APPROPRIATIONS

SENATE FILE 36 - Miscellaneous Supplemental and Other Appropriations
SENATE FILE 425 - Appropriations - Agriculture and Natural Resources
SENATE FILE 433 - Appropriations - Economic Development
SENATE FILE 435 - Appropriations - Judicial Branch
SENATE FILE 436 - Supplemental Appropriations - Environment First Fund
SENATE FILE 439 - Appropriations - Justice System
SENATE FILE 452 - Appropriations - Infrastructure and Capital Projects
SENATE FILE 453 - State and Local Government Financial and Regulatory Matters - Miscellaneous Provisions
SENATE FILE 458 - Miscellaneous Appropriations, Reductions, Revenue Adjustments, and Other Matters
HOUSE FILE 472 - Federal Block Grant Appropriations
HOUSE FILE 652 - Appropriations - Transportation
HOUSE FILE 655 - Appropriations - Administration and Regulation
HOUSE FILE 662 - Appropriations - Education
HOUSE FILE 667 - Appropriations - Health and Human Services
HOUSE FILE 683 - Miscellaneous Appropriations and Revisions, Sales and Use Tax Revisions, Criminal Code Revisions, and Other Changes
HOUSE FILE 685 - Healthy Iowans Tobacco Trust and Tobacco Settlement Trust Fund - Appropriations

RELATED LEGISLATION

SENATE FILE 97 - Transportation and Transportation-Related Regulation

SEE TRANSPORTATION. This Act establishes a funding mechanism for updating the driver's license issuance and records system by establishing a one-time $3 surcharge to be charged to driver's license applicants between July 1, 2003, and June 30, 2008. Moneys collected from the surcharge in excess of the amount needed to rewrite the system are to be deposited in the Road Use Tax Fund.

SENATE FILE 127 - Breast Cancer Awareness Motor Vehicle License Plates - Fees - Appropriation

SEE TRANSPORTATION. This Act creates a special breast cancer awareness motor vehicle registration plate and appropriates fees from the plate to the Iowa Department of Public Health to provide free mammograms through qualifying organizations.

SENATE FILE 237 - Water Quality Protection Fund - Private Water Supply Systems - Deposit and Use of Permit Fees

SEE ENVIRONMENTAL PROTECTION. This Act allows the Department of Natural Resources to collect permit fees from private water supply well contractors and appropriates the moneys collected to be used for the purpose of supporting programs established to protect private drinking water supplies.

SENATE FILE 375 - Tobacco Products Regulation - Miscellaneous Provisions - Appropriations

SEE BUSINESS, BANKING & INSURANCE. This Act relates to requirements of tobacco product manufacturers under the Tobacco Master Settlement Agreement. The Act provides an appropriation from the General Fund of the State to the Department of Revenue and Finance for FY 2003-2004 to implement the Act and provides for an annual appropriation to the department to enforce the Act. The Act also appropriates funds to be used for payment of litigation fees incurred pursuant to the Master Settlement Agreement.

SENATE FILE 438 - Office of Grants Enterprise Management

SEE STATE GOVERNMENT. This Act provides funding of up to $125,000 for the newly created Office of Grants Enterprise Management in the Department of Management from the increase in the amount of state indirect cost reimbursements.

SENATE FILE 451 - Jurisdiction and Funding of Streets and Roads

SEE TRANSPORTATION. This Act provides for the transfer of jurisdiction of certain primary and farm-to-market roads and for the transfer of funds associated with those roads, and establishes a study committee to evaluate the distribution of moneys in the street construction fund of the cities.

SENATE FILE 459 - Iowa Agricultural Industry Finance Loans - Assignment

SEE ECONOMIC DEVELOPMENT. This Act provides that the Department of Economic Development may accept an assignment of a loan made by a corporation providing financing to an eligible person under the Iowa Agricultural Industry Finance Act in Code Chapter 15E.

HOUSE FILE 304 - Agricultural Land Tax Credits

SEE TAXATION. This Act provides for the reimbursement of a county, from the appropriation made to the Agricultural Land Credit Fund to pay for credits during FY 2003-2003, for the amount paid by a county to those qualifying for the agricultural land tax credit payable during FY 2002-2003 who, due to an error in the certification of the total amount of agricultural land tax credits, received a reduced amount. The Act takes effect April 15, 2003.

HOUSE FILE 656 - Fire Fighter Motor Vehicle Registration Plates - Fees

SEE TRANSPORTATION. This Act directs that special fire fighter motor vehicle license plate fees are to be transferred to a special fund to be used for fire fighter training by the Fire Service Training Bureau.

HOUSE FILE 682 - Wine Manufacturing, Sale, and Distribution

SEE ALCOHOL REGULATION & SUBSTANCE ABUSE. This Act is concerned with the funding of grape and wine development programs in the state, and with the establishment of new wine permit classifications and fees for native wines.

APPROPRIATIONS

SENATE FILE 36 - Miscellaneous Supplemental and Other Appropriations (full text of bill)
BY COMMITTEE ON APPROPRIATIONS. This Act supplements appropriations made for FY 2002-2003.

The Act includes supplemental appropriations to the Department of Human Services for purposes of child and family services, the State Mental Health Institute at Mt. Pleasant, and the state resource centers. The Act also narrows language relating to an infrastructure appropriation made for construction of an alternative services girls treatment center.

The Act makes supplemental appropriations to the Department of Corrections. Existing law requiring per diem reimbursements from the U.S. Marshal's Service to be deposited into the General Fund of the State is amended to allow the department to utilize moneys received above a certain amount. Supplemental appropriations are provided for each correctional facility, general administration, and certain community-based corrections districts.

The Act includes a supplemental appropriation to the State Public Defender and allocates the appropriation to be used for court-appointed attorneys for indigent adults and juveniles.

The Act includes supplemental appropriations for these divisions of the Department of Public Safety: Administration, Criminal Investigation, Narcotics Enforcement, State Fire Marshal, and Iowa State Patrol.

The Act takes effect February 17, 2003.

SENATE FILE 425 - Appropriations - Agriculture and Natural Resources (full text of bill)
BY COMMITTEE ON APPROPRIATIONS. This Act provides funding for the Iowa Department of Agriculture and Land Stewardship (IDALS) and the Department of Natural Resources (DNR) from a number of sources.

For IDALS, moneys are appropriated from the General Fund of the State and full-time equivalent employee positions (FTEs) are authorized in order to support its Administrative Division, Regulatory Division, Laboratory Division, and Conservation Division. The Act also appropriates moneys to support animal industry programs, including a program to regulate horse and dog racing by the department. The Act specifically provides support to the Senior Farmers' Market Nutrition Program and to the department for membership in a Missouri River association.

For DNR, moneys are appropriated from the General Fund of the State and FTEs are authorized in order to support its Administrative and Support Services Division, Parks and Preserves Division, Forests and Forestry Division, Energy and Geological Resources Division, and Environmental Protection Division. The Act also appropriates moneys from the State Fish and Game Protection Fund for support of the Division of Fish and Wildlife. Moneys are transferred to the State Fish and Game Protection Fund to support snowmobile programs and enforce state navigation laws administered by DNR.

An appropriation is made from the Unassigned Revenue Fund administered by the Iowa Comprehensive Underground Storage Tank Fund Board to DNR for administration and expenses of the Underground Storage Tank Section.

The Act permits DNR to use additional funds for staffing to reduce the department's floodplain permit backlog and to use additional funds available from stormwater discharge permit fees for staffing required to implement the Federal Total Maximum Daily Load Program.

SENATE FILE 433 - Appropriations - Economic Development (full text of bill)
BY COMMITTEE ON APPROPRIATIONS. This Act makes appropriations and transfers from the General Fund of the State to the Iowa Department of Economic Development (IDED), the State University of Iowa, the University of Northern Iowa, Iowa State University of Science and Technology, the Iowa Department of Workforce Development (IWD), and the Public Employment Relations Board for the 2003 2004 fiscal year.

The Act provides that the goals for IDED shall be to expand and stimulate the state economy, increase the wealth of Iowans, and increase the population of the state.

The Act appropriates from loan repayments on loans under the former Rural Community 2000 Program to IDED moneys for providing financial assistance to Iowa's councils of governments that provide technical and planning assistance to local governments and for the Rural Development Program for the purposes of the program, including the Rural Enterprise Fund and collaborative skills development training.

The Act appropriates moneys collected by the Division of Insurance in excess of the anticipated gross revenues to IDED for purposes of insurance economic development and international insurance economic development.

The Act appropriates moneys from the Iowa Community Development Loan Fund to IDED for purposes of the Community Development Program.

The Act appropriates moneys from the Workforce Development Fund Account to the Workforce Development Fund.

The Act provides that moneys appropriated or transferred to or receipts credited to the Workforce Development Fund may be used for administration of workforce development activities.

The Act provides that all moneys remaining in the Job Training Fund on July 1, 2003, and any moneys appropriated or credited to the fund during the fiscal year beginning July 1, 2003, shall be transferred to the Workforce Development Fund.

The Act appropriates moneys from the Administrative Contribution Surcharge Fund to IWD for salaries, support, maintenance, conducting labor market surveys, miscellaneous purposes, and for workforce development regional advisory board member expenses.

The Act appropriates moneys from the Special Employment Security Contingency Fund to IWD for the Division of Workers' Compensation and immigration service centers.

The Act allows the Office of Renewable Fuels and Coproducts to apply to IDED for moneys in the Value-Added Agricultural Products and Processes Financial Assistance Fund for deposit in the Renewable Fuels and Coproducts Fund.

The Act requests that the Auditor of State review the audit of the Iowa Finance Authority performed by the auditor hired by the authority. The Auditor of State is also requested to conduct a performance audit of the authority to determine the effectiveness of the authority and the programs of the authority.

The Act provides that, for the fiscal year beginning July 1, 2003, any entity that was specifically identified in 2001 Iowa Acts, Chapter 188, to receive funding from IDED, excluding any entity identified to receive a direct appropriation beginning July 1, 2003, may apply to the department for assistance through the appropriate program.

The Act provides that, in providing moneys from the Shelter Assistance Fund to homeless shelter programs, IDED shall explore the potential of allocating moneys to programs based in part on their ability to move their clients toward self-sufficiency.

The Act provides that all federal grants to, and the federal receipts of, agencies appropriated funds under this Act, not otherwise appropriated, are appropriated for the purposes set forth in the federal grants or receipts unless otherwise provided.

The Act appropriates moneys credited to the state by the U.S. Secretary of the Treasury pursuant to the Social Security Act to IWD for the administration of the Unemployment Compensation Program only.

The Act reduces the standing limited appropriation for the School-to-Career Program employer refunds.

THE GOVERNOR ITEM VETOED THE FOLLOWING PROVISIONS:

1. A provision requiring the department to demonstrate accountability by using performance measures appropriate to show the attainment of the goals for the state and by measuring the effectiveness and results of the department's programs and activities.
2. A provision allocating certain appropriated moneys to Iowa State University for the purpose of funding small business development centers throughout the state.
3. Provisions requiring the University of Iowa, the University of Northern Iowa, and Iowa State University to emphasize that a business and an individual that create a business and receive benefits from a program funded, in part, through moneys appropriated in the Act have a commercially viable product or service.
4. A provision allowing the Department of Workforce Development to use certain additional penalty and interest revenue to accomplish the mission of the department upon notification to the General Assembly.

SENATE FILE 435 - Appropriations - Judicial Branch (full text of bill)
BY COMMITTEE ON APPROPRIATIONS. This Act appropriates $113.35 million from the General Fund of the State to the judicial branch for FY 2003-2004, reduces the percentage of the state's contribution to the Judicial Retirement Fund for FY 2003-2004, and provides that the appointment of a clerk of the district court shall not occur unless the State Court Administrator approves such an appointment.

SENATE FILE 436 - Supplemental Appropriations - Environment First Fund (full text of bill)
BY COMMITTEE ON APPROPRIATIONS. This Act appropriates $16,555,000 from the Cash Reserve Fund to the Environment First Fund for FY 2002-2003. The Act provides that any moneys that are not obligated in the Environment First Fund at the end of FY 2002-2003 are to be transferred to the Cash Reserve Fund, except for unobligated moneys for soil conservation practices. In addition, if the U.S. Supreme Court rules on or after July 1, 2003, in favor of the legality of Iowa's tax on the gross receipts from slot machines at racetracks, any additional tax revenues deposited into the Rebuild Iowa Infrastructure Fund are to be transferred to the Cash Reserve Fund in an amount equal to $16,555,000, less the amount transferred from the Environment First Fund. The U.S. Supreme Court did so rule but the ruling was handed down on June 9, 2003.

The Act takes effect April 11, 2003.

SENATE FILE 439 - Appropriations - Justice System (full text of bill)
BY COMMITTEE ON APPROPRIATIONS. This Act makes appropriations for FY 2003-2004 to the departments of Justice, Corrections, Public Defense, and Public Safety, the Iowa Law Enforcement Academy, the Office of the State Public Defender, the Iowa Telecommunications and Technology Commission, the Board of Parole, and the Iowa Civil Rights Commission.

DEPARTMENT OF JUSTICE. The Act appropriates $10.02 million to the Department of Justice, which represents an increase of $166,000 compared to the FY 2002-2003 appropriations.

