House Study Bill 698

                                       HOUSE FILE       
                                       BY  (PROPOSED COMMITTEE ON
                                            APPROPRIATIONS BILL BY
                                            CHAIRPERSON DIX)


    Passed House,  Date               Passed Senate, Date             
    Vote:  Ayes        Nays           Vote:  Ayes        Nays         
                 Approved                            

                                      A BILL FOR

  1 An Act relating to state budget requirements involving the state
  2    general fund expenditure limitation and the Iowa economic
  3    emergency fund, and providing effective dates.
  4 BE IT ENACTED BY THE GENERAL ASSEMBLY OF THE STATE OF IOWA:
  5 TLSB 6492YC 80
  6 jp/pj/5

PAG LIN

  1  1    Section 1.  Section 8.22A, subsection 3, Code Supplement
  1  2 2003, is amended to read as follows:
  1  3    3.  By December 15 of each fiscal year the conference shall
  1  4 agree to a revenue estimate for the fiscal year beginning the
  1  5 following July 1.  That estimate shall be used by the governor
  1  6 in the preparation of the budget message under section 8.22
  1  7 and by the general assembly in the budget process.  If the
  1  8 conference agrees to a different estimate at a later meeting
  1  9 which projects a greater amount of revenue than the initial
  1 10 estimate amount agreed to by December 15, the governor and the
  1 11 general assembly shall continue to use the initial estimate
  1 12 amount in the budget process for that fiscal year.  However,
  1 13 if the conference agrees to a different estimate at a later
  1 14 meeting which projects a lesser amount of revenue than the
  1 15 initial estimate amount, the governor and the general assembly
  1 16 shall use the lesser amount in the budget process for that
  1 17 fiscal year.  As used in this subsection, "later meeting"
  1 18 means only those later meetings which are held prior to the
  1 19 conclusion of the regular session of the general assembly and,
  1 20 if the general assembly holds an extraordinary session prior
  1 21 to the commencement of the fiscal year to which the estimate
  1 22 applies, those later meetings which are held before or during
  1 23 the extraordinary session.
  1 24    Sec. 2.  Section 8.54, subsection 2, Code 2003, is amended
  1 25 to read as follows:
  1 26    2.  There is created a state general fund expenditure
  1 27 limitation for each fiscal year beginning on or after July 1,
  1 28 1993, calculated as provided in this section.  An expenditure
  1 29 limitation shall be used for the portion of the budget process
  1 30 commencing on the date the revenue estimating conference
  1 31 agrees to a revenue estimate for the following fiscal year in
  1 32 accordance with section 8.22A, subsection 3, and ending with
  1 33 the governor's final approval or disapproval of the
  1 34 appropriations bills applicable to that fiscal year that were
  1 35 passed prior to July 1 of that fiscal year in a regular or
  2  1 extraordinary legislative session.
  2  2    Sec. 3.  Section 8.55, subsection 2, paragraph a, as
  2  3 enacted by 2002 Iowa Acts, Second Extraordinary Session,
  2  4 chapter 1001, section 25, and as made effective by 2003 Iowa
  2  5 Acts, chapter 179, section 40, is amended to read as follows:
  2  6    a.  The maximum balance of the fund is the amount equal to
  2  7 two and one=half five percent of the adjusted revenue estimate
  2  8 for the fiscal year.  If the amount of moneys in the Iowa
  2  9 economic emergency fund is equal to the maximum balance,
  2 10 moneys in excess of this amount shall be transferred to the
  2 11 general fund surplus for taxpayers fund created in section
  2 12 8.57B.
  2 13    Sec. 4.  Section 8.55, subsection 2, paragraph c, Code
  2 14 Supplement 2003, is amended by striking the paragraph.
  2 15    Sec. 5.  Section 8.57, subsection 1A, paragraphs c and d,
  2 16 as enacted by 2004 Iowa Acts, House File 2039, section 3, are
  2 17 amended to read as follows:
  2 18    c.  The appropriation made in paragraph "a" shall continue
  2 19 until the aggregate of the appropriations made or transferred
  2 20 to the senior living trust fund pursuant to paragraph "a" of
  2 21 this subsection and section 8.55, subsection 2, paragraph "c",
  2 22 is equal to one hundred eighteen million dollars.
  2 23    d.  The aggregate amount of the appropriations to be
  2 24 transferred from the Iowa economic emergency fund to the
  2 25 senior living trust fund pursuant to section 8.55, subsection
  2 26 2, paragraph "c", shall be reduced by the appropriations made
  2 27 pursuant to paragraph "a" of this subsection.
  2 28    Sec. 6.  NEW SECTION.  8.57B  SURPLUS FOR TAXPAYERS FUND.
  2 29    1.  The surplus for taxpayers fund is created in the state
  2 30 treasury.  The fund shall consist of appropriations made to
  2 31 the fund and transfers from the Iowa economic emergency fund
  2 32 and other funds as provided by law.  The fund shall be
  2 33 separate from the general fund of the state and the balance in
  2 34 the fund shall not be considered part of the balance of the
  2 35 general fund of the state.  However, the fund shall be
  3  1 considered a special account for the purposes of section 8.53,
  3  2 relating to generally accepted accounting principles.
