SSB 3246 (LSB 6203XC (6) 83)

SENATE FILE _____

BY  (PROPOSED COMMITTEE ON APPROPRIATIONS BILL BY CHAIRPERSON DVORSKY)

A BILL FOR

An Act relating to the state expenditure limitations and related state budget requirements, making transfers and revising appropriations, and including applicability provisions.
BE IT ENACTED BY THE GENERAL ASSEMBLY OF THE STATE OF IOWA:

    Section 1.  Section 8.22A, Code 2009, is amended to read as follows:
   8.22A  Revenue estimating conference.
   1.  The state revenue estimating conference is created consisting of the governor or the governor’s designee, the director of the legislative services agency or the director’s designee, and a third member agreed to by the other two.
   2.  The conference shall meet as often as deemed necessary, but shall meet at least quarterly. The conference may use sources of information deemed appropriate.  At each meeting, the conference shall agree to estimates for both the current and succeeding fiscal years for the general fund of the state, lottery revenues to be available for disbursement, and from gambling revenues and from interest earned on the cash reserve fund and the economic emergency fund to be deposited in the rebuild Iowa infrastructure fund.
   3.  By For purposes of the state general fund expenditure limitation and other expenditure limitations under section 8.54, by December 15 of each fiscal year the conference shall agree to a revenue estimate revenue estimates for the amounts of moneys subject to an expenditure limitation under section 8.54 for the fiscal year beginning the following July 1. That The estimate amounts shall be used by the governor in the preparation of the budget message under section 8.22 and by the general assembly in the budget process. If the conference agrees to a different estimate at a later meeting which projects a greater amount of revenue than the initial estimate amount agreed to by December 15, the governor and the general assembly shall continue to use the initial estimate amount in the budget process for that fiscal year. However, if the conference agrees to a different estimate at a later meeting which projects a lesser amount of revenue than the initial estimate amount, the governor and the general assembly shall use the lesser amount in the budget process for that fiscal year. As used in this subsection, “later meeting” means only those later meetings which are held prior to the conclusion of the regular session of the general assembly and, if the general assembly holds an extraordinary session prior to the commencement of the fiscal year to which the estimate applies, those later meetings which are held before or during the extraordinary session.
   4.  At the meeting in which the conference agrees to the revenue estimate for the general fund of the state for the following fiscal year in accordance with the provisions of subsection 3, the conference shall agree to an estimate for tax refunds payable from that estimated revenue. The estimates required by this subsection shall be used in determining the adjusted revenue estimate under section 8.54.
   5.  At the meeting in which the conference agrees to the revenue estimate for the general fund of the state for the succeeding fiscal year in accordance with the provisions of subsection 3, the conference shall also agree to the following estimates which shall be used by the governor in preparation of the budget message under section 8.22 and the general assembly in the budget process for the succeeding fiscal year:
   a.  The amount of lottery revenues that will be deposited in the general fund for the following fiscal year to be available for disbursement following the deductions made pursuant to section 99G.39, subsection 1.  This estimate shall be included in the conference’s estimate of general fund revenues and shall be calculated as the sum of the following, divided by seven, as agreed to by the conference:
   (1)  The conference’s estimate of the amount of lottery revenues to be deposited in the general fund for the succeeding fiscal year.
   (2)  The conference’s estimate of the amount of lottery revenues to be deposited in the general fund for the current fiscal year.
   (3)  The actual amount of the lottery revenues deposited in the general fund for the five most recently completed fiscal years, adjusted for inflation through the close of the most recently completed fiscal year.
   b.  The amount of revenue for the following fiscal year from gambling revenues and from interest earned on the cash reserve fund and the economic emergency fund to be deposited in the rebuild Iowa infrastructure fund under section 8.57, subsection 6, paragraph “e”.
   c.  The amount of accruals of those revenues collected by or due from entities other than the state on or before June 30 of the fiscal year but not remitted to the state until after June 30.
   d.  The amount of accrued lottery revenues collected on or before June 30 of the fiscal year but not transferred to the general fund of the state until after June 30.