DEPARTMENT OF CORRECTIONS. The Act appropriates $251.24 million to the Department of Corrections for institutions, administration, and community-based corrections, which represents an increase of $8.45 million from the FY 2002-2003 appropriations.

DEPARTMENT OF PUBLIC DEFENSE. The Act appropriates $6.14 million to the Department of Public Defense, which represents an increase of $100,700 from the FY 2002-2003 appropriations.

DEPARTMENT OF PUBLIC SAFETY. The Act appropriates $60.7 million to the Department of Public Safety, which represents an increase of $1.1 million from the FY 2002-2003 appropriations.

IOWA LAW ENFORCEMENT ACADEMY. The Act appropriates $1.05 million to the Iowa Law Enforcement Academy, which represents an increase of $72,000 from the FY 2002-2003 appropriations.

OFFICE OF THE STATE PUBLIC DEFENDER/INDIGENT DEFENSE. The Act appropriates $36.18 million to the State Public Defender for indigent defense, which represents an increase of $360,000 from the FY 2002-2003 appropriations.

IOWA TELECOMMUNICATIONS AND TECHNOLOGY COMMISSION. The Act appropriates $500,000 to the Iowa Telecommunications and Technology Commission, which represents a decrease of $502,000 from the FY 2002-2003 appropriations.

BOARD OF PAROLE. The Act appropriates $1.02 million to the Board of Parole, which represents an increase of $53,300 from the FY 2002-2003 appropriations.

IOWA CIVIL RIGHTS COMMISSION. The Act appropriates $806,894 to the Iowa Civil Rights Commission, which represents a decrease of $79,130 from the FY 2002-2003 appropriations. The appropriation to the Iowa Civil Rights Commission was added to the Act due to the elimination of the health and human rights appropriations bill.

The Act extends the lease of the Fire Service Institute at Iowa State University to the Department of Public Safety until July 1, 2010.

The Act extends the standing limited appropriation from the E911 Emergency Communications Fund to the E911 administrator for an additional year through FY 2003-2004. This provision takes effect May 23, 2003.

SENATE FILE 452 - Appropriations - Infrastructure and Capital Projects (full text of bill)
BY COMMITTEE ON APPROPRIATIONS. This Act makes appropriations for FY 2003 2004 from the Rebuild Iowa Infrastructure Fund, Environment First Fund, and the Tax Exempt Bond Proceeds Restricted Capital Funds Account of the Tobacco Settlement Trust Fund for various capital and other projects. Appropriations from the Rebuild Iowa Infrastructure Fund include projects for the departments of Corrections, Cultural Affairs, Economic Development, Education, General Services, Information Technology, Public Defense, Public Safety, and Transportation, and for the State Board of Regents, the Iowa Telecommunications and Technology Commission, and the National Program for Playground Safety at the University of Northern Iowa, and to the State Board of Regents for tuition replacement.

The Act also strikes an appropriation from the Rebuild Iowa Infrastructure Fund to the State Board of Regents for FY 2003 2004 for repayment of the bonding authorized in that Act for the Phase II construction of the engineering teaching and research complex at Iowa State University of Science and Technology.

The Act amends an FY 2000 2001 appropriation from the Rebuild Iowa Infrastructure Fund to the judicial branch for construction of the judicial building to allow up to $400,000 to be used for costs associated with operation of the building.

The Act appropriates funds from the Environment First Fund to the departments of Agriculture and Land Stewardship, Economic Development, and Natural Resources. The Act appropriates $11 million from the Environment First Fund to the Resources Enhancement and Protection Fund in lieu of the $20 million appropriated by statute from the General Fund of the State.

The Act makes appropriations from the Tax Exempt Bond Proceeds Restricted Capital Funds Account of the Tobacco Settlement Trust Fund for projects for the departments of Corrections, Economic Development, Education, General Services, Information Technology, Natural Resources, Public Defense, Public Safety, and Transportation, and for the State Board of Regents, the Iowa State Fair Authority, and the Office of Treasurer of State.

The Act also appropriates funds from the Tax Exempt Bond Proceeds Restricted Capital Funds Account of the Tobacco Settlement Trust Fund to the State Board of Regents for tuition replacement and to the Treasurer of State for Tobacco Master Settlement Agreement litigation fees, debt service for the Iowa Communications Network, and repayment of prison infrastructure bonds.

THE GOVERNOR ITEM VETOED THE FOLLOWING:

1. Provisions creating a Capitol Complex Parking Structure Revolving Fund to be administered by the Department of General Services and directing the department to establish parking fees for public and state employee use of the parking structure. However, see H.F. 683 for similar provisions.
2. A directive to the Department of General Services to issue a request for proposals for the management, operation and maintenance of the parking structure. However, see H.F. 683 for similar provisions.

SENATE FILE 453 - State and Local Government Financial and Regulatory Matters - Miscellaneous Provisions (full text of bill)
BY COMMITTEE ON APPROPRIATIONS. This Act addresses state and local government financial and regulatory matters. Legislators referred to this legislation as the "Government Reinvention Bill" during debate and discussion, noting that many of the ideas contained in the Act were developed working with the Public Strategies Group, a consultant retained by the Governor. The Act is organized into divisions identified by particular topics.

Division I - Property Tax Replacement
Effective July 1, 2003, Division I repeals the statutory requirements for state payment of personal property tax replacement moneys to local governments, and accelerates the phaseout and reduces the amount of state payment of replacement moneys for the property tax on machinery, equipment and computers (M & E). In addition, the division repeals the state payment of franchise tax revenues to local governments. Authority for a local government to levy in FY 2003-2004 to recoup an insufficiency in state funding for M & E in FY 2002-2003 is removed and this provision takes effect May 30, 2003. The division states that the repeals will result in appropriation reductions totaling $70 million and provides that if the Governor vetoes any provisions in the division resulting in increased appropriations, the Governor shall order uniform reductions in State General Fund appropriations to the executive branch. Senate File 458 eliminates a $10 million appropriation made in this Act for local government innovations and for FY 2003-2004 increases state payment to local governments to replace M & E tax revenues and continues the franchise tax revenue payment.

Division II - Parking Tickets
Division II provides that a local government may establish the parking violation fine for each violation that occurs. Current law establishes the maximum parking fine at $5. The division provides that if a parking violation is not paid within 30 days, the fine amount increases by $5. Under current law, the fine amount increases up to $10.

Division III - Iowa Law Enforcement Academy
Division III provides that an individual who is not a certified law enforcement officer may apply for attendance at the Iowa Law Enforcement Academy at their own expense on the condition that the individual meets certain eligibility requirements as established by academy rules. However, an individual shall not be granted permission to attend the academy training program if the acceptance would result in the nonacceptance of another qualifying applicant who is a law enforcement officer.

Division IV - Budget Appeals
Division IV relates to local government budget appeal requirements. Under the Act, the number of people necessary to file an appeal of a proposed county budget must be equal to one-fourth of 1 percent of those voting for the Office of Governor at the last general election of the county, but not less than 100 people. Under current law, a protest of a county budget can be made by a number of people equal to one-fourth of 1 percent of those voting for the Office of Governor at the last general election of the county, but not less than 10 people.

Division V - Urban Renewal Reporting
Division V changes the annual reporting requirements of municipalities that have established urban renewal areas. In lieu of the annual reporting, the reporting is to be submitted on or before December 1 of each odd-numbered year. And in lieu of various specific information, the municipality need only report the total amount of loans, bonds, and other indebtedness of the most recently ended fiscal year.

Division VI - City and County Infractions
Division VI increases the maximum civil penalty that may be imposed by a city or county for an infraction of its ordinances from $500 to $750 and from $750 to $1,000 for each repeat offense.

Division VII - Recording Transaction Fee
Division VII requires the county recorder to collect for FY 2003-2004 an electronic transaction fee of $5 for each recorded transaction for which a fee is already paid pursuant to the general recording and filing fee requirements. The purpose of the electronic transaction fee is to fund the planning and implementation of electronic recording and electronic transactions in each county and development of county and statewide Internet web sites. The division requires the county treasurer to establish and maintain an interest-bearing account into which all electronic transaction fees collected are deposited. Beginning in FY 2004-2005, the recorder is required to collect a fee of $1 to pay the ongoing costs of the electronic access. See S.F. 458 for a clarification that the fee is applied to whole transactions, rather than on a per-page basis, and for other clarifications.

Division VIII - Local Government Leases
Division VIII provides that a city or county may enter into a lease with a joint city-county authority when the city or county and the authority determine that such a lease is necessary and convenient to effectuate their purposes. The power to enter into leases with a joint authority is in addition to other powers granted to cities and counties to enter into leases, and the provisions of law which require a city or county entering into a lease to follow the authorization procedure which requires an affirmative vote of 60 percent of the votes cast on the question are not applicable and instead only a majority vote is required for authorization of such leases.

Division IX - Local Government Innovation Fund
Division IX creates the Local Government Innovation Fund under the control of the Department of Management. The purpose of the fund is to provide loans to cities and counties for purposes of stimulating and encouraging city and county innovation and savings in expenditures. The Director of the Department of Management is directed to appoint a seven-member committee to implement forms, loan requirements, and loan repayment schedules, and to perform other administrative functions. The loan provisions are required to be outlined in a Code Chapter 28E agreement between the state and the city or county receiving the loan. Moneys appropriated to the fund do not revert and the fund retains interest and earnings. The division provides an initial $10 million appropriation to the fund; however, this appropriation was repealed by S.F. 458, section 42, and the moneys are instead appropriated to continue for FY 2003-2004 state payments to local governments of state franchise tax revenues and a larger portion of state machinery and equipment property tax replacement payments. An appropriation of $1 million to the fund is included in H.F. 683.

Division X - DNR Regulation Study
Division X requires the Legislative Council to establish a study committee for the 2003 Interim to review the Department of Natural Resources' enforcement and penalty policies relating to regulation of cities and counties.

Division XI - Charge for Capital Assets
Division XI directs the Department of Management, for FY 2003-2004, to levy charges against certain executive branch departments and agencies for the indirect costs associated with the capital assets controlled by the departments and agencies. Proceeds from the charges are required to be credited to the fund from which the moneys used to pay the charges were appropriated and are limited in amount. The division provides for a reduction in State Board of Regents appropriations in lieu of the capital asset charges.

Division XII - Charter Agencies
Division XII establishes new Code Chapter 7J and provides the Governor with the authority to designate, by July 1, 2003, up to five state agencies as charter agencies. However, S.F. 458 removes the five-agency ceiling and H.F. 683 allows the Lottery Authority to be designated as a charter agency. The Department of Administrative Services (created by H.F. 534, see State Government) and the Department of Management cannot be designated as charter agencies. The designation of a charter agency is for a period of five years and terminates June 30, 2008. The division takes effect May 30, 2003.

Division XII establishes the additional authority and requirements applicable to charter agencies. The division provides that the pay for a director of a charter agency is set by the Governor within the pay plan for exempt positions in state government with a possible bonus of up to 50 percent of that amount. Each director is also required to enter into an annual performance agreement with the Governor. The division further provides that the total appropriations to charter agencies for FY 2003-2004 shall be reduced by $15 million, with an annual target of a 10 percent reduction for each charter agency. However, S.F. 458 eliminates the 10 percent annual target and allows the Department of Management to offset the amount of the FY 2003-2004 reduction by the amount of additional revenue brought in by a charter agency. The division indicates similar reductions are contemplated for the five years this division is in effect. In addition, each charter agency is allowed to retain 50 percent of any unobligated or unexpended appropriations at the end of each fiscal year.

Division XII also provides that a charter agency is not subject to any limitations relating to the number or grade of its employees. In addition, a charter agency is granted the authority to waive any personnel requirement, subject to any restriction contained within a collective bargaining agreement.

The division also allows a charter agency to waive any rule or regulation regarding procurement, fleet management, printing and copying, maintenance of buildings, and information technology.

The division also permits a charter agency to waive any administrative rule if strict compliance with the rule impacts the ability of the agency to perform its duties in the most cost-efficient manner. The charter agency may propose the granting of the waiver if it finds, by clear and convincing evidence, that the provision to be waived poses an undue financial hardship, that the waiver would not prejudice the rights of any person, that the public health and welfare can be protected by other means, and that the waiver would not violate federal or state law or the federal or state constitution. If the agency proposes a waiver, the agency must submit the waiver to the Administrative Rules Review Committee, which must review the waiver at its next meeting. The committee can either approve the waiver affirmatively or by not taking action, or it can delay the effective date of the waiver in the same manner as the committee can delay the effective date of an administrative rule.

The division further requires each charter agency to submit annual reports to the General Assembly concerning its actions as a charter agency and requires the Governor to submit a report to the General Assembly concerning the implementation of the division by January 15, 2008. The division also requires each proposed waiver or suspension of a rule by a charter agency to be submitted to the Department of Management for review and the director of the department may disapprove the waiver or suspension if it would result in an adverse financial impact on the state.

The division creates a Charter Agency Loan Fund under the authority of the Department of Management to be used for loans to support innovation by charter agencies. For FY 2003-2004, $3 million is appropriated. Senate File 458 changes the loan fund to a grant fund and eliminates the payback requirements.

Division XIII - Health Insurance Incentive
Division XIII provides that the Department of Administrative Services may establish an incentive program for state employees to encourage employees to reduce health insurance costs for FY 2003-2004. Fifty percent of any savings realized are required to be distributed to affected state employees in a manner established by the program. The department is required to obtain approval of the program from the Executive Council and to submit a copy of the proposed program, and an update on the program, by December 31, 2003, to the Legislative Government Oversight Committee.

