H.J.R. 2009 Section 1. The following amendment to the Constitution of 1 the State of Iowa is proposed: 2 The Constitution of the State of Iowa is amended by adding 3 the following new section to new Article XIII: 4 ARTICLE XIII. 5 EXPENDITURE LIMITATION. 6 General fund expenditure limitation. SECTION 1. 7 1. For the purposes of this section: 8 a. “Adjusted revenue estimate” means the most recent revenue 9 estimate determined before January 1, or a later and lesser 10 revenue estimate determined before adjournment of the regular 11 session of the General Assembly, for the general fund for the 12 following fiscal year as determined by a revenue estimating 13 conference which shall be established by the General Assembly 14 by law, adjusted by subtracting estimated refunds payable from 15 that estimated revenue and adding any available surplus in 16 accordance with subsection 6. However, if the General Assembly 17 holds an extraordinary session prior to the commencement of the 18 fiscal year to which the revenue estimate applies and before 19 or during the extraordinary session the revenue estimating 20 conference determines a lesser revenue estimate, the lesser 21 estimate shall be used for the adjusted revenue estimate. 22 b. “General fund” means the principal operating fund of the 23 state which shall be established by the General Assembly by 24 law. 25 c. “New revenues” means moneys which are received by the 26 state due to increased tax rates or fees or newly created 27 taxes or fees over and above those moneys which are received 28 due to state taxes or fees which are in effect as of January 29 1 following the most recent meeting of the state revenue 30 estimating conference. “New revenues” also includes moneys 31 received by the general fund due to new transfers over 32 and above those moneys received by the general fund due to 33 transfers which are in effect as of January 1 following the 34 most recent meeting of the state revenue estimating conference. 35 -1- LSB 5453HH (6) 83 jp/sc 1/ 4

H.J.R. 2009 The state revenue estimating conference shall determine the 1 eligibility of transfers to the general fund which are to be 2 considered as new revenue in determining the state general fund 3 expenditure limitation. 4 2. A state general fund expenditure limitation is created 5 and calculated in subsection 3, for each fiscal year beginning 6 on or after July 1 following the effective date of this 7 section. 8 3. Except as otherwise provided in this section, the state 9 general fund expenditure limitation for a fiscal year shall be 10 ninety-nine percent of the adjusted revenue estimate. 11 4. The state general fund expenditure limitation shall be 12 used by the Governor in the preparation and approval of the 13 budget and by the General Assembly in the budget process. 14 5. If a new revenue source is proposed, the budget revenue 15 projection used for that new revenue source for the period 16 beginning on the effective date of the new revenue source and 17 ending in the fiscal year in which the source is included in 18 the adjusted revenue estimate shall be ninety-five percent 19 of the amount remaining after subtracting estimated refunds 20 payable from the projected revenue from that source. If a new 21 revenue source is established and implemented, the original 22 state general fund expenditure limitation amount provided for 23 in subsection 3 shall be readjusted to include ninety-five 24 percent of the estimated revenue from that source. 25 6. Any surplus existing at the end of a fiscal year which 26 exceeds ten percent of the adjusted revenue estimate of 27 that fiscal year shall be included in the adjusted revenue 28 estimate for the following fiscal year. Any surplus equal to 29 ten percent or less of the adjusted revenue estimate of the 30 fiscal year may be included in the adjusted revenue estimate 31 for the following fiscal year if approved in a bill receiving 32 the affirmative votes of at least three-fifths of the whole 33 membership of each house of the General Assembly. For purposes 34 of this section, “surplus” means the cumulative excess of 35 -2- LSB 5453HH (6) 83 jp/sc 2/ 4

H.J.R. 2009 revenues and other financing sources over expenditures and 1 other financing uses for the general fund at the end of a 2 fiscal year. 3 7. The scope of the state general fund expenditure 4 limitation under subsection 3 shall not include federal funds, 5 donations, constitutionally dedicated moneys, and moneys in 6 expenditures from a state retirement system. 7 8. The Governor shall submit and the General Assembly shall 8 pass a budget which does not exceed the state general fund 9 expenditure limitation. The Governor shall not approve or 10 disapprove appropriation bills or items of appropriation bills 11 passed by the General Assembly in a manner that would cause 12 the final budget approved by the Governor to exceed the state 13 general fund expenditure limitation. 14 9. The Governor shall not submit and the General Assembly 15 shall not pass a budget which in order to balance assumes 16 reversion of any part of the total of the appropriations 17 included in the budget. 18 10. The state shall use consistent standards, in accordance 19 with generally accepted accounting principles, for all state 20 budgeting and accounting purposes. 21 11. The General Assembly shall enact laws to implement this 22 section. 23 Sec. 2. REFERRAL AND PUBLICATION. The foregoing proposed 24 amendment to the Constitution of the State of Iowa is referred 25 to the General Assembly to be chosen at the next general 26 election for members of the General Assembly and the Secretary 27 of State is directed to cause it to be published for three 28 consecutive months previous to the date of that election as 29 provided by law. 30 EXPLANATION 31 This resolution proposes an amendment to the Constitution of 32 the State of Iowa relating to state budgets. 33 The amendment establishes a state general fund expenditure 34 limitation. The amount of the limitation is 99 percent of the 35 -3- LSB 5453HH (6) 83 jp/sc 3/ 4

H.J.R. 2009 adjusted revenue estimate. The amendment defines adjusted 1 revenue estimate and requires that that estimate be determined 2 by a revenue estimating conference which is to be created by 3 the general assembly by law. The amendment requires that the 4 expenditure limitation be used by the governor in preparation 5 of the governor’s budget and by the general assembly in the 6 budget process. The governor is prohibited from approving or 7 disapproving of appropriations in a manner that would cause the 8 final budget approved by the governor to exceed the expenditure 9 limitation. 10 The amendment also provides that, if a new revenue source is 11 established and implemented, 95 percent of the estimate of that 12 new revenue shall be included in the expenditure limitation. 13 The amendment also requires that the amount of any surplus 14 which exceeds an amount equal to 10 percent of the adjusted 15 revenue estimate be included in the adjusted revenue estimate 16 for the following fiscal year. Any surplus which is equal 17 to 10 percent or less of the amount of the adjusted revenue 18 estimate may be included in the following year’s adjusted 19 revenue estimate if inclusion is approved in a bill by a 20 three-fifths majority of each house of the general assembly. 21 The amendment also requires the state to use generally accepted 22 accounting principles for state budgeting and accounting 23 purposes. The amendment provides that the general assembly 24 shall enact laws to implement the amendment. 25 The resolution, if adopted, will be referred to the next 26 general assembly. If the next general assembly adopts the 27 resolution, the amendment will be submitted to the voters for 28 ratification. 29 -4- LSB 5453HH (6) 83 jp/sc 4/ 4