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 yearbeginning 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 7two and one=halffive 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 11general fundsurplus 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 23d. 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. 5 20 LSB 6492YC 80 5 21 jp/pj/5 5 22