House File 219
HOUSE FILE
BY TYMESON, HOFFMAN,
DAVITT, and FREVERT
Passed House, Date Passed Senate, Date
Vote: Ayes Nays Vote: Ayes Nays
Approved
A BILL FOR
1 An Act relating to school infrastructure purposes and property
2 tax relief by increasing state sales and use taxes,
3 distributing the increased state sales and use tax revenues to
4 school districts for school infrastructure purposes and
5 property tax relief, and including an effective date.
6 BE IT ENACTED BY THE GENERAL ASSEMBLY OF THE STATE OF IOWA:
7 TLSB 2340HH 80
8 mg/cf/24
PAG LIN
1 1 Section 1. NEW SECTION. 293.1 SCHOOL DISTRICT SALES AND
1 2 USE TAX FUND.
1 3 1. A school district sales and use tax fund is created as
1 4 a separate and distinct fund in the state treasury under the
1 5 control of the department of revenue and finance. Moneys in
1 6 the fund include revenues credited to the fund pursuant to
1 7 section 422.69, subsection 2, and section 423.24,
1 8 appropriations made to the fund and other moneys deposited
1 9 into the fund. The moneys credited in a fiscal year to the
1 10 fund shall be distributed as follows:
1 11 a. A school district located in whole or in part in a
1 12 county that had in effect on March 31, 2003, the local sales
1 13 and services tax for school infrastructure purposes under
1 14 chapter 422E shall receive an amount equal to its guaranteed
1 15 school infrastructure amount as calculated under subsection 2
1 16 if the board of directors notifies the director of revenue and
1 17 finance that the school district wants to receive its
1 18 guaranteed school infrastructure amount. The notification
1 19 shall be provided by July 1, 2003. If notification is not
1 20 received by July 1, 2003, the school district shall receive
1 21 moneys pursuant to paragraph "b". Nothing in this chapter
1 22 shall prevent a school district from using its guaranteed
1 23 school infrastructure amount to pay principal and interest on
1 24 obligations issued pursuant to section 422E.4.
1 25 A school district receiving moneys pursuant to this
1 26 paragraph shall cease to receive its guaranteed school
1 27 infrastructure amount and shall receive moneys pursuant to
1 28 paragraph "b" starting with the fiscal year immediately
1 29 following the fiscal year in which occurs the end of the
1 30 original ten=year period or the date of repeal listed on the
1 31 original ballot proposition, whichever is the earlier, as
1 32 provided in chapter 422E. A school district may adopt a plan,
1 33 as provided in section 293.2, subsection 2, to anticipate
1 34 moneys it will receive pursuant to paragraph "b". A school
1 35 district receiving moneys pursuant to this paragraph may elect
2 1 to receive moneys pursuant to paragraph "b" by providing
2 2 notification to receive moneys pursuant to paragraph "b" to
2 3 the director of revenue and finance and the director of the
2 4 department of management by February 15 preceding the fiscal
2 5 year for which the election will apply. Once a school
2 6 district makes this election it is irrevocable.
2 7 b. Moneys remaining after computations made pursuant to
2 8 paragraph "a" shall be distributed to school districts not
2 9 receiving moneys under paragraph "a" on a per student basis
2 10 calculated by the director of revenue and finance by dividing
2 11 the moneys available during the fiscal year by the combined
2 12 actual enrollment for all school districts receiving
2 13 distributions under this paragraph.
2 14 The combined actual enrollment for school districts, for
2 15 purposes of this paragraph "b", shall be calculated by adding
2 16 together the actual enrollment for each school district
2 17 receiving distributions under this paragraph "b" as determined
2 18 by the department of management based on the actual enrollment
2 19 figures reported by October 1 to the department of management
2 20 by the department of education pursuant to section 257.6,
2 21 subsection 1. The combined actual enrollment count shall be
2 22 forwarded to the director of revenue and finance by March 1,
2 23 annually, for purposes of supplying estimated tax payment
2 24 figures and making estimated tax payments pursuant to
2 25 subsection 3 for the following fiscal year.