Division XIV - Area Education Agencies
Division XIV provides for reductions in specified area education agency (AEA) funding levels and carryover balances. The division provides that for FY 2003-2004, AEA special education support services fund balances shall be reduced. Specific reduction amounts are provided for each AEA. With respect to this reduction, an AEA may use the funds determined to be for AEA payments, and unreserved fund balances for media services or education services, in a manner which it believes is appropriate to best maintain the level of required AEA special education services.

A temporary reduction in state aid for AEAs paid through school districts is made. For FY 2003-2004, there is an additional reduction in state aid for AEAs and the portion of the combined district cost calculated for the agencies of $10 million. The division allows an AEA, within the limits of the total of the funds provided, to expend for special education support services an amount that exceeds the payment for special education support services in order to maintain the level of required special education support services in the AEA.

Division XIV takes effect May 30, 2003.

Division XV - Child Welfare Services
Division XV requires the Department of Human Services to implement a service system redesign for child welfare services applicable to those children who are subject to the jurisdiction of the juvenile court or juvenile court services or who have been found to be a victim of child abuse by the department. The division states the purpose of the system redesign, identifies the children involved, identifies design principles and considerations, provides for use of a stakeholder panel, establishes a legislative monitoring committee, requires implementation of the redesign to begin by January 1, 2004, provides emergency rulemaking authority, and authorizes the Director of Human Services to seek federal waivers and plan amendments.

The statutory requirements, relating to competitive bidding and penalties for divulging the contents of sealed bids, and the administrative rules relating to requirements for service contracts, are not applicable to the services procurement process used to implement the service system redesign. The department is authorized to enter into competitive negotiations and proposal modifications with service contractors as necessary to implement the outcomes-based approach.

The FY 2003-2004 General Fund moneys appropriated to the department in H.F. 667 are reduced by $10 million and the Governor is required to apply the reductions by January 1, 2004, after consulting with the legislative monitoring committee, the Director of Human Services, and the Council on Human Services. If the judicial branch reports a reduction to the judicial branch budget as a result of the redesign, the amount of the reductions made by the Governor shall be reduced accordingly. Appropriations are made to the department for costs to implement the service system redesign.

Division XVI - Department of Human Services Reinvention
Division XVI reduces and supplements various appropriations made to the Department of Human Services (DHS) for FY 2003-2004 and transfers moneys from the Hospital Trust Fund at the end of FY 2002-2003, changes the funding for educational services provided to children at DHS institutions, and addresses the Medical Assistance (Medicaid) Program.

DHS is required to develop plans for making electronic payments to Medicaid Program and child care services providers. Various FY 2003-2004 appropriations are reduced to reflect the anticipated savings from this change. The Governor is directed to apply the reductions by January 1, 2004. The appropriation made for FY 2003-2004 for the Medicaid Program from the Hospital Trust Fund is supplemented. In addition, effective May 30, 2003, a planned transfer of the Hospital Trust Fund balance at the end of FY 2002-2003 is eliminated.

The division modifies the procedures for authorizing and funding educational programs provided to children residing in DHS institutions, specifically the State Mental Health Institutes at Cherokee and Independence, the State Training School at Eldora, and the Iowa Juvenile Home at Toledo. The institution in which a child resides is required to submit to the Department of Education a proposed program and budget for approval or modification. Once a proposed program and budget are approved, monthly installments are made through the state aid to schools appropriation to DHS, which will distribute the payments to the appropriate institutions.

Under current law, the funding for the educational programs is derived from an appropriation made to DHS, though the AEAs provided the Iowa Juvenile Home and the State Training School with services. Reductions are applied to FY 2003-2004 DHS appropriations to reflect the change in the funding source. Appropriations for the State Training School, Iowa Juvenile Home, and State Mental Health Institute at Independence are affected.

DHS is directed to establish a work group to work on a plan for redesign of the Medicaid Program. The work group membership is to include representatives of the insurance industry and the policy options considered are required to include health care spending accounts, acuity-based reimbursement for services provided to certain seniors, and an evidence-based pharmaceutical program.

Division XVII - Reinvention Investment
Division XVII adds $1.35 million to the $5 million H.F. 655 appropriates to the Department of Management for reinvention initiatives intended to produce ongoing savings.

Division XVIII - Iowa Lottery Authority
Division XVIII transfers authority over the operation of the Iowa Lottery from the Lottery Division of the Department of Revenue and Finance to a newly created Iowa Lottery Authority by eliminating Code Chapter 99E, which provided the statutory basis for the operation of the Iowa Lottery, and creating new Code Chapter 99G, which provides for the operation of the Iowa Lottery under the newly created Iowa Lottery Authority. The newly created authority is deemed an instrumentality of the state but not a state agency; however, the Administrative Procedure Act, and provisions governing open records and open meetings, are made applicable to the newly created authority. The division provides for a chief executive officer (CEO) of the authority who shall be appointed by the Governor and confirmed by the Senate and who shall serve for a four-year term. However, the division provides that the new CEO can only be removed from office prior to the end of the CEO's term for improper conduct. The existing five-member Lottery Board providing oversight of the lottery is maintained, but the board is given the additional responsibility for approving the budget of the authority. The CEO and the new board are also given the exclusive power to determine the number of full-time equivalent positions needed to carry out the provision of the new Code chapter. The division also eliminates the sales tax on gross receipts from the sale of Iowa lottery tickets. Provisions governing the transition from the current organizational structure to the new structure are also included in the division. The division was originally to take effect September 1, 2003, but S.F. 458 moved the effective date up to July 1, 2003.

THE GOVERNOR ITEM VETOED THE FOLLOWING:

1. Language in Division XI (Charge for Capital Assets) that provided that the reduction in the appropriations made to the State Board of Regents for the three state universities would be applied in a particular percentage amount at each of the universities.
2. Language in Division XI (Charge for Capital Assets) that required the Legislative Council to authorize a study for the 2003 Legislative Interim of the issues surrounding the capital asset charges.
3. Language in Division XIV (Area Education Agencies) requiring the Department of Education to establish a task force to study the delivery and funding of media services, educational services, and special education support services by the area education agencies. The 18-member task force included various education system interests and 10 members of the General Assembly. The department was required to submit its findings and recommendations to the chairpersons and ranking members of the Senate and House of Representatives Standing Committees on Education and the Joint Appropriations Subcommittee on Education by December 15, 2003.

SENATE FILE 458 - Miscellaneous Appropriations, Reductions, Revenue Adjustments, and Other Matters (full text of bill)
BY COMMITTEE ON APPROPRIATIONS. This Act relates to various state appropriations, compensation of public employees, tax provisions, and regulatory matters.

Note: Some provisions of this Act may have been amended by H.F. 683.

Division I - MH/MR/DD - Allowed Growth
This division appropriates funding for county mental health, mental retardation, and developmental disabilities (MH/MR/DD) services allowed growth for FY 2004-2005.

This division amends Code Section 426B.5, relating to the risk pool established for counties with unanticipated expenditures for MH/MR/DD services. The application date by which a county must apply for assistance from the pool is moved back from April 1 to January 25. The Risk Pool Board must make its final decision on applications on or before February 25. If the board's decisions on providing assistance do not utilize all the moneys available in the risk pool for that fiscal year, the remainder is to be distributed to eligible counties based upon the methodology used to distribute allowed growth funding to counties.

The methodology for distribution of allowed growth funding for FY 2003-2004 is revised so that counties with an ending balance in the previous fiscal year that is less than 10 percent of the gross expenditures for that fiscal year are allowed an inflation adjustment. Counties with an ending balance percentage of 35 through 44 would have had 85 percent of their allowed growth payment withheld, but under the Act all of the allowed growth payment is withheld. Finally, the Department of Human Services (DHS) is prohibited from changing the inflation adjustment authorized by the division.

Division II - Standing Appropriations - Reductions
This division applies reductions to standing appropriations for the General Assembly, at risk children programs, public transit assistance, and the Educational Excellence Program. The transit assistance appropriation is further reduced in H.F. 683.

The division includes an appropriation from the Cash Reserve Fund to the Rebuild Iowa Infrastructure Fund and law is made inapplicable that would otherwise require that the reason for the appropriation be stated, that the appropriation be the only subject of the bill, and that the bill receive a supermajority vote if the appropriation caused the fund balance to drop below a certain level. This appropriation takes effect May 30, 2003. In addition, the division reduces a standing appropriation from the Rebuild Iowa Infrastructure Fund to the Environment First Fund for FY 2002 2003, and this reduction takes effect May 30, 2003.

Division III - Standing Appropriations - Limitations
This division applies limitations to standing appropriations for compensation of military personnel, nonpublic school transportation, printing of cigarette tax stamps, state share of peace officers' retirement benefits, livestock production credit refunds, reimbursement of homestead property tax credits, reimbursement of agricultural land and family farm tax credits, reimbursement of military service tax credits, state unemployment compensation expenses, interest costs under the federal Cash Management and Improvement Act, the state's Deferred Administration Compensation Program, and elderly and disabled credits.

Division IV - Revenue Adjustments - Appropriations
This division provides the following revenue adjustments and appropriations, which, except as otherwise indicated, are applicable for FY 2003-2004:

1. Interest and earnings from the Iowa Economic Emergency Fund and the Cash Reserve Fund will be credited to the General Fund of the State instead of the Rebuild Iowa Infrastructure Fund as provided in Code Sections 8.55 and 8.56.
2. The unexpended balances of state general fund operational appropriations will revert to the General Fund of the State instead of remaining with agencies for use for training and technology purposes as provided in Code Section 8.62.
3. Moneys collected from the income tax checkoff for the Keep Iowa Beautiful Fund in FY 2002 2003 and 2003 2004 are appropriated to the Iowa Department of Transportation for the purposes provided in Code Section 314.28 of education for litter prevention, improving waste management and recycling efforts, and beautification projects.
4. Of the $70 million in gambling revenues that the law provides will be deposited in the Endowment for Iowa's Health Account of the Tobacco Settlement Trust Fund, $20 million will instead be deposited in the General Fund of the State.
5. Provides an appropriation to the Iowa Department of Economic Development for assistance to a city or organization hosting the National Junior Olympics.
6. Code Section 8.55, relating to the Iowa Economic Emergency Fund, includes provisions making transfers when the fund has reached its maximum balance. The standing limited transfer to the Senior Living Trust Fund is increased to $118 million and the standing limited transfer to the Endowment for Iowa's Health Account is increased to $102 million.
7. Delays until July 1, 2004, the effective date of a change in the maximum balances of the Cash Reserve and Iowa Economic Emergency Funds.
8. The maximum amount of job credits for the Accelerated Career Education Program under Code Section 260G.4B is decreased from $6 million to $4 million.
9. Eliminates a standing appropriation from the General Fund of the State to the Endowment for Iowa's Health Account for FY 2003 2004.
10. The FY 2002 2003 appropriation to the State Racing and Gaming Commission for purposes of racetrack regulation is increased.
11. Appropriates from the Rebuild Iowa Infrastructure Fund $10 million to the General Fund of the State.
12. Increases the appropriation made for salaries and support to the Iowa Law Enforcement Academy in S.F. 439.
13. Appropriates from the Cash Reserve Fund for purpose of a Military Pay Differential Program and Health Insurance Retention Program for individuals activated for the United States armed services. This provision applies retroactively to March 19, 2003.
14. Directs that fees remaining in the Assisted Living Program Fund on June 30, 2003, be used for purposes of the fund by the Department of Inspections and Appeals instead of the Department of Elder Affairs.
15. Makes appropriations to the Department of Workforce Development for OSHA inspectors and a workers' compensation compliance officer. However, this appropriation was contingent upon the enactment of S.F. 344, which was not enacted.
16. Appropriates to the Department of Workforce Development moneys transferred to the state from the federal government under the federal Social Security Act (referred to as "Reed Act" funding in legislative debate). The moneys are to be used for payment of unemployment compensation benefits, for establishing the Unemployment Compensation Reserve Fund created by the division in Code Section 96.9, for purposes of automation and technology for the unemployment tax and claims system, and for infrastructure improvements and other costs associated with enhanced services to unemployment benefit claimants for workforce and labor exchange services. The provisions creating the reserve fund also provide for receipt of reserve contributions if the fund balance falls below a certain level. This provision takes effect May 30, 2003.
17. Extends the $30 million standing appropriation for the Iowa Early Intervention Block Grant Program for FY 2003-2004.
18. Provides a standing appropriation from Phase III moneys under the Educational Excellence Program for the Iowa Mathematics and Science Coalition.
19. Increases the amount of state property tax replacement payments for machinery, equipment and computers as set in S.F. 453 by $1.2 million; appropriates the $8.8 million in franchise tax revenues to be allocated to local jurisdictions (S.F. 453 repeals Code Section 405A.10, which provided for an annual appropriation of $8.8 million); and repeals the $10 million appropriation in S.F. 453 to the Local Government Innovation Fund.
20. The nonreversion of the appropriation for pooled technology funding is extended through FY 2003-2004. This provision takes effect May 30, 2003.
21. Changes the appropriation made in H.F. 655 for the Ready to Work Program and coordinator from the Long-term Disability Reserve Fund and the Workers' Compensation Trust Fund to the Workers' Compensation Trust Fund only.
22. Appropriates up to $50 million from the Cash Reserve Fund to the General Fund of the State to prevent any overdraft or deficit. The appropriation is contingent upon certain events, including the reduction in estimates of General Fund receipts and the insufficiency of the Governor's across-the-board cuts or the Governor's inability to make such cuts. This provision takes effect May 30, 2003.