   6.  At the meeting in which the conference agrees to the revenue estimates for the succeeding fiscal year in accordance with subsection 3, the conference shall agree to the amount available in the cash reserve fund as of the close of the previous fiscal year that may be appropriated for nonrecurring emergency expenditures as provided in section 8.56, subsection 4.
    Sec. 2.  Section 8.31, subsection 5, Code 2009, is amended to read as follows:
   5.  If the governor determines that the estimated budget resources during the fiscal year are insufficient to pay all appropriations in full, the reductions shall be uniform and prorated between all departments, agencies, and establishments upon the basis of their respective appropriations.  However,

 this subsection is not applicable to the standing appropriations made for state aid to schools in chapter 257. The appropriations made in chapter 257 for a fiscal year shall only be subject to reduction by enactment of an amendment to the allowable growth amount established for that fiscal year in section 257.8 or by other enactment revising the amount of an appropriation made in chapter 257.
    Sec. 3.  Section 8.54, Code 2009, is amended to read as follows:
   8.54  General fund expenditure limitation and other expenditure limitations.
   1.  For the purposes of section 8.22A, this section, and sections 8.55 through 8.57:
   a.  “Adjusted revenue estimate” means the appropriate revenue estimate for the general fund for the following fiscal year as determined by the revenue estimating conference under section 8.22A, subsection 3, adjusted by subtracting estimated tax refunds payable from that estimated revenue, adding accruals determined in accordance with section 8.22A, subsection 5, and as determined by the conference, adding any new revenues which may be considered to be eligible for deposit in the general fund.
   b.  “Inflation” means the percentage change in the consumer price index for all urban consumers, midwest region, published by the United States department of labor, bureau of labor statistics.
   c.  “New revenues” means moneys which are received by the general fund of the state due to increased tax rates and fees or newly created taxes and fees over and above those moneys which are received due to state taxes and fees which are in effect as of January 1 following the December state revenue estimating conference. “New revenues” also includes moneys received by the general fund of the state due to new transfers over and above those moneys received by the general fund of the state due to transfers which are in effect as of January 1 following the December state revenue estimating conference. The department of management shall obtain concurrence from the revenue estimating conference on the eligibility of transfers to the general fund of the state which are to be considered as new revenue in determining the state general fund expenditure limitation.
   2.  a.  There is created a state general fund expenditure limitation for each fiscal year calculated as provided in this section.
   b.  There is created a gambling revenue expenditure limitation calculated as provided in this section. The limitation applies to revenues received by the state that are attributable to gambling and available for appropriation but are not credited to the general fund of state. The gambling revenue expenditure limitation does not include lottery revenue.
   c.  An expenditure limitation shall be used for the portion of the budget process commencing on the date the revenue estimating conference agrees to a revenue estimate for the following fiscal year in accordance with section 8.22A, subsection 3, and ending with the governor’s final approval or disapproval of the appropriations bills applicable to that fiscal year that were passed prior to July 1 of that fiscal year in a regular or extraordinary legislative session.
   3.  Except as otherwise provided in this section, the state general fund expenditure limitation for a fiscal year shall be ninety-nine percent of the adjusted revenue estimate. of the general fund average, as agreed to by the revenue estimating conference. The general fund average for a fiscal year is the sum of the following, divided by seven:
   a.  The adjusted revenue estimate for the succeeding fiscal year.
   b.  The revenue estimate for the current fiscal year, adjusted by subtracting estimated tax refunds payable from that estimated revenue and as determined by the conference, adding any new revenues which may be considered to be eligible for deposit in the general fund.
   c.  The net revenue for the general fund of the state for the five most recently completed fiscal years, adjusted by subtracting tax refunds paid from the revenue and adjusted for inflation through the close of the most recently completed fiscal year.