  3  3    2.  Notwithstanding section 12C.7, subsection 2, interest
  3  4 or earnings on moneys in the surplus for taxpayers fund shall
  3  5 be credited to the surplus for taxpayers fund.  Moneys
  3  6 credited to the fund are not subject to section 8.33.
  3  7    3.  Moneys in the fund in a fiscal year shall be used for
  3  8 tax reductions as provided in law enacted by the general
  3  9 assembly.
  3 10    Sec. 7.  CONTINGENT EFFECTIVE DATE.  The section of this
  3 11 Act amending Code section 8.55, subsection 2, paragraph "a",
  3 12 takes effect on July 1 of the fiscal year immediately
  3 13 following the fiscal year in which all transfers have been
  3 14 made from the Iowa economic emergency fund, in the aggregate
  3 15 amount required by section 8.55, subsection 2, paragraphs "b"
  3 16 and "d", Code Supplement 2003.  The director of the department
  3 17 of management shall notify the Iowa Code editor when the
  3 18 transfers have been made.
  3 19    Sec. 8.  IMMEDIATE EFFECTIVE DATE.  The sections of this
  3 20 Act amending sections 8.22A and 8.54, being deemed of
  3 21 immediate importance, take effect upon enactment.
  3 22                           EXPLANATION
  3 23    This bill relates to state budget requirements for the
  3 24 state general fund expenditure limitation and the Iowa
  3 25 economic emergency fund.
  3 26    Code section 8.22A, relating to the revenue estimating
  3 27 conference, is amended.  This Code section requires that by
  3 28 December 15 of each fiscal year the conference must make an
  3 29 estimate for the following fiscal year and that this estimate
  3 30 must be used by the governor and the general assembly in the
  3 31 budget process for the following fiscal year.  The Code
  3 32 section by definition provides that if, at a later meeting of
  3 33 the conference held prior to the conclusion of the regular
  3 34 session of the general assembly, the conference agrees to a
  3 35 different estimate of a lesser amount of revenue, the lesser
  4  1 amount is to be used in the budget process.  The expenditure
  4  2 limitation statute in Code section 8.54 provides for the
  4  3 different estimate to be used in calculating the expenditure
  4  4 limitation.
  4  5    The bill amends Code section 8.22A to provide that if the
  4  6 general assembly holds an extraordinary session prior to the
  4  7 commencement of the fiscal year for which the estimate
  4  8 applies, then an estimate of a lesser amount of revenue agreed
  4  9 to at a meeting of the revenue estimating conference held
  4 10 prior to or during the extraordinary session would be required
  4 11 to be used in the budgeting process.  The expenditure
  4 12 limitation would also be adjusted.  This section of the bill
  4 13 takes effect upon enactment.
  4 14    The bill amends Code section 8.54, relating to the
  4 15 expenditure limitation, to specify the budget process time
  4 16 period in which the limitation is to be used.  The bill
  4 17 provides that the time period commences on the date the
  4 18 revenue estimating conference agrees to the revenue estimate
  4 19 used by the governor and general assembly for the following
  4 20 fiscal year and ends with the governor's final approval or
  4 21 disapproval of the appropriations bills applicable to that
  4 22 fiscal year that were passed prior to July 1 of that fiscal
  4 23 year in a regular or extraordinary legislative session.
  4 24    Code section 8.55, relating to the Iowa economic emergency
  4 25 fund, is amended to strike duplicative language providing for
  4 26 transfer of moneys to the senior living trust fund and to
  4 27 increase the maximum balance of the fund from 2.5 percent to 5
  4 28 percent of the adjusted revenue estimate for the fiscal year.
  4 29 Currently, Code section 8.55 provides for transfer of $118
  4 30 million from the Iowa economic emergency fund to the senior
  4 31 living trust fund.  In 2004 Iowa Acts, House File 2039, the
  4 32 $118 million is provided under Code section 8.57 as the
  4 33 initial allocation of the ending balance of the general fund
  4 34 of state.
  4 35    The surplus for taxpayers fund is created as a separate
  5  1 fund in the state treasury.  Once the Iowa economic emergency
  5  2 fund reaches its maximum balance and reimburses the endowment
  5  3 for Iowa's health account of the tobacco settlement trust
  5  4 fund, the excess is required to be transferred to the surplus
  5  5 for taxpayers fund instead of to the general fund of the state
  5  6 as is provided in current law.  The surplus for taxpayers fund
  5  7 retains interest and earnings and moneys credited to the fund
  5  8 are not subject to reversion as otherwise provided in Code
  5  9 section 8.33.
  5 10    The change to increase the percentage used for the maximum
  5 11 balance of the Iowa economic emergency fund has a contingent
  5 12 effective date of July 1 of the fiscal year immediately
  5 13 following the fiscal year in which the transfers from the fund
  5 14 have been made in the required aggregate amount.  Under
  5 15 existing law in Code section 8.55, unless reduced by other
  5 16 transfers, an aggregate of $141,751,000 is to be transferred
  5 17 to the endowment for Iowa's health account of the tobacco
  5 18 settlement trust fund once the Iowa economic emergency fund
  5 19 reaches the maximum balance.
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