Division V - Compensation And Benefits
This division relates to compensation and benefits paid to state employees. The division appropriates moneys for the fiscal year beginning July 1, 2003, to fund salary adjustments for certain contract and noncontract employees.

The State Board of Regents is specifically allocated appropriations to fund increases to employees at the State School for the Deaf and the Iowa Braille and Sight Saving School and is directed to use other sources to fund other employee increases.

The division also provides supplemental authorization to fund salaries from trust, revolving and special funds for which the 80th General Assembly has established a budget.

State trooper meal allowances are provided for and a salary model coordinator is funded to maintain the state's salary model in conjunction with the Legislative Fiscal Bureau.

Division VI - Corrective Provisions
This division provides corrective amendments to legislation passed in the 80th General Assembly, 2003 Regular Session, and to Code sections affected by such legislation.

Division VII - Miscellaneous Provisions
This division makes statutory changes to the Code and to Session Laws and makes other miscellaneous provisions as follows:

• New Code Sections 7J.1(1), 7J.1(3) and 7J.2, enacted by S.F. 453, are amended to strike the limit of five state departments or agencies that may be designated charter agencies, changing the Charter Agency Loan Fund to the Charter Agency Grant Fund to provide grants instead of loans to charter agencies to provide funding to support innovation by the charter agencies, and providing that a reduction of $15 million in the operating appropriations to a charter agency from the amount which would otherwise be appropriated along with additional generated revenue from the reinvention process is intended. Senate File 453 is also amended to accomplish the above.
• Code Section 8.23, relating to the annual departmental budget estimates required to be submitted to the Director of the Department of Management, is amended by striking the requirement for agencies that pay for energy directly to include an energy line item itemized by type of energy and location. Code Section 8.31 is amended to require that an executive branch agency must submit the requisition of an appropriation annually by June 1 in advance of the fiscal year, or by another date identified by the director. The requisition is required to identify the dates and amounts during the fiscal year for allotment of the appropriation. These changes take effect June 1, 2003, and the revised allotment requirements are first applicable to the appropriations made for the fiscal year beginning July 1, 2003.
• Code Sections 12B.10 and 12B.10A, relating to public funds investment standards and public funds investment maturity and procedural limitations, are amended to provide that the short term investments of the State Board of Regents and its institutions cannot have an effective maturity in excess of 63 months.
• Code Section 12C.27 is rewritten to provide that if the Treasurer of State determines that a bank fails to comply with the collateral pledged requirements of Code Section 12C.22, the treasurer may restrict the bank from accepting uninsured public funds.
• Code Section 12E.12(8) is amended to allow the issuing agency of refunding bonds for Tobacco Settlement Authority bonds, which cannot be used for such refunding, to use the proceeds from the previously issued refunding bonds for capital infrastructure improvements at the issuing agency. This provision takes effect May 30, 2003.
• Code Chapter 15E provisions relating to investment tax credits for certain venture capital investments are amended. Code Sections 15E.42 and 15E.43(1), paragraph "a," are amended to add individuals receiving income from a revocable trust which invests in a qualified business to qualify for a tax credit for an equity investment in a qualifying business. Code Section 15E.43(1) is amended to provide that an individual who dies before redeeming the entire investment tax credit for an equity investment in a qualifying business or community-based seed capital fund can claim the remaining credit on the decedent's final income tax return. Code Section 15E.45 is amended to provide that since investors in a community-based seed capital fund are not restricted to individual taxpayers, the reference to individual investors should be stricken. Code Section 15E.51 is amended to provide that an investor who makes separate investments into a community-based seed capital fund and a venture capital fund should be entitled to claim a tax credit for both investments. These amendments apply retroactively to January 1, 2002.
• Code Section 15E.193B(4) is amended to allow the Department of Economic Development to extend the two year completion period for tax credits for housing projects in enterprise zones if completion of the project is impossible because of substantial loss due to a catastrophe. "Substantial loss" means at least 30 percent of the project's eligible basis. This amendment takes effect May 30, 2003.
• Enacts new Code Section 16.181 to establish a Housing Trust Fund to be administered by the Iowa Finance Authority. The fund shall be used for the development and preservation of affordable housing for low income people in the state. Assets in the Housing Trust Fund shall consist of all of the following:
• Any assets received by the authority from the Iowa Housing Corporation.
• Any moneys transferred by the authority for deposit in the fund.
• Any other moneys appropriated by the General Assembly and any other moneys available to and obtained or accepted by the authority for placement in the fund.

The new Code section also creates a Local Housing Trust Fund Program and a Project Based Housing Program within the Housing Trust Fund. The new Code section provides that 60 percent of the assets in the Housing Trust Fund shall be allocated to the Local Housing Trust Fund Program and 40 percent of the assets are allocated to the Project Based Housing Program. Any assets remaining in the Local Housing Trust Fund Program on April 1 of each fiscal year which have not been awarded to a Local Housing Trust Fund may be transferred to the Project Based Housing Program at any time prior to the end of the fiscal year.

• Code Section 25.1 is amended to provide that the State Appeal Board shall no longer consider claims for vehicle registration fee refunds. Such refunds are obtained by application to the Iowa Department of Transportation in certain circumstances when a vehicle is sold, transferred or junked.
• Code section 29C.8 is amended by requiring the Administrator of the Emergency Management Division of the Department of Public Defense, effective July 1, 2004, to approve and support the development and ongoing operations of an urban search and rescue team within the state. Members of the team when acting under the direction of the administrator or pursuant to a Governor's Disaster Proclamation are considered employees of the state and shall be compensated for disability, workers' compensation, and death benefits as appropriate. The Administrator of the Emergency Management Division of the Department of Public Defense must also develop, implement and support a uniform incident command system to be used by state agencies responding to emergencies and disasters beginning July 1, 2003. A related change is made to Code Section 29C.20, pertaining to a contingent fund governed by the Executive Council for use in responding to disasters and other emergencies, to authorize payment of expenses and claims from the fund beginning July 1, 2004, for authorized urban search and rescue team activities and disaster medical assistance team activities.
• New Code Sections 99G.9(3) and 99G.40(5), enacted by S.F. 453, are amended to specify that the Auditor of State or the Auditor of State's designee is to perform audits on the records and papers of the Iowa Lottery Authority which is created in S.F. 453.
• Code Section 257.11(5) is amended to specify a minimum of 10 additional pupils are to be awarded a school district as additional weighting if a regional academy provides both advanced-level courses and vocational-technical courses. The amendment also provides that if additional funding to school districts operating regional academies exceeds $1 million, the funding shall be prorated to each school district.
• Code Sections 260C.14, 261.9 and 262.9 are amended to require community colleges, private colleges, or universities under Iowa's Tuition Grant Program and the Board of Regents universities to offer options to students who are members of the National Guard or military reserves and are called to active state or federal duty. These options include the withdrawal from registration with a full refund of tuition and fees, course grades be given or incomplete grades be given to be made up later for all of the courses, or course grades be given or incomplete grades be given to be made up later for only some of the courses.
• Code Section 284.13(1) is amended to revive the allocation for the Team Based Variable Pay Program administered by the Department of Education during the 2001 2002 fiscal year by providing a $500,000 allocation from the appropriation for the Student Achievement and Teacher Quality Program for each fiscal year of the fiscal period beginning July 1, 2003, and ending June 30, 2005. The Code section is also amended to provide that any moneys remaining shall be allocated to school districts for salaries and career development.
• Code Section 294A.25(6) (9) is amended by striking references to Phase III in standing Code language that provides for the allocation of educational excellence moneys to the Department of Education; and striking the subsection used to allocate moneys in prior years for the Ambassador to Education Program, which in FY 2003 2004 is funded from a Student Achievement and Teacher Quality Program allocation. The amendments provide that the allocations for the K-12 management information system and for the Iowa Braille and Sight Saving School and the Iowa State School for the Deaf will be made prior to the allocations provided to meet the minimum teacher salary requirements and salary improvement requirements of Code Chapter 294A.
• Code Sections 321J.2, 321J.4 and 321J.12, as amended by 2003 Iowa Acts, H.F. 65 (see Criminal Law, Procedure & Corrections), are amended to provide that a defendant who has been convicted of a first offense operating while intoxicated offense whose driver's license or nonresident operating privileges have been revoked and who seeks a temporary restricted license must install an approved ignition interlock device on all vehicles owned or operated by the defendant. This requirement also applies to a defendant whose driver's license or nonresident operating privileges have been revoked administratively due to chemical test failure.
• Code Section 331.605C(1), (2) and (4), as enacted by S.F. 453, is amended to specify that the fees collected for each electronically recorded transaction is the enumerated amount regardless of the number of pages and to change the name of the fund to which locally collected electronic transaction fees are deposited for purposes of providing electronic access to local records from the "State Government Electronic Transaction" Fund to the "Local Electronic Government Transaction" Fund.
• Code Section 422.45 is amended to add a new subsection 64 that exempts from the sales and use taxes the access or service charges assessed by financial institutions on noncustomer point of sale or noncustomer use of automated teller machines.
• Code Section 423.4 is amended to exempt from the use tax the transfer of vehicles subject to registration from one leasing corporation to another if both corporations are part of a controlled group for federal income tax purposes.
• Code Section 435.26A, as enacted by S.F. 134 (see Local Government), is amended to require certain information be provided when the certificate of title for a manufactured home has been surrendered. The amendment also provides for the procedure for the reissuance of a previously surrendered certificate of title for a manufactured home. The amendments take effect May 30, 2003.
• Code Section 452A.2 is amended to add a definition for "nonterminal storage facility" in the motor fuel tax statute.
• Code Sections 453C.1 and 453C.2 are amended to allow cigarette manufacturers that are not members of the Master Settlement Agreement and that are required to place moneys into escrow on account for cigarettes to be sold in the state to receive a refund of any excess escrow amounts remitted because of fewer cigarettes sold than anticipated. The amendments take effect May 30, 2003. If the amendment to Code Section 453C.2 is unconstitutional, the remaining portions of Code Section 453C.2 and the amendment to Code Section 453C.1 shall remain effective.
• Code Section 476.33 is amended to require the Utilities Board to consider for inclusion in the rates for public utilities the capital infrastructure investments that will not produce significant revenues and will be in service within the test year and the cost of capital charges that will occur within nine months following the test year which are associated with a new generating plant. The Utilities Board is also directed to initiate and coordinate a review of current ratemaking procedures.
• A Tobacco Compliance Employee Training Fund is created in Code Section 453A.2 consisting of the civil penalties charged for violations of the law for sales to underage purchasers. Moneys in the fund are appropriated to the Alcoholic Beverages Division of the Department of Commerce for the Tobacco Compliance Employee Training Program created in S.F. 401 (see Business, Banking & Insurance). This provision takes effect May 30, 2003.
• Code Section 505.7 is amended to allow the Commissioner of Insurance to retain funds collected during FY 2003-2004 pursuant to a legal action authorized by state or federal law to be used for reimbursement of costs and expenses.
• Code Sections 518.18 and 518A.35 are amended to reduce the premiums tax from 2 percent to 1 percent over four years and increase the prepayment of such tax for county and state mutual insurance associations. These amendments take effect May 30, 2003.
• Transfers, for FY 2003-2004, $900,000 from the Rent Fund established in H.F. 534 (see State Government) to the General Fund of the State.
• Provides for nonreversion of appropriations made for FY 1996-1997 and FY 1997-1998 for exterior state capitol restoration.
• Senate File 453, Section 49, which directs DHS to create a work group for the redesign of the Medical Assistance (Medicaid) Program, is amended. The amendment adds members of the Medical Assistance Advisory Council to the work group.
• Moves the effective date of the creation of the Iowa Lottery Authority in S.F. 453 up from September 1, 2003, to July 1, 2003.
• Repeals the following Code sections, involving programs at Iowa State University: Code Section 266.8, relating to the Hazardous Waste Technical Research and Assistance Program, and Code Sections 266.24, 266.25 and 266.26, relating to the laboratory for the manufacture and distribution of hog cholera serum, toxins, vaccines, and biological products.
• Directs the state committee, if one is formed, to implement the federal Help America Vote Act and the Commissioner of Elections to report quarterly to the Government Oversight Committees on the status of implementation of the federal Act.
• Directs the Iowa Department of Transportation to conduct a study pertaining to administrative efficiencies to be gained in coordination of school and public transportation. A report must be filed by the end of the 2003 calendar year.
• Includes language providing that if supplemental payment adjustments are implemented for physician services provided to Medical Assistance (Medicaid) Program recipients at publicly owned acute care teaching hospitals, DHS cannot recoup the adjustments unless an amount is transferred by the department to the qualifying physicians that is equivalent to the amount transferred by the State University of Iowa to the department.
• Provides for coordination of federal moneys with the projects of the Housing Trust Fund created in this Act.
• Requires the Iowa Code Editor to change the name of the Emergency Management Division of the Department of Public Defense to the Homeland Security and Emergency Management Division.
• Directs the departments of Natural Resources and Transportation to work with interested groups to develop a plan for creating a registration program for full-size off-highway vehicles for the purpose of regulating the recreational use of such vehicles and for establishing recreational areas for such vehicles.
• Requires the Treasurer of State to submit a report to the Governor and the General Assembly on the amount of county recording fees collected for FY 2000-2001, FY 2001-2002, and FY 2002-2003 and the amount of electronic transaction fees collected for the first three months of FY 2003-2004.
• Requires that public safety workers, smallpox response teams, and others required to be vaccinated under the federal Homeland Security Act are to be protected from both health-related and other results for the federally required smallpox vaccination. The Department of Public Safety and appropriate local government agencies are to achieve the following:
• Vaccinations should be voluntary.
• Extensive screening should be employed, regarding risks of vaccination.
• Reprisals or discrimination should be prohibited, regarding those not vaccinated.
• Reactions to vaccination shall be considered work-related injury.
• Prudent staggering of vaccination time should be scheduled.