   4.  The gambling revenue expenditure limitation for a fiscal year shall be the sum of the following, divided by seven, as agreed to by the revenue estimating conference:
   a.  The gambling revenues estimate for the succeeding fiscal year.
   b.  The gambling revenues estimate for the current fiscal year.
   c.  The net gambling revenues for the five most recently completed fiscal years, adjusted for inflation through the close of the most recently completed fiscal year.
   4.  5.  The state general fund expenditure limitation amount and the gambling revenue expenditure limitation amount provided for in this section shall be used by the governor in the preparation of the budget under section 8.22 and approval of the budget and by the general assembly in the budget process. If a source for new revenues is proposed, the budget revenue projection used for that new revenue source for the period beginning on the effective date of the new revenue source and ending in the fiscal year in which the source is included in the revenue base shall be an amount determined by subtracting estimated tax refunds payable from the projected revenue from that new revenue source, multiplied by ninety-five percent. If a new revenue source is established and implemented that would affect an expenditure limitation amount, the original state general fund expenditure limitation amount provided for in subsection 3 shall be readjusted to include ninety-five percent of the estimated revenue from the new revenue source.
   5.  For fiscal years in which section 8.55, subsection 2, results in moneys being transferred to the general fund, the original state general fund expenditure limitation amount provided for in subsection 3 shall be readjusted to include the moneys which are so transferred.
   6.  The scope of the expenditure limitation limitations

 under subsection 3 this section shall not encompass federal funds, donations, constitutionally dedicated moneys, moneys appropriated from the cash reserve fund, Iowa economic emergency fund, or nonrecurring expenditure fund, and moneys in expenditures from state retirement system moneys.
   7.  The governor shall transmit to the general assembly, in accordance with section 8.21, a budget which does not exceed the state general fund expenditure limitation expenditure limitations under this section. The general assembly shall pass a budget which does not exceed the state general fund expenditure limitation expenditure limitations. The governor shall not transmit a budget with recommended appropriations in excess of the state general fund expenditure limitation expenditure limitations and the general assembly shall not pass a budget with appropriations in excess of the state general fund expenditure limitation expenditure limitations. The governor shall not approve or disapprove appropriation bills or items of appropriation bills passed by the general assembly in a manner that would cause the final budget approved by the governor to exceed the state general fund expenditure limitation expenditure limitations. In complying with the requirements of this subsection, the governor and the general assembly shall not rely on any anticipated reversion of appropriations in order to meet the state general fund any expenditure limitation.
    Sec. 4.  Section 8.55, subsection 2, paragraph a, Code 2009, is amended to read as follows:
   a.  The maximum balance of the fund is the amount equal to two and one-half percent of the adjusted revenue estimate for the fiscal year. If the amount of moneys in the Iowa economic emergency fund is equal to the maximum balance, moneys in excess of this amount shall be transferred to the general fund nonrecurring expenditures fund.
    Sec. 5.  Section 8.56, subsections 2 and 3, Code 2009, are amended to read as follows:
   2.  a.  Moneys shall be credited to the cash reserve fund from all of the following:
   (1)  Appropriations made to the fund pursuant to section 8.57.
   (2)  The state’s share of the proceeds under chapter 809A.
   (3)  Moneys collected in the settlement or prosecution of a claim by the state that are not otherwise specifically allocated in accordance with law to another fund.
   (4)  Other moneys designated by law or by the executive council as one-time revenues and which are not otherwise specifically allocated by law to another fund.
   b.  The maximum balance of the cash reserve fund is the amount equal to the cash reserve goal percentage, as defined in section 8.57, multiplied by the adjusted revenue estimate for the general fund of the state for the current fiscal year.
   3.  The moneys in the cash reserve fund shall only be used pursuant to an appropriation made by the general assembly. An Except as provided in subsection 5, an appropriation shall be made in accordance with subsection 4 from the cash reserve fund only for the fiscal year in which the appropriation is made. The moneys shall only be appropriated by the general assembly for nonrecurring emergency expenditures and shall not be appropriated for payment of any collective bargaining agreement or arbitrator’s decision negotiated or awarded under chapter 20. Except as provided in section 8.58, the cash reserve fund shall be considered a special account for the purposes of section 8.53 in determining the cash position of the general fund of the state for the payment of state obligations.
