S.F. _____ Section 1. Section 8.22A, Code 2009, is amended to read as 1 follows: 2 8.22A Revenue estimating conference. 3 1. The state revenue estimating conference is created 4 consisting of the governor or the governor’s designee, the 5 director of the legislative services agency or the director’s 6 designee, and a third member agreed to by the other two. 7 2. The conference shall meet as often as deemed necessary, 8 but shall meet at least quarterly. The conference may use 9 sources of information deemed appropriate. At each meeting, 10 the conference shall agree to estimates for both the current 11 and succeeding fiscal years for the general fund of the state, 12 lottery revenues to be available for disbursement, and from 13 gambling revenues and from interest earned on the cash reserve 14 fund and the economic emergency fund to be deposited in the 15 rebuild Iowa infrastructure fund. 16 3. By For purposes of the state general fund expenditure 17 limitation and other expenditure limitations under section 18 8.54, by December 15 of each fiscal year the conference 19 shall agree to a revenue estimate revenue estimates for the 20 amounts of moneys subject to an expenditure limitation under 21 section 8.54 for the fiscal year beginning the following July 22 1. That The estimate amounts shall be used by the governor 23 in the preparation of the budget message under section 8.22 24 and by the general assembly in the budget process. If the 25 conference agrees to a different estimate at a later meeting 26 which projects a greater amount of revenue than the initial 27 estimate amount agreed to by December 15, the governor and the 28 general assembly shall continue to use the initial estimate 29 amount in the budget process for that fiscal year. However, 30 if the conference agrees to a different estimate at a later 31 meeting which projects a lesser amount of revenue than the 32 initial estimate amount, the governor and the general assembly 33 shall use the lesser amount in the budget process for that 34 fiscal year. As used in this subsection, “later meeting” 35 -1- LSB 6203XC (6) 83 jp/mg 1/ 13

S.F. _____ means only those later meetings which are held prior to the 1 conclusion of the regular session of the general assembly and, 2 if the general assembly holds an extraordinary session prior 3 to the commencement of the fiscal year to which the estimate 4 applies, those later meetings which are held before or during 5 the extraordinary session. 6 4. At the meeting in which the conference agrees to the 7 revenue estimate for the general fund of the state for the 8 following fiscal year in accordance with the provisions of 9 subsection 3, the conference shall agree to an estimate for tax 10 refunds payable from that estimated revenue. The estimates 11 required by this subsection shall be used in determining the 12 adjusted revenue estimate under section 8.54. 13 5. At the meeting in which the conference agrees to the 14 revenue estimate for the general fund of the state for the 15 succeeding fiscal year in accordance with the provisions of 16 subsection 3, the conference shall also agree to the following 17 estimates which shall be used by the governor in preparation of 18 the budget message under section 8.22 and the general assembly 19 in the budget process for the succeeding fiscal year: 20 a. The amount of lottery revenues that will be deposited in 21 the general fund for the following fiscal year to be available 22 for disbursement following the deductions made pursuant to 23 section 99G.39, subsection 1. This estimate shall be included 24 in the conference’s estimate of general fund revenues and shall 25 be calculated as the sum of the following, divided by seven, 26 as agreed to by the conference: 27 (1) The conference’s estimate of the amount of lottery 28 revenues to be deposited in the general fund for the succeeding 29 fiscal year. 30 (2) The conference’s estimate of the amount of lottery 31 revenues to be deposited in the general fund for the current 32 fiscal year. 33 (3) The actual amount of the lottery revenues deposited in 34 the general fund for the five most recently completed fiscal 35 -2- LSB 6203XC (6) 83 jp/mg 2/ 13

