 35 17 of levies, if any, for each purpose shall apply separately to 35 18 that portion of the bond issue for that category and the 35 19 resolution authorizing the bond issue shall clearly set forth 35 20 the annual debt service requirements with respect to each 35 21 purpose in sufficient detail to indicate compliance with the 35 22 rate of tax levy, if any. 35 23 b. The amount estimatedand certified to applyto pay on 35 24 principal and interest for any one year may only exceed an 35 25 amount that could be raised by a debt service property tax 35 26 levy equal to the statutory rate of levy limit, if any, by the 35 27 amount that the registered voters of the county have approved 35 28 at a special election, which may be held at the same time as 35 29 the general election and may be included in the proposition 35 30 authorizing the issuance of bonds, if an election on the 35 31 proposition is necessary, or may be submitted as a separate 35 32 proposition at the same election or at a different election. 35 33 Notice of the election shall be given as specified in section 35 34 331.305. If the proposition includes issuing bonds and 35 35 increasing the levy limit, it shall be in substantially the 35 36 following form: 35 37 Shall the county of ........, state of Iowa, be authorized 35 38 to .......... (here state purpose of project) at a total cost 35 39 not exceeding $...... and issue its general obligation bonds 35 40 in an amount not exceeding $...... for that purpose, and be 35 41 authorized to levy annually a debt service property tax (or 35 42 debt service property tax, and income surtax to offset the 35 43 property tax, if applicable), which will produce an amount not 35 44 exceeding ... dollars and ... cents per thousand dollars of 35 45 the assessed value of the taxable property within the county 35 46 to pay the principal of and interest on the bonds? 35 47 If the proposition includes only increasing the levy limit 35 48 it shall be in substantially the following form: 35 49 Shall the county of ........, state of Iowa, be authorized 35 50 to levy annually a debt service property tax (or debt service 36 1 property tax and income surtax to offset the property tax, if 36 2 applicable), which will produce an amount not exceeding ... 36 3 dollars and ... cents per thousand dollars of the assessed 36 4 value of the taxable property within the county to pay 36 5 principal and interest on the bonded indebtedness of the 36 6 county for the purpose of ..........? 36 7 Sec. 72. Section 331.490, Code 1995, is amended to read as 36 8 follows: 36 9 331.490 CITIES SUBJECT TO DEBT SERVICE TAX LEVY – RATES. 36 10 1. If a county and city have entered into an agreement to 36 11 create a joint special assessment district and issue county 36 12 general obligation bonds to fund the costs of a public 36 13 improvement benefiting that district, the county's debt ser- 36 14 vice property tax levy for the county general obligation bonds 36 15 shall not be levied against property located in any city 36 16 except a city which has entered into the agreement, and, if 36 17 applicable, the county's debt service income surtax for the 36 18 county general obligation bonds shall not be imposed on 36 19 taxpayers who reside in any city except a city which has 36 20 entered into the agreement. 36 21 2. Counties and cities entering into an agreement for a 36 22 joint special assessment district may provide in the agreement 36 23 for a different rate of the county's debt service tax levy 36 24 against property in areas of the county outside a city and 36 25 property within the cities, and, if applicable, for a 36 26 different rate of the county's debt service income surtax to 36 27 be imposed on taxpayers residing outside the cities and those 36 28 residing within each city. 36 29 Sec. 73. Section 384.26, subsection 2, Code Supplement 36 30 1995, is amended to read as follows: 36 31 2. Before the council may institute proceedings for the 36 32 issuance of bonds for a general corporate purpose, it shall 36 33 call a special city election to vote upon the question of 36 34 issuing the bonds. At the election the proposition must be 36 35 submitted in substantially the following form: 36 36 Shall the ............ (insert the name of the city) issue 36 37 its bonds in an amount not exceeding the amount of $.... for 36 38 the purpose of .........., such bonds to be payable from a 36 39 property tax levied on all taxable property within the city 36 40 (and income surtax to offset the property tax to be imposed on 36 41 the state income tax of each income taxpayer residing in the 36 42 city)? 