    Sec. 6.  Section 8.56, Code 2009, is amended by adding the following new subsection:
   NEW SUBSECTION.  5.  If the adjusted revenue estimate for the succeeding fiscal year is less than ninety-eight percent of the general fund average for that fiscal year under section 8.54, subsection 3, an appropriation for nonrecurring emergency expenditures from the cash reserve fund may be made to provide additional funding for the succeeding fiscal year. However, the amount of such appropriation shall not exceed the difference of ninety-eight percent of such general fund average minus the adjusted revenue estimate for the succeeding fiscal year. The amount of such appropriation shall not exceed twenty-five percent of the ending balance in the cash reserve fund in the most recently completed fiscal year.
    Sec. 7.  NEW SECTION.  8.57E  Nonrecurring expenditure fund.
   1.  A nonrecurring expenditure fund is created under the authority of the department of management. The fund shall consist of appropriations made to the fund and transfers of interest, earnings, and moneys from other funds as provided by the law. The fund shall be separate from the general fund of the state and the balance in the fund shall not be considered part of the balance of the general fund of the state. However, the fund shall be considered a special account for the purposes of section 8.53, relating to generally accepted accounting principles.
   2.  Notwithstanding section 12C.7, subsection 2, interest or earnings on moneys in the fund shall be credited to the fund.
   3.  For the purposes of this section, unless the context otherwise requires:
   a.  “Vertical infrastructure” includes only land acquisition and construction, major renovation, and major repair of buildings or facilities, all appurtenant structures, utilities, and site development. “Vertical infrastructure” does not include routine, recurring maintenance, debt service, or operational expenses or leasing of a building, appurtenant structure, or utility without a lease-purchase agreement.
   b.  “State debt” includes any payment for principal, interest, a sinking fund, purchase price, a redemption premium, or an interest rate exchange on bonds issued and sold by the state.
   4.  Moneys in the nonrecurring expenditure fund shall only be appropriated for vertical infrastructure, payment of state debt, tax rebates, maintenance or construction of roads and highways, including bridges, and grants or cost share to establish soil and water conservation practices. Moneys in the fund shall not be appropriated for the costs of any state employee full-time equivalent position, as defined in section 8.36A, or related costs.
    Sec. 8.  Section 8.58, Code 2009, is amended to read as follows:
   8.58  Exemption from automatic application.
   1.  To the extent that moneys appropriated under section 8.57 do not result in moneys being credited to the general fund under section 8.55, subsection 2, moneys Moneys appropriated under section 8.57 and moneys contained in the cash reserve fund, rebuild Iowa infrastructure fund, environment first fund, nonrecurring expenditure fund, and Iowa economic emergency fund shall not be considered in the application of any formula, index, or other statutory triggering mechanism which would affect appropriations, payments, or taxation rates, contrary provisions of the Code notwithstanding.
   2.  To the extent that moneys appropriated under section 8.57 do not result in moneys being credited to the general fund under section 8.55, subsection 2, moneys Moneys appropriated under section 8.57 and moneys contained in the cash reserve fund, rebuild Iowa infrastructure fund, environment first fund, nonrecurring expenditure fund, and Iowa economic emergency fund shall not be considered by an arbitrator or in negotiations under chapter 20.
    Sec. 9.  Section 809A.17, subsection 3, Code 2009, is amended to read as follows:
   3.  The state share of the cash proceeds from forfeited property shall be credited to the cash reserve fund.  Forfeited property that is not cash or sold may be used by the department of justice in the enforcement of the criminal law. The department may give, sell, or trade forfeited property that is not cash or sold to any other state agency or to any other law enforcement agency within the state if, in the opinion of the attorney general, it the forfeited property will enhance law enforcement within the state.