S.F. _____ years, adjusted for inflation through the close of the most 1 recently completed fiscal year. 2 b. The amount of revenue for the following fiscal year from 3 gambling revenues and from interest earned on the cash reserve 4 fund and the economic emergency fund to be deposited in the 5 rebuild Iowa infrastructure fund under section 8.57, subsection 6 6, paragraph “e” . 7 c. The amount of accruals of those revenues collected by or 8 due from entities other than the state on or before June 30 of 9 the fiscal year but not remitted to the state until after June 10 30. 11 d. The amount of accrued lottery revenues collected on or 12 before June 30 of the fiscal year but not transferred to the 13 general fund of the state until after June 30. 14 6. At the meeting in which the conference agrees to the 15 revenue estimates for the succeeding fiscal year in accordance 16 with subsection 3, the conference shall agree to the amount 17 available in the cash reserve fund as of the close of the 18 previous fiscal year that may be appropriated for nonrecurring 19 emergency expenditures as provided in section 8.56, subsection 20 4. 21 Sec. 2. Section 8.31, subsection 5, Code 2009, is amended 22 to read as follows: 23 5. If the governor determines that the estimated budget 24 resources during the fiscal year are insufficient to pay all 25 appropriations in full, the reductions shall be uniform and 26 prorated between all departments, agencies, and establishments 27 upon the basis of their respective appropriations. However, 28 this subsection is not applicable to the standing 29 appropriations made for state aid to schools in chapter 257. 30 The appropriations made in chapter 257 for a fiscal year shall 31 only be subject to reduction by enactment of an amendment to 32 the allowable growth amount established for that fiscal year in 33 section 257.8 or by other enactment revising the amount of an 34 appropriation made in chapter 257. 35 -3- LSB 6203XC (6) 83 jp/mg 3/ 13

S.F. _____ Sec. 3. Section 8.54, Code 2009, is amended to read as 1 follows: 2 8.54 General fund expenditure limitation and other 3 expenditure limitations . 4 1. For the purposes of section 8.22A, this section, and 5 sections 8.55 through 8.57: 6 a. “Adjusted revenue estimate” means the appropriate revenue 7 estimate for the general fund for the following fiscal year as 8 determined by the revenue estimating conference under section 9 8.22A, subsection 3, adjusted by subtracting estimated tax 10 refunds payable from that estimated revenue , adding accruals 11 determined in accordance with section 8.22A, subsection 5, and 12 as determined by the conference, adding any new revenues which 13 may be considered to be eligible for deposit in the general 14 fund. 15 b. “Inflation” means the percentage change in the consumer 16 price index for all urban consumers, midwest region, published 17 by the United States department of labor, bureau of labor 18 statistics. 19 c. “New revenues” means moneys which are received by the 20 general fund of the state due to increased tax rates and fees 21 or newly created taxes and fees over and above those moneys 22 which are received due to state taxes and fees which are in 23 effect as of January 1 following the December state revenue 24 estimating conference. “New revenues” also includes moneys 25 received by the general fund of the state due to new transfers 26 over and above those moneys received by the general fund of 27 the state due to transfers which are in effect as of January 28 1 following the December state revenue estimating conference. 29 The department of management shall obtain concurrence from the 30 revenue estimating conference on the eligibility of transfers 31 to the general fund of the state which are to be considered as 32 new revenue in determining the state general fund expenditure 33 limitation. 34 2. a. There is created a state general fund expenditure 35 -4- LSB 6203XC (6) 83 jp/mg 4/ 13

