Senate File 124
SENATE FILE
BY HOUSER
Passed Senate, Date Passed House, Date
Vote: Ayes Nays Vote: Ayes Nays
Approved
A BILL FOR
1 An Act relating to local government financing, including local
2 government fiscal reform, authority for bonding, and the
3 percentage of actual value at which residential property is
4 assessed, and including a retroactive applicability date
5 provision.
6 BE IT ENACTED BY THE GENERAL ASSEMBLY OF THE STATE OF IOWA:
7 TLSB 2134SS 80
8 sc/cl/14
PAG LIN
1 1 Section 1. Section 25B.2, subsection 3, Code 2003, is
1 2 amended by striking the subsection.
1 3 Sec. 2. NEW SECTION. 25B.5A UNFUNDED STATE MANDATES ==
1 4 EFFECT.
1 5 If, on or after July 1, 2003, a state mandate is enacted by
1 6 the general assembly, or otherwise imposed, on a political
1 7 subdivision and the state mandate requires a political
1 8 subdivision to engage in any new activity, to provide a new
1 9 service, or to provide any service beyond that required by any
1 10 law enacted prior to July 1, 2003, and the state does not
1 11 appropriate moneys to fully fund the cost of the state mandate
1 12 as identified pursuant to section 25B.5, subsections 1 and 2,
1 13 the political subdivision is not required to perform the
1 14 activity or provide the service and the political subdivision
1 15 shall not be subject to any liabilities imposed by the state
1 16 or the imposition of any fines or penalties for the failure to
1 17 comply with the state mandate.
1 18 Sec. 3. NEW SECTION. 331.404 COUNTY FINANCIAL MANAGEMENT
1 19 PLAN.
1 20 Each county shall prepare a financial management plan for
1 21 the county for use in budget planning. The financial
1 22 management plan shall contain a set of financial policies for
1 23 use by counties in budget planning. The county financial
1 24 management plan shall be prepared in a manner which will
1 25 assist counties in identifying budgeting goals, fiscal and
1 26 service planning strategies, and revenue targets. County
1 27 financial management planning shall be completed on forms
1 28 prepared by the department of management and approved by the
1 29 county finance committee in consultation with the Iowa state
1 30 association of county supervisors, the Iowa state association
1 31 of county auditors, and the public.
1 32 Copies of the financial management plan for a county shall
1 33 be maintained as a public record at the county auditor's
1 34 office and shall be filed with the state appeal board in the
1 35 same manner and at the same time that certified budgets are
2 1 filed under section 24.17.
2 2 Sec. 4. NEW SECTION. 331.423A ENDING FUND BALANCE.
2 3 1. Effective for a fiscal year beginning on or after July
2 4 1, 2009, budgeted ending fund balances shall not exceed
2 5 twenty=five percent of actual expenditures in the previous
2 6 fiscal year for either the general fund or the rural services
2 7 fund. An ending fund balance does not include funds reserved
2 8 or designated for a specific purpose and specifically
2 9 described in the certified budget.
2 10 2. A county shall not exceed a balance greater than five
2 11 percentage points above the twenty=five percent fund balance
2 12 limitation in subsection 1. If a county exceeds the
2 13 limitation in this subsection, in the second budget year
2 14 following the fiscal year that shows a fund balance exceeding
2 15 the limitation in this subsection, the county shall implement
2 16 a levy reduction formula to offset the excess fund balance.
2 17 Sec. 5. Section 331.441, subsection 2, Code 2003, is
2 18 amended by adding the following new paragraph:
2 19 NEW PARAGRAPH. d. "Rural general obligation bond" means a
2 20 negotiable bond issued by a county and payable from the levy
2 21 of ad valorem taxes on all taxable property located outside
2 22 the incorporated areas of the county through its debt service
2 23 fund which is required to be established by section 331.430.
2 24 Sec. 6. NEW SECTION. 331.450 RURAL DEBT SERVICE.
2 25 The county board of supervisors may direct the county
2 26 auditor to establish a rural debt service tax district for the
2 27 purpose of issuing general obligation bonds for rural county
2 28 services. The rural debt service tax district shall include
2 29 only unincorporated portions of the county. The county's debt
2 30 service tax levy for the rural general obligation bonds shall
2 31 be levied only against taxable property within the county
2 32 which is included within the boundaries of the rural debt
2 33 service tax district. The board may issue rural general
2 34 obligation bonds for general county purposes and essential
2 35 county purposes if such stated purpose is primarily intended
3 1 to benefit those persons residing in the county outside of
3 2 incorporated city areas. Rural general obligation bonds for
3 3 the purposes described in this section are subject to an
3 4 election held in the manner provided in section 331.442,
3 5 subsections 1 through 4, except that only those registered
3 6 voters residing within the rural service area tax district may
3 7 vote on the proposition.
