House Joint Resolution 2006 - Introduced HOUSE JOINT RESOLUTION 2006 BY PAULSEN , UPMEYER , ALONS , ANDERSON , ARNOLD , BALTIMORE , BAUDLER , BRANDENBURG , BYRNES , CHAMBERS , COWNIE , DE BOEF , DEYOE , DOLECHECK , DRAKE , FORRISTALL , FRY , GARRETT , GRASSLEY , HAGENOW , HAGER , HANUSA , HEATON , HEIN , HELLAND , HORBACH , HUSEMAN , IVERSON , JORGENSEN , KAUFMANN , KLEIN , KOESTER , LOFGREN , LUKAN , MASSIE , L. MILLER , MOORE , S. OLSON , PAUSTIAN , PEARSON , PETTENGILL , RAECKER , RASMUSSEN , RAYHONS , ROGERS , SANDS , SCHULTE , SCHULTZ , SHAW , J. SMITH , SODERBERG , SWEENEY , J. TAYLOR , TJEPKES , VAN ENGELENHOVEN , VANDER LINDEN , WAGNER , WATTS , WINDSCHITL , and WORTHAN HOUSE JOINT RESOLUTION A Joint Resolution proposing amendments to the Constitution of 1 the State of Iowa relating to state budgeting by creating a 2 state general fund expenditure limitation, providing for a 3 taxpayers relief fund, requiring authorization for certain 4 bonds, and restricting certain state revenue changes. 5 BE IT RESOLVED BY THE GENERAL ASSEMBLY OF THE STATE OF IOWA: 6 TLSB 5334YH (10) 84 jp/sc

H.J.R. 2006 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 5334YH (10) 84 jp/sc 1/ 7

H.J.R. 2006 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 d. “Surplus” means the cumulative excess of revenues and 5 other financing sources over expenditures and other financing 6 uses for the general fund at the end of a fiscal year. 7 2. A state general fund expenditure limitation is created 8 and calculated in subsection 3, for each fiscal year beginning 9 on or after July 1 following the effective date of this 10 section. 11 3. Except as otherwise provided in this section, the state 12 general fund expenditure limitation for a fiscal year shall be 13 ninety-nine percent of the adjusted revenue estimate. 14 4. The state general fund expenditure limitation shall be 15 used by the governor in the preparation and approval of the 16 budget and by the general assembly in the budget process. 17 5. If a new revenue source is proposed, the budget revenue 18 projection used for that new revenue source for the period 19 beginning on the effective date of the new revenue source and 20 ending in the fiscal year in which the source is included in 21 the adjusted revenue estimate shall be ninety-five percent 22 of the amount remaining after subtracting estimated refunds 23 payable from the projected revenue from that source. If a new 24 revenue source is established and implemented, the original 25 state general fund expenditure limitation amount provided for 26 in subsection 3 shall be readjusted to include ninety-five 27 percent of the estimated revenue from that source. 28 6. a. (1) If there is a surplus existing at the end of a 29 fiscal year which exceeds ten percent of the adjusted revenue 30 estimate of that fiscal year and the actual net revenue for the 31 general fund exceeds the adjusted revenue estimate for that 32 fiscal year, a portion of such surplus shall be transferred 33 to a taxpayers trust fund. The maximum amount subject to 34 transfer to the taxpayers trust fund shall be established by 35 -2- LSB 5334YH (10) 84 jp/sc 2/ 7