2 26 2. a. For purposes of distributions under subsection 1,
2 27 paragraph "a", the school district's guaranteed school
2 28 infrastructure amount shall be calculated according to the
2 29 following formula:
2 30 The district's guaranteed school infrastructure amount
2 31 equals the product of the county guaranteed school
2 32 infrastructure amount and the district's county actual
2 33 enrollment divided by the county combined actual enrollment.
2 34 b. For purposes of the formula in paragraph "a":
2 35 (1) "Base year" means the fiscal year beginning July 1,
3 1 2002.
3 2 (2) "Base year county taxable sales percentage" means the
3 3 percentage that the taxable sales in the county during the
3 4 base year is of the total state taxable sales during the base
3 5 year.
3 6 (3) "County combined actual enrollment" means the actual
3 7 enrollment figures determined by the department of management
3 8 for the county based on the actual enrollment figures reported
3 9 by October 1 to the department of management by the department
3 10 of education pursuant to section 257.6, subsection 1.
3 11 (4) "County guaranteed school infrastructure amount" means
3 12 an amount equal to the product of the county's chapter 422E
3 13 proportionate share and the amount deposited in the school
3 14 district sales and use tax fund for the current year times the
3 15 current year county taxable sales percentage divided by the
3 16 base year county taxable sales percentage.
3 17 (5) "County's chapter 422E proportionate share" means the
3 18 percentage that the annualized revenues received in the county
3 19 under chapter 422E for the base year is of one=fifth of the
3 20 total state sales and use tax revenues collected for deposit
3 21 into the general fund of the state for the base year.
3 22 (6) "Current year" means the fiscal year for which
3 23 distributions under this section are being made.
3 24 (7) "Current year county taxable sales percentage" means
3 25 the percentage that the taxable sales in the county during the
3 26 current fiscal year is of the total state taxable sales during
3 27 the current fiscal year.
3 28 (8) "District's county actual enrollment" means the actual
3 29 enrollment of the school district that attends school in the
3 30 county for which the county combined actual enrollment is
3 31 determined.
3 32 (9) "Taxable sales" means sales subject to the state sales
3 33 and services tax under chapter 422, division IV.
3 34 3. a. The director of revenue and finance within fifteen
3 35 days of the beginning of each fiscal year shall send to each
4 1 school district an estimate of the amount of tax moneys each
4 2 school district will receive for the year and for each quarter
4 3 of the year. At the end of each quarter, the director may
4 4 revise the estimates for the year and remaining quarters.
4 5 b. The director shall remit ninety=five percent of the
4 6 estimated tax receipts for the school district to the school
4 7 district on or before September 30 of the fiscal year and on
4 8 or before the last day of each following quarter.
4 9 c. The director shall remit a final payment of the
4 10 remainder of tax moneys due for the fiscal year before
4 11 November 10 of the next fiscal year. If an overpayment has
4 12 resulted during the previous fiscal year, the November payment
4 13 shall be adjusted to reflect any overpayment.
4 14 d. If the distributions are to school districts described
4 15 in subsection 1, paragraph "a", the payments to these school
4 16 districts shall be done on a monthly basis beginning with the
4 17 month of August.
4 18 Sec. 2. NEW SECTION. 293.2 USE OF SCHOOL DISTRICT SALES
4 19 AND USE TAX FUND MONEYS.
4 20 1. A school district receiving moneys from the school
4 21 district sales and use tax fund under section 293.1,
4 22 subsection 1, paragraph "a", shall use the moneys as provided
4 23 on the original ballot proposition pursuant to chapter 422E,
4 24 for the payment of principal and interest on general
4 25 obligation bonds issued pursuant to chapter 296, or section
4 26 298.20 or loan agreements under section 297.36, for payments
4 27 made pursuant to lease or lease=purchase agreements, or for
4 28 payment of principal and interest on bonds issued under
4 29 sections 293.3 and 422E.4.
4 30 2. a. Moneys received by a school district from the
4 31 school district sales and use tax fund under section 293.1,
4 32 subsection 1, paragraph "b", shall be spent for infrastructure
4 33 purposes only according to a plan developed by the board of
4 34 directors. The plan may apply to more than one fiscal year.