Division VIII - Medical Assistance (Medicaid) Program
This division amends H.F. 619 (see Health & Safety) as follows:

• Directs health care facilities to assist the Iowa Commission of Veterans Affairs in identifying residents that may be eligible for, rather than actually determining a resident's eligibility for, benefits through the federal Department of Veterans Affairs.
• Directs DHS to adopt rules for disclosure of certain information under the Medical Assistance Preferred Drug List Program to be developed by the department.
• Amends Code Section 249A.20B to provide that under the nursing facility quality assurance assessment, DHS is to provide a reimbursement to nursing facilities and is to calculate the amount of the reimbursement as a per patient-day amount and pay this amount in addition to the existing reimbursement amount under the case mix reimbursement rate.
• Replaces language relating to the Case Management Program for the Frail Elders to provide that it is the intent of the General Assembly that the Department of Elder Affairs (DEA) in collaboration with DHS, area agencies on aging, advocacy groups, industry representatives, and consumers to submit recommendations regarding the redesign of the program to the General Assembly by October 1, 2003. The new language also provides that it is the intent of the General Assembly that DEA and DHS coordinate efforts to resolve issues relating to level of care determinations no later than October 1, 2003.
• Provides that information to be provided by pharmacies and providers under the Medical Assistance Program relating to pharmaceuticals may be provided by alternative means if DHS is ensured of the validity and accuracy of the information and of the timely submission of the information. The amendment also provides that the information is subject to Code Chapter 550, relating to trade secrets.
• Provides that with regard to the nursing facility reimbursement, DHS, in consultation with nursing facility representatives, is to review projections of State General Fund expenditures for nursing facility reimbursement on a quarterly basis and is to consider savings from other nursing facility payment policy changes in the review.
• Relates to chronic care management, corrects references, and provides for contracting for provision of chronic disease management.
• Provides for use of a portion of the federal Temporary Assistance for Needy Families moneys carried forward from FY 2002 2003, and directs the Commission of Veterans Affairs to work with the Commandant of the Iowa Veterans Home, DHS, and the Department of Inspections and Appeals to identify residents of health care facilities who may be eligible for benefits through the federal Department of Veterans Affairs.

The division also directs certain persons to work cooperatively in identifying residents of health care facilities who may be eligible for benefits through the federal Department of Veterans Affairs.

Division IX - ICN Sale
Governor vetoed.

Division X - Government Organization Review Committee
Governor vetoed.

THE GOVERNOR ITEM VETOED THE FOLLOWING:

1. The nonapplicability of the provision in Code Section 25B.7 that allows local governments to prorate the amount of homestead, military service, and elderly and disabled tax credits that are not reimbursed due to reductions made in the Act to the state appropriations for the credits.
2. The appropriation to county hospitals located in counties with a population of 250,000 or more.
3. The amendment to the School Ready Children Grants Account of the Iowa Empowerment Fund in Code Section 28.9 that requires the distribution formula for the grants to incorporate certain performance components.
4. The language that would have changed the merit status of the Iowa Law Enforcement Academy's Director to one requiring the appointment by the Governor subject to Senate confirmation.
5. The provision making a county fair society immune from liability for any damages occurring at a county fair sponsored by such society.
6. The amendment to Code Section 455D.9 that provided an exception to the prohibition on the land disposal of yard waste if the sanitary landfill operates an active methane collection system that produces electricity.
7. A directive for the Department of Corrections to develop a plan to sell to a municipality a 20-acre tract of undeveloped land located adjacent to the Iowa Correctional Institution for Women. Net proceeds of the sale would have been retained by the department to be used for correctional facilities.
8. A provision allowing a city meeting certain population criteria to make application for refund of sales or use tax paid relative to street and sewer construction projects and for the application to be considered to be timely filed, notwithstanding the one-year application period, if it is filed by August 1, 2003. Any refund paid could not exceed $15,000.
9. A provision allowing a school district located in a county with a certain population to refile for state reimbursement for costs for providing vocational education programs at the secondary level in its district. The amount of reimbursement was limited to 6.5 percent of the costs and to $6,000 minus any amount previously received from a prior claim for reimbursement of those costs.
10. An allocation of funding from the Team-Based Variable Pay Program for the Reading Instruction Pilot Program.
11. With regard to the administering of smallpox vaccinations pursuant to the federal Homeland Security Act, the following:
    • The protection from the loss of public employee's income and seniority resulting from reactions and the use of federal moneys to purchase insurance to cover reactions not otherwise covered.
    • The requirement for vaccinations to be administered according to the federal Needlestick Safety and Prevention Act of 2000.
    • The requirement for the Department of Public Defense to coordinate efforts to ensure that appropriate medical care and drugs are available to protect against adverse reactions.
12. Division IX of the Act, which would have established a process for the gradual transition of ownership and responsibility for the Iowa Communications Network from the state to private enterprise. The division would provide that while it is recognized that the network is a valuable state asset, it is also recognized that it requires significant ongoing financial support from the state, and that it is in the state's best interest that the network be sold to a qualified private business enterprise that will commit to provide the same low-cost and high-quality service to state and federal agencies and military installations as is now provided under state ownership. The division would provide for the creation of a State Network Privatization Board, with responsibility for selecting a manager to oversee and operate the network on behalf of the state, issuing a request for proposals from qualified private entities for the purchase of the network, and selection of a purchaser and entering into a sales contract with that purchaser. The division would specify dates by which these responsibilities would be carried out. The division would provide that upon execution of a management contract and a sales contract by the board, the executed contracts would be transmitted to the General Assembly and the Governor, which would have the authority to disapprove the board's action within specified time frames. The division would provide for the obtaining by the state of necessary third-party approvals during the time period between the execution and closing of the sales contract, specify minimum qualifications and criteria regarding purchaser selection, and provide for the repeal of Iowa Code Chapter 8D as of the date of the closing of the sale of the network.
13. Division X of the Act, which would have amended S.F. 390 (see Local Government), which was vetoed by the Governor. Senate File 390 would have authorized establishment of local government for the county. This division would provide that a local government organization review committee may be created in counties having a population over 100,000. The division would also provide that the legislative appointee to the local government organization review committee be a resident of the unincorporated area of the county if more than one-half of the population of the legislative district resides in the unincorporated area.

HOUSE FILE 472 - Federal Block Grant Appropriations (full text of bill)
BY COMMITTEE ON APPROPRIATIONS. This Act appropriates moneys to various state agencies for the federal fiscal year beginning October 1, 2003, and ending September 30, 2004, from the following federal block grants: Substance Abuse Prevention and Treatment, Community Mental Health Services, Maternal and Child Health Services, Preventive Health and Health Services, Drug Control and System Improvement, Stop Violence Against Women, Local Law Enforcement, Residential Substance Abuse Treatment for State Prisoners, Community Services, Community Development, Low-Income Home Energy Assistance, Social Services, Mental Health Services for the Homeless, and Child Care and Development. See H.F. 667 for appropriations of the federal Temporary Assistance for Needy Families (TANF) Block Grant.

The Act requires that moneys be distributed in accordance with the applicable federal requirements. The Act establishes a procedure if more or less federal funding is received than predicted. In addition, the Act appropriates other federal grants, receipts and funds, including specific categorical grants, and other nonstate grants, receipts and funds available in whole and in part for the state fiscal year beginning July 1, 2003, and ending June 30, 2004.

HOUSE FILE 652 - Appropriations - Transportation (full text of bill)
BY COMMITTEE ON APPROPRIATIONS. This Act makes appropriations for FY 2003-2004 from the Road Use Tax Fund and the Primary Road Fund to the Iowa Department of Transportation.

Appropriations from the Road Use Tax Fund include appropriations for driver's license production costs, salaries, operations, administrative services, planning, motor vehicles, the merit system, unemployment and workers' compensation, audit expenses, county issuance of driver's licenses, a system providing toll-free telephone road and weather reports, membership in the North America's Superhighway Corridor Coalition, rewriting the vehicle registration system, indirect cost recoveries, participation in the Mississippi River Parkway Commission, and scale facilities improvements.

Appropriations from the Primary Road Fund include appropriations for salaries, operations, planning, highways, motor vehicles, the merit system, unemployment and workers' compensation, disposal of hazardous wastes at field locations, indirect cost recoveries, audit expenses, producing transportation maps, and roof replacement and other improvements at field facilities.

The Act also expands the purposes for which two prior appropriations for scale facilities improvements may be used.

HOUSE FILE 655 - Appropriations - Administration and Regulation (full text of bill)
BY COMMITTEE ON APPROPRIATIONS. This Act relates to, and appropriates around $86.7 million from the General Fund of the State to, various administrative and regulatory state departments, agencies and funds for FY 2003-2004. The Act also appropriates a total of around $23.7 million in other funds.

The state departments and agencies include the Auditor of State, Iowa Ethics and Campaign Disclosure Board, Department of Commerce, Office of Governor including the Lieutenant Governor, Terrace Hill Quarters and Drug Control Policy Office, Department of Inspections and Appeals (including racing and gaming regulation), Department of Management, Iowa Public Employees' Retirement System, Secretary of State, and Treasurer of State. In addition, for the 2003 Legislative Session, the Health and Human Rights Joint Appropriations Subcommittee was eliminated and the appropriations made for the Department of Human Rights were incorporated in this Act. In addition, the Act appropriates moneys to the Department of Administrative Services and the Department of Revenue created by the enactment of H.F. 534 (see State Government).

The Act also appropriates funding for the state's membership in the National Governors Association and for the Ready to Work Program Coordinator. The Act includes an appropriation to the Department of Management for government reinvention activities and this appropriation was supplemented in S.F. 458.

HOUSE FILE 662 - Appropriations - Education (full text of bill)
BY COMMITTEE ON APPROPRIATIONS. This Act appropriates moneys for FY 2003-2004 from the General Fund of the State to the College Student Aid Commission, the Department for the Blind, the Department of Cultural Affairs, the Department of Education, and the State Board of Regents and its institutions.

COLLEGE STUDENT AID COMMISSION. The Act includes appropriations to the College Student Aid Commission for general administrative purposes, student aid programs, an initiative directing primary care physicians to areas of the state experiencing physician shortages, the Accelerated Career Education Grant Program, the National Guard Educational Assistance Program, and the Teacher Shortage Forgivable Loan Program. The Act provides for the nonreversion of National Guard Educational Assistance Program moneys during the period ending one year after the date on which the U.S. President declares a cessation of hostilities ending Operation Iraqi Freedom. The Act also nullifies, for the second straight year, the $2.75 million standing appropriation for the Iowa Work-Study Program for FY 2003-2004.

DEPARTMENT FOR THE BLIND. The Act appropriates to the Department for the Blind for its administration.

DEPARTMENT OF CULTURAL AFFAIRS. The Act appropriates to the Department of Cultural Affairs for its Arts, Historical and Administration Divisions, for historic sites, and for community cultural grants.

DEPARTMENT OF EDUCATION. The Act appropriates moneys to the Department of Education for purposes of the department's general administration, vocational education administration, Board of Educational Examiners, Division of Vocational Rehabilitation Services, independent living, State Library for general administration and the Enrich Iowa Program, library service area system, Public Broadcasting Division, regional telecommunications councils, vocational education to secondary schools, school food service, Iowa Empowerment Fund, textbooks for nonpublic school pupils, Student Achievement and Teacher Quality Program, and community colleges. The Act also directs the department to spend as supplemental aid to the community colleges any moneys remaining unexpended or unencumbered by the end of FY 2002-2003 from the moneys appropriated for the Team-Based Variable Pay Pilot Program established in 2001. The Act also provides for the nonreversion of moneys allocated for the Career Development Program under the Student Achievement and Teacher Quality Program. House File 685 provides additional FY 2003-2004 funding to the Iowa Empowerment Fund for deposit in the School Ready Children Grants Account from the Healthy Iowans Tobacco Trust.

In statutory provisions, the Act modifies and updates Code language related to the Student Achievement and Teacher Quality Program and to allocations provided for the program. The Act allocates moneys to administer the Ambassador to Education position from moneys appropriated to the program, and provides for the nonreversion of moneys allocated for purposes of the issuance of national board certification awards and the beginning teacher mentoring and induction programs.

The Act also amends the standing Code language that provides for the allocation of Educational Excellence Program moneys to the department for FY 2002-2003 for purposes of the National Assessment of Education Progress and the Ambassador to Education position. These provisions take effect May 30, 2003.