    Sec. 10.  APPLICABILITY.  This Act applies beginning July 1, 2010, for the budget process for the succeeding fiscal year.
EXPLANATION
   This bill relates to the state general fund expenditure limitation and related state budget requirements.
   Code section 8.22A, relating to the state revenue estimating conference, is amended to require the conference to provide estimates for the current and succeeding fiscal year at each meeting. The conference’s estimate of the lottery revenues credited to the general fund for purposes of the estimate used in developing the state general fund expenditure limitation is revised to require the use of an adjusted seven year average. New duties are added to conform with other provisions in the bill.
   The portion of Code section 8.31, relating to the authority of the governor to order uniform reductions in appropriation allocations in the event budget resources are estimated to be insufficient, is amended to exempt from that authority the standing appropriations made for state aid to schools under Code chapter 257. The bill provides that the school aid appropriations are only subject to reduction by enactment of an amendment to the allowable growth amount established for that fiscal year in Code section 257.8 or by other enactment revising the amount of a standing appropriation in Code chapter 257.
   Code section 8.54, relating to the state general fund expenditure limitation, is amended in several ways. The list of adjustments in the term “adjusted revenue estimate” augmented to include revenue accruals identified by the revenue estimating conference. The term “inflation” is defined to mean the percentage change in the consumer price index for all urban consumers, midwest region, published by the United States department of labor, bureau of labor statistics. The bill provides that period of inflation addressed is through the close of the most recently completed fiscal year.
   A gambling revenue expenditure limitation is established for the revenues received by the state that are attributable to gambling and available for appropriation but are not credited to the general fund of state. The gambling revenue expenditure limitation does not include lottery revenue. Requirements of the governor and general assembly in the budget and appropriations process are made applicable to the gambling revenue expenditure limitation.
   Under current law, the state general fund expenditure limitation is 99 percent of the adjusted revenue estimate for the succeeding fiscal year. This one-year approach is replaced to utilize an average seven-year period, consisting of net revenues for the current and succeeding fiscal years, plus the net revenues for the five most recently completed fiscal years, as adjusted for inflation, divided by seven.
   Code section 8.55, relating to the Iowa economic emergency fund, is amended to provide that, once the fund reaches its maximum balance, the excess revenues are credited to the nonrecurring expenditure fund created in the bill instead of the general fund.
   Code section 8.56, relating to the cash reserve fund, is amended in several ways. A new listing of funding sources for the fund is added. In addition to the current ending balance and other appropriations in Code section 8.57, the fund is to receive the state’s share of proceeds under the forfeiture law in Code chapter 809A, moneys collected in the settlement or prosecution of a claim by the state that are not otherwise allocated, and other moneys designated by law or by the executive council as one-time revenues.
   Under current law, appropriations from the cash reserve fund are only authorized for emergency nonrecurring expenditures to be made for the same fiscal year in which the appropriation is made. The bill authorizes an appropriation for such expenditures for the succeeding fiscal year when a revenue reduction is anticipated for that exceeds a threshold specified in the bill. The amount of such an appropriation is subject to various limitations. 
   New Code section 8.57E creates a new nonrecurring expenditure fund under the department of management. Appropriations from the fund are limited to vertical infrastructure and payment of state debt, as these terms are defined by the bill, tax rebates, maintenance or construction of roads and highways, including bridges, and grants or cost share to establish soil and water conservation practices. Appropriations cannot be used for state employee full-time equivalent positions, as this term is defined in Code section 8.26A, or related costs.
   Code section 8.58, which exempts consideration of the balances in the cash reserve fund and other enumerated reserve funds that are separate from the general fund for various formulas, triggering mechanisms, and collective bargaining consideration, is amended to include the nonrecurring expenditure fund in the exemption.
   Code section 809A.17, relating to allocation of forfeited property, is amended to provide that cash proceeds are credited to the cash reserve fund.
   An applicability section provides that the changes made in the bill are effective beginning July 1, 2010, for the budget process for the succeeding fiscal year.