4 35 Prior to adoption of the plan, the board of directors shall
5 1 hold a public hearing on the question of approval of the
5 2 proposed plan. The board shall set forth its proposal and
5 3 shall publish the notice of the time and place of a public
5 4 hearing on the proposed plan. Notice of the time and place of
5 5 the public hearing shall be published not less than ten nor
5 6 more than twenty days before the public hearing in a newspaper
5 7 which is a newspaper of general circulation in the school
5 8 district. At the hearing, or no later than thirty days after
5 9 the date of the hearing, the board shall take action to adopt
5 10 the proposed plan.
5 11 b. If the board adopts the plan, moneys received shall be
5 12 used according to the plan unless within twenty=eight days
5 13 following the action of the board, the secretary of the board
5 14 receives a petition containing signatures of registered voters
5 15 equal in number to five percent of the voters in the school
5 16 district who voted at the last general election, asking that
5 17 an election be called to approve or disapprove the action of
5 18 the board. The board shall either rescind its action or
5 19 direct the county commissioner of elections to submit the
5 20 question to the registered voters of the school district at
5 21 the next following regular school election or a special
5 22 election. If a majority of those voting on the question at
5 23 the election favors disapproval of the action of the board,
5 24 the district shall use the moneys received as provided in
5 25 paragraph "c" for the fiscal year.
5 26 At the expiration of the twenty=eight day period, if no
5 27 petition is filed, the board shall use the moneys received
5 28 according to the plan for the duration of the plan. However,
5 29 the board may, at anytime, expend a greater share of moneys
5 30 received for property tax relief than otherwise specified in
5 31 the plan.
5 32 c. If an election is held and the plan is disapproved, as
5 33 provided in paragraph "b", or if a plan is not approved by the
5 34 board, moneys received by a school district shall be used for
5 35 the fiscal year to reduce the following levies in the
6 1 following order:
6 2 (1) Bond levies under sections 298.18 and 298.18A and
6 3 other debt levies until the moneys received or the levies are
6 4 reduced to zero.
6 5 (2) The physical plant and equipment levy under section
6 6 298.2, until the moneys received or the levy is reduced to
6 7 zero.
6 8 (3) The schoolhouse tax levy under section 278.1,
6 9 subsection 7, Code 1989, until the moneys received or the levy
6 10 is reduced to zero.
6 11 Any money remaining after the reduction of the levies
6 12 specified in this paragraph may be used for any lawful
6 13 infrastructure purpose of the school district.
6 14 d. For purposes of this subsection, "infrastructure
6 15 purposes" means those purposes for which a school district is
6 16 authorized to contract indebtedness and issue general
6 17 obligation bonds under chapter 296 or to expend tax revenues
6 18 under section 298.3, the payment of principal and interest on
6 19 general obligation bonds issued under chapter 296 or section
6 20 298.20 or loan agreements under section 297.36, payments made
6 21 pursuant to a lease or lease=purchase agreement, or the
6 22 payment of principal and interest on bonds issued under
6 23 section 293.3 or 422E.4.
6 24 Sec. 3. NEW SECTION. 293.3 BONDING.
6 25 A school district may anticipate the amount of moneys to be
6 26 received pursuant to section 293.1 as provided in this
6 27 section.
6 28 The board of directors of a school district is authorized
6 29 to issue negotiable, interest=bearing school bonds, without
6 30 election, and utilize tax receipts derived from the school
6 31 district sales and use tax fund for principal and interest
6 32 repayment. Proceeds of the bonds issued pursuant to this
6 33 section shall be utilized solely for school infrastructure
6 34 needs as school infrastructure is defined in section 293.2,
6 35 subsection 2.