36 43 Sec. 74. Section 384.26, subsection 4, Code Supplement 36 44 1995, is amended to read as follows: 36 45 4. The proposition of issuing general corporate purpose 36 46 bonds is notcarried oradopted unless the vote in favor of 36 47 the proposition is equal to at least sixty percent of the 36 48 total vote cast for and against the proposition at the 36 49 election. However, if the city council elects to offset the 36 50 annual property tax levy with revenues from a local income 37 1 surtax pursuant to section 76.21, the ballot proposition to 37 2 authorize the issuance of the bonds shall be submitted to the 37 3 electorate pursuant to section 75.1, subsection 2. If the 37 4 proposition of issuing the general corporate purpose bonds is 37 5 approved by the voters, the city may proceed with the issuance 37 6 of the bonds. 37 7 Sec. 75. Section 384.26, subsection 5, paragraph a, 37 8 unnumbered paragraph 1, Code Supplement 1995, is amended to 37 9 read as follows: 37 10 Notwithstanding the provisions of subsection 2, a council 37 11 may, in lieu of calling an election, institute proceedings for 37 12 the issuance of bonds for a general corporate purpose by 37 13 causing a notice of the proposal to issue the bonds, including 37 14 a statement of the amount and purpose of the bonds, the type 37 15 or types of debt service tax to be levied or imposed to pay 37 16 principal and interest of the bonds, together with the maximum 37 17 rate of interest which the bonds are to bear, and the right to 37 18 petition for an election, to be published at least once in a 37 19 newspaper of general circulation within the city at least ten 37 20 days prior to the meeting at which it is proposed to take 37 21 action for the issuance of the bonds subject to the following 37 22 limitations: 37 23 Sec. 76. Section 384.32, Code 1995, is amended to read as 37 24 follows 37 25 384.32 TAX TO PAY. 37 26 Taxes for the payment of general obligation bonds must be 37 27 levied in accordance with chapter 76, and the bonds are 37 28 payable from the levy ofunlimited ad valorem taxes on all the37 29taxable property within the city through its debt service fund37 30authorized by section 384.4a debt service property tax or a 37 31 combination of a debt service property tax and a debt service 37 32 income surtax, unlimited as to amount. 37 33 Sec. 77. APPLICABILITY DATE. This division 37 34 of this Act applies to bond 37 35 issuances approved at elections held on or after the effective 37 36 date of this division of this Act. 37 37 DIVISION X 37 38 PROPERTY TAX STUDY 37 39 Sec. 78. The legislative council shall direct the 37 40 establishment of a legislative committee to study the 37 41 system of local government property taxation. The 37 42 committee shall conduct a comprehensive review of the 37 43 property tax system in Iowa, including identifying the 37 44 various classes of property taxpayers, the portion of 37 45 property taxes collected from each class of taxpayer, 37 46 the distribution of those taxes to local governments, 37 47 and the value of local government services received by 37 48 a class of taxpayers in relation to the amount of 37 49 property taxes paid by that class. The committee 37 50 shall also examine the current system of property tax 38 1 credits and exemptions allowed to taxpayers, tax 38 2 increment financing and tax abatement programs, 38 3 property tax credits and exemptions, the effect of tax 38 4 abatement programs, and tax increment financing on the 38 5 tax rates applied to the other classes of property, 38 6 and the general authority of local officials to abate 38 7 property taxes. 38 8 As an integral part of the collection of taxes by 38 9 local governments, the committee shall also review the 38 10 budgeting procedures and practices of local 38 11 governments, including the process of estimating and 38 12 spending ending fund balances; the authorization to 38 13 use, or the practice of using, unexpended funds or 38 14 ending fund balances for capital improvements or other 38 15 nonrecurring expenditures; and the impact on property 38 16 tax rates of actions of the school budget review 38 17 committee, the state appeal board, the application of 38 18 the property tax rollback, and the application of 38 19 equalization orders issued by the department of 38 20 revenue and finance. 38 21 The committee shall also review the use of property 38 22 taxes as the sole or major source of funding for 38 23 school, city, and county services and the use of 38 24 alternate sources of revenues to pay for such 38 25 services, the repayment of bonds or other debt 38 26 obligations by local governments, the use of alternate 38 27 sources of revenue to repay bonds or other debt 38 28 obligations, and the current statutory requirements 38 29 for the issuance of bonds or other debt obligations by 38 30 local governments." 38 31 # . Title page, line 12, by inserting after the 38 32 word "credits;" the following: "increasing the school 38 33 foundation base level for special education;""." 38 34 38 35 38 36 38 37 WILLIAM D. PALMER 38 38 38 39 38 40 38 41 MICHAEL E. GRONSTAL 38 42 SF 2449.316 76 38 43 mg/cf
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