STATE BOARD OF REGENTS. The Act appropriates moneys to the State Board of Regents for the board office, tuition replacement, the Southwest Iowa Graduate Studies Center, the Tristate Graduate Center, the Quad-Cities Graduate Studies Center, the State University of Iowa (SUI), Iowa State University of Science and Technology (ISU), the University of Northern Iowa (UNI), the Iowa School for the Deaf, the Iowa Braille and Sight Saving School, and for tuition and transportation costs for students residing in the Iowa Braille and Sight Saving School and the Iowa School for the Deaf. Senate File 453 reduces the general university appropriations by a total of $17.9 million to be applied as follows: SUI - 46.7 percent, ISU - 36.8 percent, and UNI - 16.5 percent.

THE GOVERNOR ITEM VETOED THE FOLLOWING:

1. A provision requiring the State Board of Regents, Department of Management, and the Legislative Fiscal Bureau to cooperate to determine and agree upon the amount of tuition replacement that needs to be appropriated for FY 2004-2005.
2. A provision stating the intent of the General Assembly that the University of Iowa continue progress on the School of Public Health and the Public Health Initiative; and providing that from the funds appropriated to the University of Iowa, up to $2.1 million may be used for the School of Public Health and the Public Health Initiative, which is the same amount used for the school and initiative in FY 2002-2003.
3. A provision stating the intent of the General Assembly that Iowa State University continue progress on the Center for Excellence in Fundamental Plant Sciences; and providing that from the funds appropriated to Iowa State University, up to $4.67 million may be used for the Center for Excellence in Fundamental Plant Sciences, which is the same amount used for the center in FY 2002-2003.
4. A provision stating the intent of the General Assembly that the University of Northern Iowa continue progress on the implementation of a Master in Social Work program; and providing that from the funds appropriated to the University of Northern Iowa, the university may use up to $450,000 for the program, up to $100,000 may be used for the Roadside Vegetation Project, and up to $200,000 may be used for the Iowa Office for Staff Development. The amounts specified are the same amounts used for those purposes in FY 2002-2003.
5. A technical correction to Code Section 284.13 that conflicts with a provision in S.F. 458, which makes a related technical correction to the same Code section.

HOUSE FILE 667 - Appropriations - Health and Human Services (full text of bill)
BY COMMITTEE ON APPROPRIATIONS. This Act makes appropriations for purposes of health and human services to the Department of Elder Affairs, Iowa Department of Public Health, Department of Inspections and Appeals, Department of Human Services, and Commission of Veterans Affairs. The 80th General Assembly eliminated the Joint Appropriations Subcommittee on Health and Human Rights. The human rights appropriations addressed in that subcommittee were transferred to the Joint Appropriations Subcommittee on Administration and Regulation. The health appropriations addressed by that subcommittee were transferred to a new Joint Appropriations Subcommittee on Health and Human Services. The Act is organized into divisions addressing various topics.

Division I - Department of Elder Affairs
The Act appropriates funds to the Department of Elder Affairs for aging programs and area agencies on aging to provide Iowans 60 years of age and older with case management for the frail elderly, retired and senior volunteer programs, resident advocate committee coordination, employment, and other services that may include, but are not limited to, adult day services, respite care, chore services, telephone reassurance, information and assistance, and home repair services, including the winterizing of homes and the construction of entrance ramps that make residences accessible to the physically handicapped.

Division II - Iowa Department of Public Health
The Act appropriates funds to the Iowa Department of Public Health (IDPH), including funds for addictive disorders related to reducing the use of tobacco, alcohol, and other drugs, and treating individuals affected by addictive behaviors, including gambling; for adult wellness, relating to maintaining or improving the health status of adults with target populations between the ages of 18 and 60; for child and adolescent wellness, relating to promoting the optimum health status for children and adolescents from birth through 21 years of age; for chronic conditions, relating to serving individuals identified as having chronic conditions or special health care needs; for community capacity, relating to strengthening the health care delivery system at the local level, including funding for a child vision screening program; for elderly wellness, for optimizing the health of persons over 60 years of age; for environmental hazards; and for infectious diseases.

The Act also appropriates funds for public protection, relating to protecting the health and safety of the public through the establishment of standards and the enforcement of regulations. The department may expend funds received from licensing fees if those additional expenditures are directly the result of unanticipated litigation costs approved by the Director of the Department of Management in an amount not to exceed 5 percent of the average annual fees collected for the previous two fiscal years.

The Act further authorizes IDPH to retain fees collected for various health regulation and professional licensing boards to be used for those purposes.

Division II appropriates funds from the Gambling Treatment Fund to IDPH for treatment of addictive disorders, including gambling, and provides for the use of the moneys remaining in the fund. The division also extends the Vital Records Modernization Project, which provides for an enhanced fee that is earmarked for technology improvements, to June 30, 2004.

Division II also extends the Scope of Practice Review Committee project to July 1, 2004.

Division II requires the Director of Public Health to establish a Health Care Access Partnership Pilot Project in a county with a population of more than 250,000. The purpose of the pilot project is to implement systems of health care services for persons with low income or without health insurance by enhancing collaboration between persons and agencies providing charity care or Medicaid Program services.

Division III - Department of Human Services
Division III makes appropriations for the Department of Human Services (DHS) and includes other appropriations and provisions involving human services and health care.

TEMPORARY ASSISTANCE FOR NEEDY FAMILIES BLOCK GRANT (TANF). Division III appropriates moneys from the federal TANF Block Grant Fund for a number of purposes, including the Family Investment Program; field operations; general administration; local administrative costs; child care assistance, including funding for provision of educational opportunities to registered child care home providers; mental health and developmental disabilities community services; child and family services; child abuse prevention grants; pregnancy prevention grants; technology needs and other resources to meet federal welfare reform requirements; volunteers; the Healthy Opportunities for Parents to Experience Success (HOPES) Program; and for transfer to the federal Social Services Block Grant. An appropriation is made to the Iowa Marriage Initiative Grant Fund.

Division III increases by $1 million the appropriation of federal TANF Block Grant moneys to be used for funding of community-based programs targeted to children from birth through five years of age and developed by community empowerment areas.

The TANF Block Grant is subject to federal reauthorization during FY 2003-2004 and legislative intent is stated that the General Assembly will reallocate funding if the federal government reduces the amount of the block grant.

FAMILY INVESTMENT PROGRAM (FIP). Under federal TANF welfare reform provisions, federal funding is provided for FIP in the form of an annual block grant to the state. Consequently, the Act includes FIP and FIP-related program appropriations from the General Fund of the State and from the fund created for receipt of federal funds. These appropriations are directed to the Food Stamp Employment and Training Program, the Family Development and Self-Sufficiency Grant Program, income maintenance reengineering, and for the diversion program and incentive grants.

EMERGENCY ASSISTANCE. Funding for the Emergency Assistance Program used to assist low-income families with utility costs is eliminated for FY 2003-2004.

CHILD SUPPORT RECOVERY. Division III requires the Child Support Recovery Unit (CSRU) to continue to work with the judicial branch to determine the feasibility of a pilot project using a court-appointed referee for determination of child support awards, if initiated by the judicial branch; continues the Child Support Public Awareness Campaign located in the Office of the Attorney General; and provides that surcharges paid by obligors and received by CSRU, as a result of referral of support delinquencies by CSRU to any private collection agency, are appropriated to DHS to pay the costs of any contracts with the collection agencies. The Act also directs DHS to issue federal access and visitation grant moneys directly to private not-for-profit agencies that provide services designed to increase compliance with the child access provisions of court orders, including but not limited to neutral visitation site and mediation services.

MEDICAL ASSISTANCE (Medicaid). Division III continues Medicaid Program provisions required in previous years. A new provision directs DHS to eliminate hospital crossover claims for persons dually eligible for Medicaid and Medicare, provided federal approval is received and other requirements are met. In addition, appropriations affecting reimbursements to various Medicaid services providers are made from Tobacco Settlement Funds (see H.F. 685) and the Senior Living Trust Fund.

HEALTH INSURANCE PREMIUM PAYMENT PROGRAM. Division III appropriates funds to continue the Health Insurance Premium Payment Program, which provides for payment for private health insurance in lieu of Medicaid Program coverage.

MEDICAL CONTRACTS. Division III provides funding for contracted services associated with the Medicaid Program and authorizes DHS to either continue or reprocure the department's contract with the department's fiscal agent. House File 683 includes an allocation of funding for use with a reprocurement.

STATE SUPPLEMENTARY ASSISTANCE (SSA). Division III appropriates funding for SSA and the Medicare Program home and community-based services waiver rent subsidy.

CHILDREN'S HEALTH INSURANCE PROGRAM. Division III appropriates funds for the state children's health insurance program known as the healthy and well kids in Iowa (hawk-i) Program.

CHILD CARE ASSISTANCE. The appropriation provides funding for the State Child Care Assistance Program and child day care resource and referral services. Division III requires DHS to use moneys deposited in the Child Care Credit Fund for the State Child Care Assistance Program. DHS is required to develop consumer information to assist parents in selecting child care providers.

JUVENILE INSTITUTIONS. Division III makes appropriations to the Iowa Juvenile Home at Toledo and the State Training School at Eldora. See S.F. 453, which provides for educational funding through the school aid formula for children placed in DHS institutions.

CHILD AND FAMILY SERVICES. See S.F. 453 for requirements for DHS to redesign the child welfare and juvenile justice services system and applying a reduction in this and other DHS appropriations in the amount of $10 million.

Division III decreases this appropriation compared with the previous fiscal year. Division III provides for continuation of the funding cap for group foster care and provides that if annualization of a service area's current expenditures indicates that the area is at risk of exceeding its overall expenditure target by more than 5 percent, DHS and Juvenile Court Services are to examine current group foster care placements to identify children for whom termination from the program is appropriate. Dispositional hearings are to be set for those so identified. Division III limits the amount that may be expended under the appropriation for psychiatric medical institutions for children (PMICs) and provides that all or a portion of the moneys allocated for PMICs may be transferred to the appropriation for the Medicaid Program.

Division III allocates funding for 50 highly structured juvenile program beds (informally known as "boot camp" beds). The statutory requirements relating to the funding cap for group foster care, which apply to the juvenile court, are to continue to apply instead to the Juvenile Court Services staff.

Division III authorizes DHS to continue decategorization of child welfare services funding; limits funding for shelter care services; provides funding for protective child care assistance; provides funding for court-ordered services provided to juveniles; provides funding for school-based supervision of children adjudicated delinquent; permits DHS to operate a subsidized guardianship program if the program can be operated under a waiver from the federal government without loss of federal Title IV-E funds; provides legislative intent that DHS continue strong support of the initiative for decategorization of child welfare funding; and provides that a foster parent who is unable to complete training requirements due to active duty in the military service is deemed to be in compliance with the training requirement (this provision takes effect May 23, 2003).

JUVENILE DETENTION HOME FUND. Division III addresses the Juvenile Detention Home Fund consisting of funds collected by the Iowa Department of Transportation (IDOT) at the time IDOT suspends, revokes or bars a person's motor vehicle license or nonresident operating privileges. Moneys in the fund are to be used for the costs of the establishment, improvement, operation, and maintenance of county or multicounty juvenile detention homes for continuation of the community partnership for child protection sites, and remaining treatment plan grants.

FAMILY SUPPORT SUBSIDY PROGRAM. Division III maintains the program funding relative to the revised amount for the previous fiscal year.

MENTAL HEALTH INSTITUTES. Division III provides appropriations to institutes at Cherokee, Clarinda, Independence, and Mount Pleasant. Division III directs the institute at Independence to continue the 30-bed PMIC facility and the Mount Pleasant institute to continue the dual diagnosis unit to provide psychiatric treatment and substance abuse treatment simultaneously on a net budgeting basis.

STATE RESOURCE CENTERS. Division III makes appropriations for the State Resource Center at Glenwood and the State Resource Center at Woodward utilizing a net State General Fund appropriation. The centers are authorized to carry forward unexpended balances from FY 2002-2003.

SPECIAL NEEDS GRANTS AND STATE CASES. Division III eliminates the appropriation for special needs grants and decreases the appropriation for MH/DD state cases compared with the previous year's appropriation.

MENTAL HEALTH AND DEVELOPMENTAL DISABILITIES (MH/DD) SERVICES FUNDING. Division III includes a number of provisions affecting provision of state funding of MH/DD services provided by counties. One provision relates to funding for MH/DD services growth. Under current law, the state is required to annually provide funding for the growth in county MH/DD services expenditures. Division III continues a practice begun in 2001 by combining the moneys appropriated for growth and the moneys appropriated for the MH/DD Community Services Fund and applying a reduction to formula distribution amounts based upon the relative size of a county's ending balance. See S.F. 458 for a revision in this methodology which allows an inflation adjustment for those counties with a relatively low ending balance.

PERSONAL ASSISTANCE. Division III provides an increased appropriation for this pilot program for adult persons with physical disabilities in an urban and a rural area compared with the estimated net expenditure for the previous fiscal year. Division III also prohibits acceptance of new applicants, but an individual receiving services as of June 30, 2003, is to continue receiving services until the individual voluntarily leaves the project or until a program with similar services exists.

SEXUALLY VIOLENT PREDATORS. This appropriation provides for payment of costs associated with the commitment and treatment of sexually violent predators at the State Mental Health Institute at Cherokee. The Act authorizes any unspent balance in the FY 2002-2003 appropriation to be carried forward.