7 1 Bonds issued under this section may be sold at public sale
7 2 as provided in chapter 75. Notice shall be given and a
7 3 hearing shall be held as provided in section 73A.12. Bonds
7 4 may bear dates, bear interest at rates not exceeding that
7 5 permitted by chapter 74A, mature in one or more installments,
7 6 be in either coupon or registered form, carry registration and
7 7 conversion privileges, be payable as to principal and interest
7 8 at times and places, be subject to terms of redemption prior
7 9 to maturity with or without premium, and be in one or more
7 10 denominations, all as provided by the resolution of the board
7 11 of directors authorizing their issuance. The resolution may
7 12 also prescribe additional provisions, terms, conditions, and
7 13 covenants which the board of directors deems advisable,
7 14 including provisions for creating and maintaining reserve
7 15 funds, the issuance of additional bonds ranking on a parity
7 16 with such bonds and additional bonds junior and subordinate to
7 17 such bonds, and that such bonds shall rank on a parity with or
7 18 be junior and subordinate to any bonds which may be then
7 19 outstanding. Bonds may be issued to refund outstanding and
7 20 previously issued bonds under this section. Bonds are a
7 21 contract between the school district and holders, and the
7 22 resolution issuing the bonds and pledging tax revenues to be
7 23 received from the school district sales and use tax fund to
7 24 the payment of principal and interest on the bonds is a part
7 25 of the contract. Bonds issued pursuant to this section shall
7 26 not constitute indebtedness within the meaning of any
7 27 constitutional or statutory debt limitation or restriction,
7 28 and shall not be subject to any other law relating to the
7 29 authorization, issuance, or sale of bonds.
7 30 A school district shall be authorized to enter into a
7 31 chapter 28E agreement with one or more cities or a county
7 32 whose boundaries encompass all or a part of the area of the
7 33 school district. A city or cities entering into a chapter 28E
7 34 agreement shall be authorized to expend its designated portion
7 35 of the tax revenues to be received from the school district
8 1 sales and use tax fund for any valid purpose permitted in this
8 2 chapter or authorized by the governing body of the city. A
8 3 county entering into a chapter 28E agreement with a school
8 4 district shall be authorized to expend its designated portion
8 5 of the tax revenues to be received from the school district
8 6 sales and use tax fund to provide property tax relief within
8 7 the boundaries of the school district located in the county.
8 8 A school district is also authorized to enter into a chapter
8 9 28E agreement with another school district which is located
8 10 partially or entirely in or is contiguous to the county. The
8 11 school district shall only expend its designated portion of
8 12 tax revenues to be received from the school district sales and
8 13 use tax fund for infrastructure purposes.
8 14 The governing body of a city may authorize the issuance of
8 15 bonds which are payable from its designated portion of the tax
8 16 revenues to be received from the school district sales and use
8 17 tax fund, and not from property tax, by following the
8 18 authorization procedures set forth for cities in section
8 19 384.83. A city may pledge irrevocably any amount derived from
8 20 its designated portions of the tax revenues to be received
8 21 from the school district sales and use tax fund to the support
8 22 or payment of such bonds.
8 23 Sec. 4. Section 298.18, unnumbered paragraph 4, Code 2003,
8 24 is amended to read as follows:
8 25 The amount estimated and certified to apply on principal
8 26 and interest for any one year may exceed two dollars and
8 27 seventy cents per thousand dollars of assessed value by the
8 28 amount approved by the voters of the school corporation, but
8 29 not exceeding four dollars and five cents per thousand of the
8 30 assessed value of the taxable property within any school
8 31 corporation, provided that the registered voters of such
8 32 school corporation have first approved such increased amount
8 33 at a special election, which may be was held at the same time
8 34 as the regular school election prior to July 1, 2003. The
8 35 proposition submitted to the voters at such special election
9 1 shall be in substantially the following form:
9 2 Sec. 5. Section 298.18, unnumbered paragraphs 5 and 6,
9 3 Code 2003, are amended by striking the unnumbered paragraphs.
9 4 Sec. 6. Section 298.18, unnumbered paragraph 8, Code 2003,
9 5 is amended to read as follows:
9 6 The ability of a school corporation to exceed two dollars
9 7 and seventy cents per thousand dollars of assessed value to
9 8 service principal and interest payments on bonded indebtedness
9 9 is limited and conferred only to those school corporations
9 10 engaged in the administration of elementary and secondary
9 11 education and which have voted to exceed that levy limitation
9 12 prior to July 1, 2003.