S.F. _____ limitation for each fiscal year calculated as provided in this 1 section. 2 b. There is created a gambling revenue expenditure 3 limitation calculated as provided in this section. The 4 limitation applies to revenues received by the state that are 5 attributable to gambling and available for appropriation but 6 are not credited to the general fund of state. The gambling 7 revenue expenditure limitation does not include lottery 8 revenue. 9 c. An expenditure limitation shall be used for the portion 10 of the budget process commencing on the date the revenue 11 estimating conference agrees to a revenue estimate for the 12 following fiscal year in accordance with section 8.22A, 13 subsection 3, and ending with the governor’s final approval 14 or disapproval of the appropriations bills applicable to that 15 fiscal year that were passed prior to July 1 of that fiscal 16 year in a regular or extraordinary legislative session. 17 3. Except as otherwise provided in this section, the state 18 general fund expenditure limitation for a fiscal year shall be 19 ninety-nine percent of the adjusted revenue estimate. of the 20 general fund average, as agreed to by the revenue estimating 21 conference. The general fund average for a fiscal year is the 22 sum of the following, divided by seven: 23 a. The adjusted revenue estimate for the succeeding fiscal 24 year. 25 b. The revenue estimate for the current fiscal year, 26 adjusted by subtracting estimated tax refunds payable from that 27 estimated revenue and as determined by the conference, adding 28 any new revenues which may be considered to be eligible for 29 deposit in the general fund. 30 c. The net revenue for the general fund of the state for 31 the five most recently completed fiscal years, adjusted by 32 subtracting tax refunds paid from the revenue and adjusted for 33 inflation through the close of the most recently completed 34 fiscal year. 35 -5- LSB 6203XC (6) 83 jp/mg 5/ 13

S.F. _____ 4. The gambling revenue expenditure limitation for a fiscal 1 year shall be the sum of the following, divided by seven, as 2 agreed to by the revenue estimating conference: 3 a. The gambling revenues estimate for the succeeding fiscal 4 year. 5 b. The gambling revenues estimate for the current fiscal 6 year. 7 c. The net gambling revenues for the five most recently 8 completed fiscal years, adjusted for inflation through the 9 close of the most recently completed fiscal year. 10 4. 5. The state general fund expenditure limitation amount 11 and the gambling revenue expenditure limitation amount provided 12 for in this section shall be used by the governor in the 13 preparation of the budget under section 8.22 and approval of 14 the budget and by the general assembly in the budget process. 15 If a source for new revenues is proposed, the budget revenue 16 projection used for that new revenue source for the period 17 beginning on the effective date of the new revenue source and 18 ending in the fiscal year in which the source is included in 19 the revenue base shall be an amount determined by subtracting 20 estimated tax refunds payable from the projected revenue from 21 that new revenue source, multiplied by ninety-five percent. If 22 a new revenue source is established and implemented that would 23 affect an expenditure limitation amount , the original state 24 general fund expenditure limitation amount provided for in 25 subsection 3 shall be readjusted to include ninety-five percent 26 of the estimated revenue from the new revenue source. 27 5. For fiscal years in which section 8.55, subsection 2 , 28 results in moneys being transferred to the general fund, the 29 original state general fund expenditure limitation amount 30 provided for in subsection 3 shall be readjusted to include the 31 moneys which are so transferred. 32 6. The scope of the expenditure limitation limitations 33 under subsection 3 this section shall not encompass federal 34 funds, donations, constitutionally dedicated moneys, moneys 35 -6- LSB 6203XC (6) 83 jp/mg 6/ 13

S.F. _____ appropriated from the cash reserve fund, Iowa economic 1 emergency fund, or nonrecurring expenditure fund, and moneys in 2 expenditures from state retirement system moneys. 3 7. The governor shall transmit to the general assembly, in 4 accordance with section 8.21, a budget which does not exceed 5 the state general fund expenditure limitation expenditure 6 limitations under this section . The general assembly 7 shall pass a budget which does not exceed the state general 8 fund expenditure limitation expenditure limitations . The 9 governor shall not transmit a budget with recommended 10 appropriations in excess of the state general fund expenditure 11 limitation expenditure limitations and the general assembly 12 shall not pass a budget with appropriations in excess of 13 the state general fund expenditure limitation expenditure 14 limitations . The governor shall not approve or disapprove 15 appropriation bills or items of appropriation bills passed 16 by the general assembly in a manner that would cause the 17 final budget approved by the governor to exceed the state 18 general fund expenditure limitation expenditure limitations . 19 In complying with the requirements of this subsection, the 20 governor and the general assembly shall not rely on any 21 anticipated reversion of appropriations in order to meet the 22 state general fund any expenditure limitation. 23 Sec. 4. Section 8.55, subsection 2, paragraph a, Code 2009, 24 is amended to read as follows: 25 a. The maximum balance of the fund is the amount equal 26 to two and one-half percent of the adjusted revenue estimate 27 for the fiscal year. If the amount of moneys in the Iowa 28 economic emergency fund is equal to the maximum balance, moneys 29 in excess of this amount shall be transferred to the general 30 fund nonrecurring expenditures fund . 31 Sec. 5. Section 8.56, subsections 2 and 3, Code 2009, are 32 amended to read as follows: 33 2. a. Moneys shall be credited to the cash reserve fund 34 from all of the following: 35 -7- LSB 6203XC (6) 83 jp/mg 7/ 13