3 8 Sec. 7. NEW SECTION. 331.451 LOANS TO CITIES.
3 9 A county may enter into a 28E agreement with one or more
3 10 cities to finance in whole or in part one or more projects
3 11 meeting the definition of a city essential corporate purpose
3 12 or city general corporate purpose. The agreement may provide
3 13 for issuance of general obligation bonds by the county the
3 14 proceeds from which will be loaned to the city to finance such
3 15 a city project. The county may require that the repayment
3 16 obligation of a city be secured as the county deems
3 17 appropriate. The repayment obligation may be evidenced by one
3 18 or more notes of a borrowing city. The loan agreements may
3 19 contain terms and conditions the county deems advisable.
3 20 The county may provide in the resolution authorizing the
3 21 issuance of bonds that the principal and interest on the bonds
3 22 are payable exclusively from any of the following:
3 23 1. The income and receipts or other money derived from the
3 24 project financed with the proceeds of the bonds.
3 25 2. The income and receipts or other money derived from
3 26 designated projects whether or not the projects are financed
3 27 in whole or in part with the proceeds of the bonds or notes.
3 28 3. A debt service property tax levy imposed by the city on
3 29 the taxable property in the city.
3 30 4. Tax incremental revenues if the project is located in
3 31 an urban renewal area. The county may require that a city
3 32 create an urban renewal area to collect incremental tax
3 33 revenues to secure the loan.
3 34 Bonds proposed to be issued under this section are subject
3 35 to an election held in the manner provided in section 331.442,
4 1 subsections 1 through 4.
4 2 Sec. 8. Section 441.21, Code 2003, is amended by adding
4 3 the following new subsection:
4 4 NEW SUBSECTION. 5A. For valuations established as of
4 5 January 1, 2003, and for subsequent years, if the percentage
4 6 of actual value at which residential property is to be
4 7 assessed as computed under subsection 5 is less than fifty
4 8 percent, the percentage of actual value at which residential
4 9 property shall be assessed shall be fifty percent
4 10 notwithstanding the computation under subsection 5.
4 11 Sec. 9. RETROACTIVE APPLICABILITY. The section of this
4 12 Act amending section 441.21 applies retroactively to
4 13 assessment years beginning on or after January 1, 2003.
4 14 EXPLANATION
4 15 This bill makes a number of changes relating to local
4 16 government fiscal reform.
4 17 The bill provides that if a new state mandate is imposed on
4 18 or after July 1, 2003, which requires the performance of a new
4 19 activity or service or the expansion of a service beyond what
4 20 was required before July 1, 2003, the state mandate must be
4 21 fully funded. If the state mandate is not fully funded, the
4 22 affected political subdivisions are not required to comply or
4 23 implement the state mandate. Also, no fines or penalties may
4 24 be imposed on a political subdivision for failure to comply or
4 25 carry out an unfunded state mandate.
4 26 The bill strikes Code section 25B.2, subsection 3, and
4 27 rewrites it as a new section outside the intent section of
4 28 Code chapter 25B. The rewritten section removes a qualifying
4 29 phrase which limits the circumstances under which a political
4 30 subdivision may fail to carry out an unfunded state mandate.
4 31 The bill requires counties to annually prepare a financial
4 32 management plan to be filed with the state at the same time
4 33 that the certified budget is filed. The purpose of the plan
4 34 is to set forth a set of financial policies for use by
4 35 counties in budget planning.
5 1 The bill limits the ending general fund and rural services
5 2 fund balances of a county to 25 percent of actual expenditures
5 3 from each fund in the previous fiscal year. However, the bill
5 4 provides that if the ending fund balance exceeds five
5 5 percentage points above 25 percent, the county shall implement
5 6 a levy reduction formula in the following fiscal year to
5 7 offset the excess fund balance. The limitation applies to
5 8 fiscal years beginning on or after July 1, 2009.
5 9 The bill allows a county to issue rural general obligation
5 10 bonds payable from property taxes levied in the unincorporated
5 11 areas of the county. The bonds are subject to the election
5 12 requirements for countywide general obligation bonds.
5 13 The bill also allows a county to issue general obligation
5 14 bonds and loan the proceeds of the bonds to one or more cities
5 15 to finance a city project. The bonds are subject to the
5 16 election requirements for countywide general obligation bonds.
5 17 The bill sets the percentage (rollback) of the actual value
5 18 at which residential property is to be taxed at not less than
5 19 50 percent for valuations established as of January 1, 2003,
5 20 and for subsequent years. This provision of the bill applies
5 21 retroactively to assessment years beginning on or after
5 22 January 1, 2003.
5 23 LSB 2134SS 80
5 24 sc/cl/14