9 13 Sec. 7. Section 422.43, subsections 1, 2, 4, 5, 6, 7, 10,
9 14 and 12, Code 2003, are amended to read as follows:
9 15 1. There is imposed a tax of five six percent upon the
9 16 gross receipts from all sales of tangible personal property,
9 17 consisting of goods, wares, or merchandise, except as
9 18 otherwise provided in this division, sold at retail in the
9 19 state to consumers or users; a like rate of tax upon the gross
9 20 receipts from the sales, furnishing, or service of gas,
9 21 electricity, water, heat, pay television service, and
9 22 communication service, including the gross receipts from such
9 23 sales by any municipal corporation or joint water utility
9 24 furnishing gas, electricity, water, heat, pay television
9 25 service, and communication service to the public in its
9 26 proprietary capacity, except as otherwise provided in this
9 27 division, when sold at retail in the state to consumers or
9 28 users; a like rate of tax upon the gross receipts from all
9 29 sales of tickets or admissions to places of amusement, fairs,
9 30 and athletic events except those of elementary and secondary
9 31 educational institutions; a like rate of tax on the gross
9 32 receipts from an entry fee or like charge imposed solely for
9 33 the privilege of participating in an activity at a place of
9 34 amusement, fair, or athletic event unless the gross receipts
9 35 from the sales of tickets or admissions charges for observing
10 1 the same activity are taxable under this division; and a like
10 2 rate of tax upon that part of private club membership fees or
10 3 charges paid for the privilege of participating in any
10 4 athletic sports provided club members.
10 5 2. There is imposed a tax of five six percent upon the
10 6 gross receipts derived from the operation of all forms of
10 7 amusement devices and games of skill, games of chance,
10 8 raffles, and bingo games as defined in chapter 99B, operated
10 9 or conducted within the state, the tax to be collected from
10 10 the operator in the same manner as for the collection of taxes
10 11 upon the gross receipts of tickets or admission as provided in
10 12 this section. The tax shall also be imposed upon the gross
10 13 receipts derived from the sale of lottery tickets or shares
10 14 pursuant to chapter 99E. The tax on the lottery tickets or
10 15 shares shall be included in the sales price and distributed to
10 16 the general fund as provided in section 99E.10.
10 17 4. There is imposed a tax of five six percent upon the
10 18 gross receipts from the sales of engraving, photography,
10 19 retouching, printing, and binding services. For the purpose
10 20 of this division, the sales of engraving, photography,
10 21 retouching, printing, and binding services are sales of
10 22 tangible property.
10 23 5. There is imposed a tax of five six percent upon the
10 24 gross receipts from the sales of vulcanizing, recapping, and
10 25 retreading services. For the purpose of this division, the
10 26 sales of vulcanizing, recapping, and retreading services are
10 27 sales of tangible property.
10 28 6. There is imposed a tax of five six percent upon the
10 29 gross receipts from the sales of optional service or warranty
10 30 contracts, except residential service contracts regulated
10 31 under chapter 523C, which provide for the furnishing of labor
10 32 and materials and require the furnishing of any taxable
10 33 service enumerated under this section. The gross receipts are
10 34 subject to tax even if some of the services furnished are not
10 35 enumerated under this section. For the purpose of this
11 1 division, the sale of an optional service or warranty
11 2 contract, other than a residential service contract regulated
11 3 under chapter 523C, is a sale of tangible personal property.
11 4 Additional sales, services, or use taxes shall not be levied
11 5 on services, parts, or labor provided under optional service
11 6 or warranty contracts which are subject to tax under this
11 7 section.
11 8 If the optional service or warranty contract is a computer
11 9 software maintenance or support service contract and there is
11 10 no separately stated fee for the taxable personal property or
11 11 for the nontaxable service, the tax of five six percent
11 12 imposed by this subsection shall be imposed on fifty percent
11 13 of the gross receipts from the sale of such contract. If the
11 14 contract provides for technical support services only, no tax
11 15 shall be imposed under this subsection. The provisions of
11 16 this subsection also apply to the tax imposed by chapter 423.