S.F. _____ (1) Appropriations made to the fund pursuant to section 1 8.57. 2 (2) The state’s share of the proceeds under chapter 809A. 3 (3) Moneys collected in the settlement or prosecution 4 of a claim by the state that are not otherwise specifically 5 allocated in accordance with law to another fund. 6 (4) Other moneys designated by law or by the executive 7 council as one-time revenues and which are not otherwise 8 specifically allocated by law to another fund. 9 b. The maximum balance of the cash reserve fund is the 10 amount equal to the cash reserve goal percentage, as defined in 11 section 8.57, multiplied by the adjusted revenue estimate for 12 the general fund of the state for the current fiscal year. 13 3. The moneys in the cash reserve fund shall only be used 14 pursuant to an appropriation made by the general assembly. 15 An Except as provided in subsection 5, an appropriation shall 16 be made in accordance with subsection 4 from the cash reserve 17 fund only for the fiscal year in which the appropriation is 18 made. The moneys shall only be appropriated by the general 19 assembly for nonrecurring emergency expenditures and shall 20 not be appropriated for payment of any collective bargaining 21 agreement or arbitrator’s decision negotiated or awarded under 22 chapter 20. Except as provided in section 8.58, the cash 23 reserve fund shall be considered a special account for the 24 purposes of section 8.53 in determining the cash position 25 of the general fund of the state for the payment of state 26 obligations. 27 Sec. 6. Section 8.56, Code 2009, is amended by adding the 28 following new subsection: 29 NEW SUBSECTION . 5. If the adjusted revenue estimate 30 for the succeeding fiscal year is less than ninety-eight 31 percent of the general fund average for that fiscal year under 32 section 8.54, subsection 3, an appropriation for nonrecurring 33 emergency expenditures from the cash reserve fund may be made 34 to provide additional funding for the succeeding fiscal year. 35 -8- LSB 6203XC (6) 83 jp/mg 8/ 13

S.F. _____ However, the amount of such appropriation shall not exceed 1 the difference of ninety-eight percent of such general fund 2 average minus the adjusted revenue estimate for the succeeding 3 fiscal year. The amount of such appropriation shall not exceed 4 twenty-five percent of the ending balance in the cash reserve 5 fund in the most recently completed fiscal year. 6 Sec. 7. NEW SECTION . 8.57E Nonrecurring expenditure fund. 7 1. A nonrecurring expenditure fund is created under the 8 authority of the department of management. The fund shall 9 consist of appropriations made to the fund and transfers of 10 interest, earnings, and moneys from other funds as provided by 11 the law. The fund shall be separate from the general fund of 12 the state and the balance in the fund shall not be considered 13 part of the balance of the general fund of the state. However, 14 the fund shall be considered a special account for the purposes 15 of section 8.53, relating to generally accepted accounting 16 principles. 17 2. Notwithstanding section 12C.7, subsection 2, interest or 18 earnings on moneys in the fund shall be credited to the fund. 19 3. For the purposes of this section, unless the context 20 otherwise requires: 21 a. “Vertical infrastructure” includes only land acquisition 22 and construction, major renovation, and major repair of 23 buildings or facilities, all appurtenant structures, utilities, 24 and site development. “Vertical infrastructure” does not 25 include routine, recurring maintenance, debt service, or 26 operational expenses or leasing of a building, appurtenant 27 structure, or utility without a lease-purchase agreement. 28 b. “State debt” includes any payment for principal, 29 interest, a sinking fund, purchase price, a redemption premium, 30 or an interest rate exchange on bonds issued and sold by the 31 state. 32 4. Moneys in the nonrecurring expenditure fund shall 33 only be appropriated for vertical infrastructure, payment of 34 state debt, tax rebates, maintenance or construction of roads 35 -9- LSB 6203XC (6) 83 jp/mg 9/ 13