FIELD OPERATIONS, GENERAL ADMINISTRATION, AND VOLUNTEERS. Appropriations are included for DHS field operations, general administration, and volunteers. Division III allocates $57,000 for the Prevention of Disabilities Council. DHS is authorized to retain up to $500,000 received in settlement of provider overpayments to use for the costs of filling field operations positions.

MEDICAID, STATE SUPPLEMENTARY ASSISTANCE, AND SOCIAL SERVICE PROVIDERS REIMBURSED UNDER THE DEPARTMENT OF HUMAN SERVICES. Division III establishes reimbursement rates for social services providers. However, H.F. 685 increases reimbursements to some of these providers.

Division III provides the following new provisions for FY 2003-2004:

• Reimbursement for nursing facilities shall be provided at 100 percent of the modified price-based case-mix reimbursement rate.
• Pharmacy dispensing fees shall be reimbursed using a single rate of $4.26 per prescription or the pharmacy's usual and customary fee, whichever is lower.
• DHS may modify reimbursement rates for providers reimbursed by DHS if funding is allocated for that purpose from the Senior Living Trust Fund or as specified in appropriations from the Tobacco Settlement Endowment Fund (see H.F. 685).
• The department may adopt emergency rules to implement the hospital crossover claims process.

TRANSFER AUTHORITY. Division III permits DHS to transfer funding between a number of appropriations provided the combined funding is not changed.

ELECTRONIC BENEFIT TRANSFER IMPLEMENTATION. Division III provides that the unspent funds allocated to DHS for FY 2002-2003 for the federal food stamp electronic benefit transfer requirements are to remain available in FY 2003-2004. This provision takes effect May 23, 2003.

STATUTORY AND OTHER PROVISIONS. Division III provides that the following requirements in law or rule are suspended for FY 2003-2004: school attendance requirements for children participating in FIP (known as the "Learnfare" initiative), requirements for case permanency plan reviews for certain intact families, and the annual evaluation of the Family Support Subsidy Program.

Division III provides all of the following statutory and other provisions:

• Provides for a parental involvement program to develop a plan for presentation to the General Assembly by December 31, 2003, to provide a comprehensive approach to policy and service delivery at the state, county and local levels and to provide a network of services to assist both mothers and fathers in parenting their children. The comprehensive approach is to include the areas of structure and policies, connecting fathers with necessary services, and public awareness. Specific elements to be addressed in the plan were item vetoed by the Governor.
• Provides for payment for voluntary foster care services for a period of 90 rather than 30 days.
• Provides that under the healthy and well kids in Iowa (hawk-i) Program, the Director of Human Services, with the approval of the hawk-i Board, may contract with participating insurers to provide dental-only services.
• Revises language from a 2002 enactment relating to requirements for children's rehabilitative treatment services reimbursed under Medicaid to change documentation requirements.
• Revises a funding amount used in the formula for distribution of mental health, mental retardation, and developmental disabilities allowed growth funding for FY 2003-2004.
• Provides for carryover of unexpended FY 2002-2003 appropriations for the Glenwood and Woodward State Resource Centers and the sexually violent predators unit. This provision takes effect May 23, 2003.

Division IV - Senior Living Trust Fund
Division IV makes appropriations from the Senior Living Trust Fund.

The division provides an appropriation to the Department of Elder Affairs for a Comprehensive Senior Living Program. The division provides that it is the intent of the General Assembly that these moneys not be transferred for purposes of the Assisted Living Program and adult day care, and provides that the Department of Elder Affairs is to distribute up to $300,000 of the funds appropriated to supplement and maximize federal funds under the federal Older Americans Act.

Division IV provides an appropriation to the Department of Inspections and Appeals for inspection and certification of assisted living facilities and adult day services.

Division IV provides an appropriation to the Department of Human Services to provide grants to nursing facilities for conversion to assisted living programs or to provide long-term care alternatives; to supplement the medical assistance appropriation; for reimbursement of health care services and rent expenses to persons under the home and community-based services waiver and the State Supplementary Assistance Program; and to implement nursing facility provider reimbursements.

Division V - Hospital Trust Fund
Division V makes an appropriation from the Hospital Trust Fund to the Department of Human Services to supplement the medical assistance appropriation for FY 2003-2004.

Division VI - Medical Assistance Program Supplementation
Division VI provides appropriations from the General Fund of the State, the Senior Living Trust Fund, and the Hospital Trust Fund to the Department of Human Services for supplementation of the medical assistance appropriation for FY 2002-2003. This division takes effect May 23, 2003.

Division VII - Veterans Affairs
Division VII appropriates funds from the General Fund of the State to the Commission of Veterans Affairs and the Iowa Veterans Home. This division provides that the Iowa Veterans Home is to operate with a net State General Fund appropriation. Division VII also provides that the Iowa Veterans Home may carry forward unspent moneys from FY 2002-2003 and this provision takes effect May 23, 2003.

THE GOVERNOR ITEM VETOED THE FOLLOWING:

1. Language in Division II requiring the Iowa Department of Public Health to report certain information regarding religious and other nongovernmental organizations that applied for substance abuse treatment funding.
2. Requirements in Division III for the Department of Human Services (DHS) to establish an Iowa Fatherhood and Family Initiative Grant Program, using moneys allocated to the Iowa Marriage Initiative Grant Fund from the federal Temporary Assistance for Needy Families Block Grant.
3. Language in Division III directing DHS to continue working with county representatives in implementing the rehabilitation option for services to persons with chronic mental illness under the Medicaid Program. The Governor stated in the veto message that this effort has been completed.
4. Language in Division III directing DHS to consult with legislators if the amount of federal child care funding received is greater than anticipated.
5. A portion of language in Division III directing DHS to develop consumer information material to assist parents in selecting a child care provider and specifically requiring development of an Internet site for posting of the consumer information.
6. Language in Division III directing DHS and Juvenile Court Services to continue developing criteria for DHS service area administrators and chief juvenile court officers to grant exceptions to extend eligibility beyond age 18 for intensive tracking and supervision and supervised community treatment to delinquent youth who are subject to release from the State Training School or other intensive program. The Governor stated in his veto message that these criteria were previously developed.
7. A directive in Division III for DHS to develop a plan for privatizing the administration of the foster care and adoption programs.
8. A directive in Division III for DHS to submit proposed legislation to make statutory changes to conform the Code to a previous enactment that eliminated the DHS regional system and replaced it with a service area system.
9. An exemption in Division III for DHS institutions from state charges for vehicle depreciation during FY 2003-2004.
10. A large portion of new Code Section 217A.1, created in Division III, providing for a plan to establish a comprehensive approach to supporting parents' involvement with their children. The vetoed language required a list of specific items to be addressed in the plan.

HOUSE FILE 683 - Miscellaneous Appropriations and Revisions, Sales and Use Tax Revisions, Criminal Code Revisions, and Other Changes (full text of bill)
BY COMMITTEE ON APPROPRIATIONS. This Act relates to economic development, taxation, financial and regulatory matters and makes and revises appropriations, modifies criminal penalties, and provides a fee. The Act is organized into divisions.

Division I - Public Employee Salaries

This division relates to state employee salaries by increasing the overall appropriation for salary adjustment made in S.F. 458, increasing the allocation for the judicial branch, and providing for a 2 percent increase in the salaries of justices, judges and magistrates effective in December 2003.

Division II - Appropriations and Appropriations Revisions

This division makes and revises appropriations for FY 2003 2004. New appropriations are made for the Insurance Division to implement a study of school health insurance, for the Local Government Innovation Fund created in S.F. 453, for a grant to a county hospital in a county with a population of 250,000 or more, and for infrastructure work at correctional facilities. Appropriations are increased for the following purposes: Department of Corrections for implementation costs associated with the infrastructure projects funded by the division, Office of the Governor for staffing costs previously funded by other state departments and agencies, Department of Revenue for additional positions to prepare information for the Revenue Estimating Conference and to improve the turnaround time for processing corporate tax filings, and the Iowa Department of Public Health to be used for infectious diseases. The amount of a previous reduction made to the standing appropriation for public transit is increased. The Department of Human Services is authorized to use up to $500,000 of the amount appropriated for the Medical Assistance (Medicaid) Program if the department decides to procure a new contract for the program's fiscal agent.

Division III - Miscellaneous Provisions

This division includes miscellaneous provisions.

The Government Oversight Committees are directed to review the application of Iowa's assisted living program statutes to continuing care communities and make recommendations for legislation.

The Governor is authorized to designate the Iowa Lottery as a charter agency established pursuant to S.F. 453. Code requirements, which allow the Department of Economic Development to extend a completion deadline for housing businesses eligible for certain incentives, are amended to allow the deadline to be extended for current or future projects.

Code provisions involving regulation of pit type and electronic pitless scales for livestock by the Department of Agriculture and Land Stewardship are revised to address clearance requirements.

Language enacted in H.F. 675, relating to continuing care retirement communities (CCRCs), is revised. The enacted language provides that a CCRC that complied with the chapter of the Code relating to retirement facilities (Code Chapter 523D) would not be held in violation of the assisted living program chapter if the CCRC provides services to independent living residents. The Act provides instead that a CCRC may provide limited personal care and emergency response services to its independent living tenants under certain conditions.

The Department of Human Services (DHS) is required to develop information to assist parents in selecting a child care provider and this and additional information is to be made available on the Internet.

Code Section 384.84 is amended to provide that liens for nonpayment of charges or rates for sewer systems, storm water drainage systems, sewage treatment, solid waste collection, water, and solid waste disposal for premises, which include mobile homes, modular homes, or manufactured homes, shall only be filed against the premises, and not the land, if the premises are located on leased land.

New Code Section 422E.3A, relating to the Secure an Advanced Vision for Education Fund for the school district local option school infrastructure sales tax, as enacted by S.F. 445 (see Education), is amended in regard to the distribution from the fund as follows:

• Provides that in the case of a school district located in a county that has approved the local option tax by April 1, 2003, and would receive tax revenues in an amount greater than its guaranteed amount, such school district would not be entitled to subsequently receive a supplemental amount if the tax revenues would be less than its guaranteed amount unless it passes a resolution by October 1, 2003, agreeing to receive any supplemental amount but limiting the maximum amount it may receive in total to its guaranteed amount.
• Provides that in the case of a school district located in a county that has approved the local option tax by April 1, 2003, and would receive a supplemental amount because its tax revenues are less than its guaranteed amount, such school district would not be entitled to subsequently receive its tax revenues in an amount greater than its guaranteed amount unless it passes a resolution by October 1, 2003, agreeing to forego any subsequent supplemental amount.
• Sets the statewide tax revenues per student at $575 per student rather than determining the amount each year by estimating the amount that would be raised statewide if all counties imposed the local option school infrastructure tax and dividing this number by the combined actual enrollment for all school districts.
• Provides that if money is insufficient to pay all supplemental amounts that distribution will be made first to the school district with the lowest sales tax capacity per student until its per student amount reaches the school district or districts with the next lowest sales tax capacity per student, and then these are raised to the level of the next lowest sales tax capacity per student, and continues in this manner until all money is distributed or the school districts reach their guaranteed amount.
• Requires that all school districts must receive a certificate of need from the Department of Education before using supplemental amounts received for new construction purposes. Previously the certificate of need requirement applied only to school districts with less than 250 actual enrollment or less than 100 actual enrollment in the high school.

Code requirements are amended to provide that an owner of a manufactured home who has surrendered a certificate of title for the manufactured home and requires another title is required to apply for another certificate of title pursuant to any of the provisions of Code Chapter 321 rather than just pursuant to one section of that chapter.

Code Section 459.315, as amended by 2003 Iowa Acts, H.F. 644 (see Agriculture), which regulates commercial manure services, is amended to restore an exemption from certification requirements which applies under current law to noncommercial applicators who apply manure originating from small animal feeding operations.

Code Section 508.31A, a requirement for life insurance company issuance of funding agreements included in 2003 Iowa Acts, H.F. 647, is amended to allow an agreement to be awarded to a nonnatural person for federally registered securities, regardless of whether the nonnatural person issued the securities.

The division changes the applicability regarding matters pending on April 11, 2003, of a requirement that specifies the circumstances of the transfer of matters related to violations of the prohibition of supplying tobacco, tobacco products, or cigarettes to minors from local entities to the Iowa Department of Public Health. This provision provides that even though the new Code section is to apply to matters pending on April 11, 2003, for which a penalty has not been assessed, if a violation was pending on April 11, 2003, and a county health department, city health department, or city assesses a penalty on or after April 11, 2003, but prior to June 30, 2003, the county health department, city health department, or city assessing the penalty is deemed to have jurisdiction to assess the penalty and the penalty assessed is deemed valid.

Responsibility for administering a grant program for providing community mental health services to veterans and veterans' families is shifted from the Iowa Department of Public Health to DHS.

Requirements for the transfer of certain Medicaid funding relating to physician services provided through the University of Iowa School of Medicine are specified. The number of full-time equivalent positions authorized for the DHS unit for commitment and treatment of sexually violent predators is increased.

Division IV - Corrective Provisions

This division provides corrective amendments to legislation passed by the Eightieth General Assembly, 2003 Regular Session.

Division V - Criminal Offenders and Inmates

This division relates to criminal offenders imprisoned in the county jail and inmates serving a sentence at a Department of Corrections institution. The division restricts the release of certain offenders pursuant to pretrial release guidelines. The division permits inmates serving a first operating-while-intoxicated offense to serve their sentence at an operating-while-intoxicated program if the program provides law enforcement security. The division also makes changes to sentences for persons serving a third operating-while-intoxicated offense.