11 17 7. There is imposed a tax of five six percent upon the
11 18 gross receipts from the renting of rooms, apartments, or
11 19 sleeping quarters in a hotel, motel, inn, public lodging
11 20 house, rooming house, manufactured or mobile home which is
11 21 tangible personal property, or tourist court, or in any place
11 22 where sleeping accommodations are furnished to transient
11 23 guests for rent, whether with or without meals. "Renting" and
11 24 "rent" include any kind of direct or indirect charge for such
11 25 rooms, apartments, or sleeping quarters, or their use. For
11 26 the purposes of this division, such renting is regarded as a
11 27 sale of tangible personal property at retail. However, this
11 28 tax does not apply to the gross receipts from the renting of a
11 29 room, apartment, or sleeping quarters while rented by the same
11 30 person for a period of more than thirty=one consecutive days.
11 31 10. There is imposed a tax of five six percent upon the
11 32 gross receipts from the rendering, furnishing, or performing
11 33 of services as defined in section 422.42.
11 34 12. A tax of five six percent is imposed upon the gross
11 35 receipts from the sales of prepaid telephone calling cards and
12 1 prepaid authorization numbers. For the purpose of this
12 2 division, the sales of prepaid telephone calling cards and
12 3 prepaid authorization numbers are sales of tangible personal
12 4 property.
12 5 Sec. 8. Section 422.43, subsection 13, paragraph a,
12 6 unnumbered paragraph 1, Code 2003, is amended to read as
12 7 follows:
12 8 A tax of five six percent is imposed upon the gross
12 9 receipts from the sales, furnishing, or service of solid waste
12 10 collection and disposal service.
12 11 Sec. 9. Section 422.43, subsections 16 and 17, Code 2003,
12 12 are amended to read as follows:
12 13 16. a. A tax of five six percent is imposed upon the
12 14 gross receipts from sales of bundled services contracts. For
12 15 purposes of this subsection, a "bundled services contract"
12 16 means an agreement providing for a retailer's performance of
12 17 services, one or more of which is a taxable service enumerated
12 18 in this section and one or more of which is not, in return for
12 19 a consumer's or user's single payment for the performance of
12 20 the services, with no separate statement to the consumer or
12 21 user of what portion of that payment is attributable to any
12 22 one service which is a part of the contract.
12 23 b. For purposes of the administration of the tax on
12 24 bundled services contracts, the director may enter into
12 25 agreements of limited duration with individual retailers,
12 26 groups of retailers, or organizations representing retailers
12 27 of bundled services contracts. Such an agreement shall impose
12 28 the tax rate only upon that portion of the gross receipts from
12 29 a bundled services contract which is attributable to taxable
12 30 services provided under the contract.
12 31 17. A tax of five six percent is imposed upon the gross
12 32 receipts from any mobile telecommunication service which this
12 33 state is allowed to tax by the provisions of the federal
12 34 Mobile Telecommunications Sourcing Act, Pub. L. No. 106=252, 4
12 35 U.S.C. } 116 et seq. For purposes of this subsection, taxes
13 1 on mobile telecommunications service, as defined under the
13 2 federal Mobile Telecommunications Sourcing Act, that are
13 3 deemed to be provided by the customer's home service provider
13 4 shall be paid to the taxing jurisdiction whose territorial
13 5 limits encompass the customer's place of primary use,
13 6 regardless of where the mobile telecommunication service
13 7 originates, terminates, or passes through and shall in all
13 8 other respects be taxed in conformity with the federal Mobile
13 9 Telecommunications Sourcing Act. All other provisions of the
13 10 federal Mobile Telecommunications Sourcing Act are adopted by
13 11 the state of Iowa and incorporated into this subsection by
13 12 reference. With respect to mobile telecommunications service
13 13 under the federal Mobile Telecommunications Sourcing Act the
13 14 director shall, if requested, enter into agreements consistent
13 15 with the provisions of the federal Act.
13 16 Sec. 10. Section 422.47, Code 2003, is amended by adding
13 17 the following new subsection:
13 18 NEW SUBSECTION. 2. Construction contractors may make
13 19 application to the department for a refund of the additional
13 20 one percent tax paid under this division by reason of the
13 21 increase in the tax from five to six percent for taxes paid on
13 22 goods, wares, or merchandise under the following conditions:
13 23 a. The goods, wares, or merchandise are incorporated into
13 24 an improvement to real estate in fulfillment of a written
13 25 contract fully executed prior to July 1, 2003. The refund
13 26 shall not apply to equipment transferred in fulfillment of a
13 27 mixed construction contract.