S.F. _____ and highways, including bridges, and grants or cost share to 1 establish soil and water conservation practices. Moneys in 2 the fund shall not be appropriated for the costs of any state 3 employee full-time equivalent position, as defined in section 4 8.36A, or related costs. 5 Sec. 8. Section 8.58, Code 2009, is amended to read as 6 follows: 7 8.58 Exemption from automatic application. 8 1. To the extent that moneys appropriated under section 9 8.57 do not result in moneys being credited to the general fund 10 under section 8.55, subsection 2 , moneys Moneys appropriated 11 under section 8.57 and moneys contained in the cash reserve 12 fund, rebuild Iowa infrastructure fund, environment first fund, 13 nonrecurring expenditure fund, and Iowa economic emergency fund 14 shall not be considered in the application of any formula, 15 index, or other statutory triggering mechanism which would 16 affect appropriations, payments, or taxation rates, contrary 17 provisions of the Code notwithstanding. 18 2. To the extent that moneys appropriated under section 19 8.57 do not result in moneys being credited to the general fund 20 under section 8.55, subsection 2 , moneys Moneys appropriated 21 under section 8.57 and moneys contained in the cash reserve 22 fund, rebuild Iowa infrastructure fund, environment first fund, 23 nonrecurring expenditure fund, and Iowa economic emergency fund 24 shall not be considered by an arbitrator or in negotiations 25 under chapter 20. 26 Sec. 9. Section 809A.17, subsection 3, Code 2009, is amended 27 to read as follows: 28 3. The state share of the cash proceeds from forfeited 29 property shall be credited to the cash reserve fund. Forfeited 30 property that is not cash or sold may be used by the department 31 of justice in the enforcement of the criminal law. The 32 department may give, sell, or trade forfeited property that is 33 not cash or sold to any other state agency or to any other law 34 enforcement agency within the state if, in the opinion of the 35 -10- LSB 6203XC (6) 83 jp/mg 10/ 13

S.F. _____ attorney general, it the forfeited property will enhance law 1 enforcement within the state. 2 Sec. 10. APPLICABILITY. This Act applies beginning July 1, 3 2010, for the budget process for the succeeding fiscal year. 4 EXPLANATION 5 This bill relates to the state general fund expenditure 6 limitation and related state budget requirements. 7 Code section 8.22A, relating to the state revenue estimating 8 conference, is amended to require the conference to provide 9 estimates for the current and succeeding fiscal year at each 10 meeting. The conference’s estimate of the lottery revenues 11 credited to the general fund for purposes of the estimate used 12 in developing the state general fund expenditure limitation is 13 revised to require the use of an adjusted seven year average. 14 New duties are added to conform with other provisions in the 15 bill. 16 The portion of Code section 8.31, relating to the authority 17 of the governor to order uniform reductions in appropriation 18 allocations in the event budget resources are estimated to 19 be insufficient, is amended to exempt from that authority 20 the standing appropriations made for state aid to schools 21 under Code chapter 257. The bill provides that the school aid 22 appropriations are only subject to reduction by enactment of 23 an amendment to the allowable growth amount established for 24 that fiscal year in Code section 257.8 or by other enactment 25 revising the amount of a standing appropriation in Code chapter 26 257. 27 Code section 8.54, relating to the state general fund 28 expenditure limitation, is amended in several ways. The 29 list of adjustments in the term “adjusted revenue estimate” 30 augmented to include revenue accruals identified by the revenue 31 estimating conference. The term “inflation” is defined to 32 mean the percentage change in the consumer price index for 33 all urban consumers, midwest region, published by the United 34 States department of labor, bureau of labor statistics. The 35 -11- LSB 6203XC (6) 83 jp/mg 11/ 13

