Senate Study Bill 3199 - Introduced SENATE FILE _____ BY (PROPOSED COMMITTEE ON WAYS AND MEANS BILL BY CHAIRPERSON BOLKCOM) A BILL FOR An Act allowing school districts to use an income surtax to 1 raise cash reserves in addition to or instead of property 2 taxes and including effective date and applicability 3 provisions. 4 BE IT ENACTED BY THE GENERAL ASSEMBLY OF THE STATE OF IOWA: 5 TLSB 5450SC (1) 83 ak/sc

S.F. _____ Section 1. Section 257.31, subsection 15, Code Supplement 1 2009, is amended to read as follows: 2 15. Annually the school budget review committee shall 3 review the amount of property tax levied , and income surtax 4 collected, if applicable, by each school district for the cash 5 reserve authorized in section 298.10. If in the committee’s 6 judgment, the amount of a district’s cash reserve levy is 7 unreasonably high, the committee shall instruct the director 8 of the department of management to reduce that district’s tax 9 levy computed under section 257.4 for the following budget year 10 by the amount the cash reserve levy is deemed excessive. A 11 reduction in a district’s property tax levy for a budget year 12 under this subsection does not affect the district’s authorized 13 budget. 14 Sec. 2. Section 298.10, Code Supplement 2009, is amended to 15 read as follows: 16 298.10 Levy for cash reserve. 17 1. The board of directors of a school district may certify 18 for levy by April 15 of a school year, a cash reserve levy 19 consisting of a tax on all taxable property in the school 20 district , an income surtax, or a combination of property tax 21 and income surtax in order to raise an amount for a necessary 22 cash reserve for a school district’s general fund. The amount 23 raised for a necessary cash reserve does not increase a school 24 district’s authorized expenditures as defined in section 257.7. 25 2. For fiscal years beginning on or after July 1, 2012, the 26 cash reserve levy for a budget year shall not exceed twenty 27 percent of the general fund expenditures for the year previous 28 to the base year minus the general fund unexpended fund balance 29 for the year previous to the base year. 30 3. The income surtax, if an income surtax is imposed, shall 31 be imposed, collected, and paid to the school district in 32 the manner provided for the instructional support program in 33 sections 257.21 through 257.26. The income surtax portion of 34 the cash reserve levy is subject to the limitation in section 35 -1- LSB 5450SC (1) 83 ak/sc 1/ 3

S.F. _____ 298.14. 1 Sec. 3. Section 298.14, Code 2009, is amended to read as 2 follows: 3 298.14 School district income surtaxes. 4 1. For each fiscal year, the cumulative total of the 5 percents of surtax approved by the board of directors of a 6 school district and collected by the department of revenue 7 under sections 257.21, 257.29, and 298.2, and 298.10, and 8 the enrichment surtax under section 442.15, Code 1989, and 9 an income surtax collected by a political subdivision under 10 chapter 422D, shall not exceed twenty percent. 11 2. A school district income surtax fund is created in the 12 office of treasurer of state. Income surtaxes collected by the 13 department of revenue under sections 257.21, 257.29, and 298.2 , 14 and 298.10, and section 442.15, Code 1989, shall be deposited 15 in the school district income surtax fund to the credit of each 16 school district. A separate accounting of each surtax, by 17 school district, shall be maintained. 18 3. The director of the department of administrative 19 services shall draw warrants in payment of the surtaxes 20 collected in each school district. Warrants shall be payable 21 in two installments to be paid on approximately the first day 22 of December and the first day of February following collection 23 of the taxes and shall be delivered to the respective school 24 districts. 25 Sec. 4. EFFECTIVE UPON ENACTMENT AND APPLICABILITY. This 26 Act, being deemed of immediate importance, takes effect upon 27 enactment and applies to school budget years beginning on or 28 after July 1, 2010. 29 EXPLANATION 30 This bill allows school districts to use an income surtax 31 to raise cash reserves in addition to or instead of property 32 taxes. 33 The bill provides that the cash reserve income surtax 34 shall be collected and imposed in the same manner as the 35 -2- LSB 5450SC (1) 83 ak/sc 2/ 3

S.F. _____ instructional support income surtax. The income surtax 1 portion of the cash reserve levy is added to the list of income 2 surtaxes available to a school district’s board of directors, 3 the percentages of which, collectively, cannot exceed 20 4 percent. 5 The bill is effective upon enactment and applies to school 6 budget years beginning on or after July 1, 2010. 7 -3- LSB 5450SC (1) 83 ak/sc 3/ 3