13 28 b. The contractor has paid to the department or to a
13 29 retailer the full six percent tax.
13 30 c. The claim is filed on forms provided by the department
13 31 and is filed within one year of the date the tax is paid.
13 32 A contractor who makes an erroneous application for refund
13 33 shall be liable for payment of the excess refund paid plus
13 34 interest at the rate in effect under section 421.7. In
13 35 addition, a contractor who willfully makes a false application
14 1 for refund is guilty of a simple misdemeanor and is liable for
14 2 a penalty equal to fifty percent of the excess refund claimed.
14 3 Excess refunds, penalties, and interest due under this
14 4 subsection may be enforced and collected in the same manner as
14 5 the tax imposed by this division.
14 6 Sec. 11. Section 422.69, subsection 2, Code 2003, is
14 7 amended to read as follows:
14 8 2. a. Unless Except as provided in paragraph "b", or as
14 9 otherwise provided, the fees, taxes, interest, and penalties
14 10 collected under this chapter shall be credited to the general
14 11 fund.
14 12 b. One=sixth of the fees, taxes, interest, and penalties
14 13 collected pursuant to division IV shall be credited to the
14 14 school district sales and use tax fund created in section
14 15 293.1.
14 16 Sec. 12. Section 422E.1, Code 2003, is amended by adding
14 17 the following new subsection:
14 18 NEW SUBSECTION. 4. a. This chapter does not apply to any
14 19 county after the effective date of this section of this Act.
14 20 b. In the case of a county that has in effect on March 31,
14 21 2003, a local sales and services tax for school infrastructure
14 22 purposes, the increase in the state sales and services tax
14 23 under chapter 422, division IV, from five percent to six
14 24 percent shall replace the county's local sales and services
14 25 tax for school infrastructure purposes and to this extent the
14 26 local sales and services tax for school infrastructure
14 27 purposes is repealed.
14 28 Sec. 13. Section 423.2, Code 2003, is amended to read as
14 29 follows:
14 30 423.2 IMPOSITION OF TAX.
14 31 An excise tax is imposed on the use in this state of
14 32 tangible personal property, including aircraft subject to
14 33 registration under section 328.20, purchased for use in this
14 34 state, at the rate of five six percent of the purchase price
14 35 of the property. An excise tax is imposed on the use of
15 1 manufactured housing in this state at the rate of five six
15 2 percent of the purchase price if the manufactured housing is
15 3 sold in the form of tangible personal property and at the rate
15 4 of five six percent of the installed purchase price if the
15 5 manufactured housing is sold in the form of realty. An excise
15 6 tax is imposed on the use in this state of vehicles subject to
15 7 registration or subject only to the issuance of a certificate
15 8 of title at the rate of five percent. An excise tax is
15 9 imposed on the use of leased vehicles at the rate of five
15 10 percent of the amount otherwise subject to tax as calculated
15 11 pursuant to section 423.7A. The excise tax is imposed upon
15 12 every person using the property within this state until the
15 13 tax has been paid directly to the county treasurer or the
15 14 state department of transportation, to a retailer, or to the
15 15 department. An excise tax is imposed on the use in this state
15 16 of services enumerated in section 422.43 at the rate of five
15 17 six percent. This tax is applicable where services are
15 18 rendered, furnished, or performed in this state or where the
15 19 product or result of the service is used in this state. This
15 20 tax is imposed on every person using the services or the
15 21 product of the services in this state until the user has paid
15 22 the tax either to an Iowa use tax permit holder or to the
15 23 department.
15 24 Sec. 14. Section 423.24, Code 2003, is amended by adding
15 25 the following new subsection:
15 26 NEW SUBSECTION. 2A. One=sixth of all other revenue
15 27 arising under the operation of this chapter shall be credited
15 28 to the school district sales and use tax fund created in
15 29 section 293.1.
15 30 Sec. 15. Section 423.24, subsection 3, Code 2003, is
15 31 amended to read as follows:
15 32 3. All other revenue arising under the operation of this
15 33 chapter not credited as specified in subsections 1, 2, and 2A
15 34 shall be credited to the general fund of the state.