S.F. _____ bill provides that period of inflation addressed is through the 1 close of the most recently completed fiscal year. 2 A gambling revenue expenditure limitation is established 3 for the revenues received by the state that are attributable 4 to gambling and available for appropriation but are not 5 credited to the general fund of state. The gambling revenue 6 expenditure limitation does not include lottery revenue. 7 Requirements of the governor and general assembly in the budget 8 and appropriations process are made applicable to the gambling 9 revenue expenditure limitation. 10 Under current law, the state general fund expenditure 11 limitation is 99 percent of the adjusted revenue estimate for 12 the succeeding fiscal year. This one-year approach is replaced 13 to utilize an average seven-year period, consisting of net 14 revenues for the current and succeeding fiscal years, plus the 15 net revenues for the five most recently completed fiscal years, 16 as adjusted for inflation, divided by seven. 17 Code section 8.55, relating to the Iowa economic emergency 18 fund, is amended to provide that, once the fund reaches its 19 maximum balance, the excess revenues are credited to the 20 nonrecurring expenditure fund created in the bill instead of 21 the general fund. 22 Code section 8.56, relating to the cash reserve fund, is 23 amended in several ways. A new listing of funding sources 24 for the fund is added. In addition to the current ending 25 balance and other appropriations in Code section 8.57, the 26 fund is to receive the state’s share of proceeds under the 27 forfeiture law in Code chapter 809A, moneys collected in the 28 settlement or prosecution of a claim by the state that are not 29 otherwise allocated, and other moneys designated by law or by 30 the executive council as one-time revenues. 31 Under current law, appropriations from the cash reserve fund 32 are only authorized for emergency nonrecurring expenditures to 33 be made for the same fiscal year in which the appropriation 34 is made. The bill authorizes an appropriation for such 35 -12- LSB 6203XC (6) 83 jp/mg 12/ 13

S.F. _____ expenditures for the succeeding fiscal year when a revenue 1 reduction is anticipated for that exceeds a threshold specified 2 in the bill. The amount of such an appropriation is subject to 3 various limitations. 4 New Code section 8.57E creates a new nonrecurring 5 expenditure fund under the department of management. 6 Appropriations from the fund are limited to vertical 7 infrastructure and payment of state debt, as these terms are 8 defined by the bill, tax rebates, maintenance or construction 9 of roads and highways, including bridges, and grants or cost 10 share to establish soil and water conservation practices. 11 Appropriations cannot be used for state employee full-time 12 equivalent positions, as this term is defined in Code section 13 8.26A, or related costs. 14 Code section 8.58, which exempts consideration of the 15 balances in the cash reserve fund and other enumerated reserve 16 funds that are separate from the general fund for various 17 formulas, triggering mechanisms, and collective bargaining 18 consideration, is amended to include the nonrecurring 19 expenditure fund in the exemption. 20 Code section 809A.17, relating to allocation of forfeited 21 property, is amended to provide that cash proceeds are credited 22 to the cash reserve fund. 23 An applicability section provides that the changes made in 24 the bill are effective beginning July 1, 2010, for the budget 25 process for the succeeding fiscal year. 26 -13- LSB 6203XC (6) 83 jp/mg 13/ 13