The division expands the access to a presentence investigation report (PSI). The division permits the Department of Corrections to operate a substance abuse treatment facility. The division provides that an inmate may earn up to an additional 365 day reduction of the remaining balance of the inmate's sentence if the inmate performs an exemplary act. The division eliminates an appeal to the Director of the Department of Corrections for loss of earned time. The division provides that a mentally ill inmate may be treated at correctional institutions other than the Iowa medical classification center at Oakdale.

The division makes changes to the inmate savings fund by permitting the Department of Corrections to seize certain funds for deposit into the inmate savings fund. The division makes changes to the inmate telephone rebate fund. The division provides that a person may be discharged from probation on the condition that supervision fees are paid. The division provides that certain restitution be paid to a crime victim's heirs at law rather than the victim's estate.

Division VI - Economic Development Appropriations

This division appropriates moneys from the Grow Iowa Values Fund created in H.F. 692 as follows:

• To the Department of Economic Development (DED) for the fiscal period beginning July 1, 2003, and ending June 30, 2006, annually, for implementing and administering a marketing strategy.
• To DED annually for the fiscal period beginning July 1, 2003, and ending June 30, 2007, for programs administered by the department.
• To the Grow Iowa Values Board annually for the fiscal period beginning July 1, 2003, and ending June 30, 2007, for financial assistance for institutions of higher learning under the control of the State Board of Regents and for accredited private institutions for certain types of economic development facilities.
• To the General Fund of the State annually for the fiscal period beginning July 1, 2005, and ending June 30, 2007, for payment of rehabilitation project tax credits for projects located in certified cultural and entertainment districts.
• To DED annually for the fiscal period beginning July 1, 2003, and ending June 30, 2007, for deposit in the Loan and Credit Guarantee Fund to be used for the program created in H.F. 692 to assist small and medium-sized businesses.
• To the General Fund of the State annually for the fiscal period beginning July 1, 2004, and ending June 30, 2007, for payment of Endow Iowa Tax Credits.
• To DED annually for the fiscal period beginning July 1, 2004, and ending June 30, 2007, for Endow Iowa Grants to lead philanthropic entities for use in assisting community foundations.
• To the Grow Iowa Values Board annually for the fiscal period beginning July 1, 2003, and ending June 30, 2007, for the purpose of providing financial assistance for projects in targeted state parks and destination parks.
• To the Office of Treasurer of State annually for the fiscal period beginning July 1, 2003, and ending June 30, 2007, for deposit in the Iowa Cultural Trust Fund.

In addition, the division appropriates $100 million in anticipated federal moneys from the federal Jobs and Growth Tax Relief Reconciliation Act of 2003 for the fiscal period beginning July 1, 2003, and ending June 30, 2005, for deposit in the Grow Iowa Values Fund.

The division annually appropriates moneys from the General Fund of the State from moneys credited to the general fund as a result of entering into the Streamlined Sales and Use Tax Agreement for the fiscal period beginning July 1, 2003, and ending June 30, 2010, for deposit in the Grow Iowa Values Fund.

Division VII - Workforce-Related Issues

This division creates a Workforce Training and Economic Development Fund for each community college. The division appropriates moneys from the Grow Iowa Values Fund to the Department of Economic Development (DED) for the fiscal period beginning July 1, 2003, for deposit in the Workforce Training and Economic Development Funds. The division allocates a portion of moneys appropriated to be used for job retention projects. Starting with the fiscal year beginning July 1, 2004, the division requires a community college to receive approval from the Grow Iowa Values Board of an annual progress report prior to receiving the moneys from a Workforce Training and Economic Development Fund for that fiscal year.

The division creates a Job Retention Program allowing a community college and DED to enter into a Job Retention Agreement for projects designed to train employees in return for a commitment by the participating employer to not move business operations outside the state for a period of at least ten years.

The division adds annual reporting requirements to Iowa Code Chapters 260F and 260G.

Division VIII - Loan and Credit Guarantee Fund

The division creates a Loan and Credit Guarantee Fund for purposes of the Loan and Credit Guarantee Program enacted in H.F. 692 (see Taxation).

Division IX - University-Based Research Utilization Program Appropriation

The division establishes a standing appropriation from the General Fund of the State to each university under the control of the State Board of Regents of an amount determined by the Department of Economic Development under the University-Based Research Utilization Program, enacted in H.F. 692 (see Taxation).

Division X - Endow Iowa Tax Credit

The division allows, for tax years beginning on or after January 1, 2003, an Endow Iowa Tax Credit against personal and corporate income tax, the franchise tax for financial institutions, the insurance premium tax, and the moneys and credits tax for credit unions. The tax credit shall equal 20 percent of the taxpayer's endowment gift to a qualified community foundation. The tax credit is part of the Endow Iowa Program enacted in H.F. 692 (see Taxation). The division limits the aggregate amount of tax credits to a total of $2 million. The division limits the maximum amount of tax credits granted to a taxpayer to 5 percent of the aggregate amount of tax credits authorized. The tax credits are not transferable and shall not be authorized after December 31, 2005.

This division takes effect June 19, 2003, and is retroactively applicable to January 1, 2003, for tax years beginning on or after that date.

Division XI - Rehabilitation Project Tax Credits

The division allows additional rehabilitation project tax credits to be issued. Previously, $2.4 million of rehabilitation project tax credits could be issued each fiscal year. The division allows an additional $500,000 of tax credits to be approved each fiscal year for purposes of projects located in certified cultural and entertainment districts.

Division XII - Secure an Advanced Vision for Education Fund - Appropriation

The division appropriates from the Rebuild Iowa Infrastructure Fund to the Secure an Advanced Vision for Education Fund, enacted in S.F. 445 (see Education), for the fiscal period beginning July 1, 2004, and ending June 30, 2014, the amount of moneys in excess of the first $47 million credited to the Rebuild Iowa Infrastructure Fund during the fiscal year, not to exceed $10 million.

The division appropriates from the General Fund of the State from moneys credited to the General Fund as a result of the state entering into the Streamlined Sales and Use Tax Agreement to the Secure an Advanced Vision for Education Fund the sum of $5 million for each fiscal year beginning July 1, 2004, and ending June 30, 2014. The division provides that this appropriation is made after the appropriation from the same source to the Grow Iowa Values Fund.

Division XIII - Repeals

The division provides that the divisions of the Act designated for economic development appropriations, workforce-related issues, loan and credit guarantee fund, university-based research utilization program appropriation, Endow Iowa Tax Credit, and rehabilitation project tax credits are repealed effective June 30, 2010.

Division XIV - Streamlined Sales and Use Taxes

This division rewrites the state sales and use taxes by combining Code Chapter 422, Division IV (sales tax), Code Chapter 423 (use tax), and provisions of the Multistate Streamlined Sales and Use Tax Agreement (agreement) into a new Code Chapter 423.

Subchapter I of the new Code chapter sets out the definitions applicable to the new Code chapter. These definitions are from the definitions used in the present sales and use taxes and others needed for provisions under the agreement.

Subchapter II of the new Code chapter imposes the sales tax, provides sales tax exemptions, and provides for sales tax refunds. These provisions are presently part of the current sales tax or were enacted during the 2003 Legislative Session. However, this subchapter puts all exemptions in the same Code section while current Code has them located in numerous places, e.g., many agriculture related exemptions were listed under the definition of "retail sale."

Subchapter III of the new Code chapter imposes the use tax and provides use tax exemptions. These provisions are presently part of the current use tax.

Subchapter IV of the new Code Chapter establishes the Uniform Sales and Use Tax Administration Act, which is part of the agreement, and authorizes the Director of Revenue to enter into the agreement on behalf of the state; provides that entry into the agreement does not amend or modify Iowa law; establishes certain agreement requirements including striving to achieve uniform tax rates, uniform standards, central registration, no change in nexus status as a result of registration, monetary allowances for retailers, and consumer privacy; and provides that the agreement only binds and provides benefits to those states that are members of it.

Subchapter V of the new Code chapter provides for the administration of the sales and use tax as it relates to retailers not registered under the agreement. This subchapter incorporates the current sales and use tax provisions related to the liability and collection of tax, penalties, filing of returns, and refunds. The subchapter also incorporates the sourcing rules contained in the Agreement. These rules establish the manner of determining in which state the transaction upon which the sales tax is imposed occurs, or if, as in telecommunications services, the transaction occurs in more than one state, how the tax is to be assessed and collected.

Subchapter VI of the new Code chapter provides for the administration of the sales and use tax as it relates to retailers registered under the agreement. The provisions of subchapter VI apply to these retailers. In addition, the subchapter specifies the benefits and obligations of retailers that register under the agreement, including the filing of returns and paying of the taxes by a certified service provider who is the retailer's agent with authority to perform all use tax functions, by a certified automated system which is software that calculates the taxes owed the various jurisdictions, and by a proprietary automated system which is software owned by the retailer that calculates the taxes owed the various jurisdictions.

The division also contains coordinating amendments and establishes an Iowa Streamlined Sales Tax Advisory Council to review, study and submit recommendations to Iowa's delegation regarding the proposed Streamlined Sales and Use Tax Agreement.

The division takes effect January 1, 2004.

Division XV - Capitol Complex Parking - VETOED BY THE GOVERNOR

Division XVI - Effective Date

Unless otherwise provided, the Act takes effect July 1, 2003.

THE GOVERNOR ITEM VETOED THE FOLLOWING:

1. The sales tax reduction in rate for residential utilities under Division XIV, the streamlined sales and use taxes. This provision would have set the rate at 3 percent for five fiscal years beginning July 1, 2003, and then reduced the rate by one percentage point for each subsequent fiscal year until residential utilities would be completely exempt. This provision was vetoed to correspond with the item veto of Division XX of H.F. 692 (see Taxation).
2. Division XV would have created a Capitol Complex Parking Structure Revolving Fund to be administered by the Department of Administrative Services. The fund would consist of moneys collected by the department as parking fees, which were to be established by the department for state employee use of the parking structure, in addition to any moneys appropriated to the fund by the General Assembly and any other moneys obtained for deposit in the fund. The moneys in the fund would be appropriated to the department for costs associated with the management, operation and maintenance of the parking structure.
   In addition, the Division directed the Department of Administrative Services to issue a request for proposals for the management, operation and maintenance of the parking structure. The awarding of a contract for the services would have been subject to approval by the General Assembly.

HOUSE FILE 685 - Healthy Iowans Tobacco Trust and Tobacco Settlement Trust Fund - Appropriations (full text of bill)
BY COMMITTEE ON APPROPRIATIONS. This Act relates to and makes appropriations from the Healthy Iowans Tobacco Trust.

The Act makes appropriations involving the Medical Assistance (Medicaid) Program to the Department of Human Services (DHS) for FY 2003-2004 for reimbursement of or cost-of-living adjustments for, unless otherwise provided, all noninstitutional providers for continuation of the resource-based relative value system; dental services; hospitals; home health care services; critical access hospitals; the expansion of home health care services and rehabilitative treatment services for children with special needs; the expansion of respite care services provided through home and community-based services waivers; rehabilitative treatment and support services; adoption, independent living, shelter care, and home studies providers; and services providers under the purview of DHS.

The Act also provides for supplementation of the appropriation for the state children's health insurance program known as hawk-i, for supplementation of the appropriation for the Medicaid Program which includes funds for the Iowa Chronic Care Consortium (see H.F. 619, Health & Safety), and for coverage under the Medicaid Program to certain women who require treatment for breast and cervical cancer.

The Act appropriates funds to the Iowa Department of Public Health (IDPH) for the Tobacco Use Prevention and Control Program, for a program that utilizes high school mentors in an effort to reduce the illegal use of substances, for provision of smoking cessation products, and for additional substance abuse treatment.

The Act appropriates funds to IDPH for development of a Healthy Iowans 2010 Plan for core public health functions, for implementation and support of a coordinated system of delivery of trauma and emergency medical services, for the Poison Control Center, for development of scientific and medical expertise in environmental epidemiology, and for the Childhood Lead Poisoning Prevention Program.

The Act appropriates funds to the Department of Corrections for day programming, the Drug Court Program, and a value-based treatment program at the Newton Correctional Facility with the option of a portion of the value-based treatment program funds being used for a similar program at the Iowa Correctional Institution for Women at Mitchellville.

The Act appropriates funds to the Property Tax Relief Fund for FY 2003-2004, for assistance to counties with limited county mental health, mental retardation, and developmental disabilities (MH/MR/DD) services fund balances to continue reimbursement increases to service providers in the same amount as provided in FY 2001-2002.

The Act appropriates funds from the Healthy Iowans Tobacco Trust to the Iowa Empowerment Fund for FY 2003-2004 for deposit in the School Ready Children Grants Account.

The Act appropriates funds from the Healthy Iowans Tobacco Trust to the Department of Corrections for operation and staffing of the special needs unit at the Fort Madison correctional facility.

The Act provides for the transfer of moneys appropriated for the county MH/MR/DD allowed growth factor for deposit in the risk pool for FY 2003-2004 to the medical assistance appropriation for FY 2003-2004.

The Act also provides for transfer of funds from the Endowment for Iowa's Health Account to the Healthy Iowans Tobacco Trust for FY 2003-2004.