15 35 Sec. 16. APPLICABILITY. This section applies in regard to
16 1 the increase in the state sales and use taxes from five to six
16 2 percent. The six percent rate applies to all sales of taxable
16 3 personal property, consisting of goods, wares, or merchandise
16 4 if delivery occurs on or after July 1, 2003. The six percent
16 5 use tax rate applies to the use of property when the first
16 6 taxable use in this state occurs on or after July 1, 2003.
16 7 The six percent rate applies to the gross receipts from the
16 8 sale, furnishing, or service of gas, electricity, water, heat,
16 9 pay television service, and communication service if the date
16 10 of billing the customer is on or after July 1, 2003. In the
16 11 case of a service contract entered into prior to July 1, 2003,
16 12 which contract calls for periodic payments, the six percent
16 13 rate applies to those payments made or due on or after July 1,
16 14 2003. This periodic payment applies, but is not limited to,
16 15 tickets or admissions, private club membership fees, sources
16 16 of amusement, equipment rental, dry cleaning, reducing salons,
16 17 dance schools, and all other services subject to tax, except
16 18 the aforementioned utility services which are subject to a
16 19 special transitional rule. Unlike periodic payments under
16 20 service contracts, installment sales of goods, wares, and
16 21 merchandise are subject to the full amount of sales or use tax
16 22 when the sales contract is entered into or the property is
16 23 first used in Iowa.
16 24 Sec. 17. EFFECTIVE DATE. Sections 1 and 2 of this Act,
16 25 being deemed of immediate importance, take effect upon
16 26 enactment.
16 27 EXPLANATION
16 28 This bill increases state sales and use tax rates from 5
16 29 percent to 6 percent, except for motor vehicles where the rate
16 30 remains at 5 percent. The increased revenues are deposited
16 31 into a school district sales and use tax fund to be
16 32 distributed to school districts throughout the state to be
16 33 used for infrastructure or property tax relief purposes.
16 34 Because the increase in the state sales tax rate replaces the
16 35 local option sales and services tax for school infrastructure
17 1 purposes, those school districts that were receiving revenues
17 2 from the local option tax may continue to receive, according
17 3 to a formula, revenues from the school district sales and use
17 4 tax fund in an amount that approximates what those districts
17 5 would have received under the local option tax. These
17 6 districts will receive their distributions first. The
17 7 remaining moneys will be distributed to the other school
17 8 districts on a per pupil basis. School districts that were
17 9 receiving the local option tax may elect to receive the
17 10 distributions on a per pupil basis rather than pursuant to the
17 11 formula.
17 12 Revenues received by the school districts according to the
17 13 formula must be used for the purposes specified in the ballot
17 14 when the local option tax was first passed or to pay principal
17 15 and interest on general obligation bonds, lease=purchase
17 16 agreements, or other loan agreements. Other districts will
17 17 spend the revenues according to an infrastructure plan
17 18 developed by the board of directors of the school district.
17 19 If a plan is not developed by the board or the plan is not
17 20 approved at a reverse referendum, then the revenues will be
17 21 used for property tax relief by lowering the debt service
17 22 levies, the physical plant and equipment levy, the schoolhouse
17 23 tax levy or for infrastructure purposes, in that order. Bonds
17 24 may be issued by a school district, without an election, in
17 25 anticipation of the distributions the district will receive
17 26 from the school district sales and use tax fund.
17 27 The school district debt service levy is also reduced from
17 28 a maximum $4.05 per $1,000 of taxable value to $2.70 per
17 29 $1,000 of taxable value. However, if the voters in the
17 30 district have voted to exceed the $2.70 per $1,000 of taxable
17 31 value levy amount prior to July 1, 2003, then the maximum levy
17 32 may remain at $4.05 per $1,000 of taxable value until the
17 33 bonds are retired.
17 34 The bill has some effective date provisions. However, the
17 35 sales and use tax rates are increased as of July 1, 2003, if
18 1 the bill is enacted before that date.
18 2 LSB 2340HH 80
18 3 mg/cf/24