H.J.R. 2006 statute enacted for this purpose and shall not be less than 1 one percent of the adjusted revenue estimate for the fiscal 2 year in which the surplus exists. Except for temporary cash 3 flow purposes, moneys in the taxpayers trust fund shall only 4 be used in accordance with appropriations made for purposes of 5 providing tax relief. 6 (2) After taking into account any transfer anticipated 7 pursuant to subparagraph (1), the remaining surplus anticipated 8 at the end of a fiscal year which exceeds ten percent of the 9 adjusted revenue estimate of that fiscal year shall be included 10 in the adjusted revenue estimate for the following fiscal year. 11 b. Any surplus equal to ten percent or less of the adjusted 12 revenue estimate of the fiscal year may be included in the 13 adjusted revenue estimate for the following fiscal year if 14 approved in a bill receiving the affirmative votes of at least 15 three-fifths of the members elected to each house of the 16 general assembly. 17 7. If a bill or joint resolution provides for new revenue or 18 appropriations bonding authority, or an expansion of existing 19 revenue or appropriations bonding authority, which bonds are 20 funded in whole or in part from revenues from the general 21 fund or from another portion of the state treasury, the bill 22 or joint resolution shall not become law unless approved by 23 the affirmative votes of at least two-thirds of the members 24 elected to each house of the general assembly. In addition, 25 the state general fund expenditure limitation for the initial 26 or subsequent fiscal year to which the bill or joint resolution 27 applies shall include any appropriations of such revenues for 28 the fiscal year. 29 8. The scope of the state general fund expenditure 30 limitation under subsection 3 shall not include federal funds, 31 donations, constitutionally dedicated moneys, and moneys 32 expended from a state retirement system. 33 9. The governor shall submit and the general assembly shall 34 pass a budget which does not exceed the state general fund 35 -3- LSB 5334YH (10) 84 jp/sc 3/ 7

H.J.R. 2006 expenditure limitation. The governor shall not approve or 1 disapprove appropriation bills or items of appropriation bills 2 passed by the general assembly in a manner that would cause 3 the final budget approved by the governor to exceed the state 4 general fund expenditure limitation. 5 10. The governor shall not submit and the general assembly 6 shall not pass a budget which in order to balance assumes 7 reversion of any part of the total of the appropriations 8 included in the budget. 9 11. The state shall use consistent standards, in accordance 10 with generally accepted accounting principles, for all state 11 budgeting and accounting purposes. 12 12. The general assembly shall enact laws to implement this 13 section. 14 Sec. 2. The following amendment to the Constitution of the 15 State of Iowa is proposed: 16 The Constitution of the State of Iowa is amended by adding 17 the following new sections to new Article XIII: 18 ARTICLE XIII. 19 THREE-FIFTHS MAJORITY FOR TAX LAW CHANGES. 20 Three-fifths majority to increase taxes. SECTION 1. A 21 bill containing provisions enacting, amending, or repealing 22 the state income tax or enacting, amending, or repealing the 23 state sales and use taxes, in which the aggregate fiscal 24 impact of those provisions relating to those taxes results in 25 a net increase in state tax revenues, as determined by the 26 general assembly, shall require the affirmative votes of at 27 least three-fifths of the members elected to each house of the 28 general assembly for passage. This section does not apply to 29 income tax or sales and use taxes imposed at the option of a 30 local government. 31 Three-fifths majority to enact new state tax. SEC. 2. A bill 32 that establishes a new state tax to be imposed by the state 33 shall require the affirmative votes of at least three-fifths 34 of the members elected to each house of the general assembly 35 -4- LSB 5334YH (10) 84 jp/sc 4/ 7

H.J.R. 2006 for passage. 1 Enforcement of three-fifths majority requirement. SEC. 3. A 2 lawsuit challenging the proper enactment of a bill pursuant to 3 section 1 or 2 shall be filed no later than one year following 4 the enactment. Failure to file such a lawsuit within the 5 one-year time limit shall negate the three-fifths majority 6 requirement as it applies to the bill. 7 Each bill to which section 1 or 2 applies shall include a 8 separate provision describing the requirements for enactment 9 prescribed by section 1 or 2. 10 Implementation. SEC. 4. The general assembly shall enact 11 laws to implement sections 1 through 3. 12 Sec. 3. The foregoing proposed amendments to the 13 Constitution of the State of Iowa are referred to the general 14 assembly to be chosen at the next general election for members 15 of the general assembly, and the Secretary of State is directed 16 to cause them to be published for three consecutive months 17 previous to the date of that election as provided by law. 18 EXPLANATION 19 This resolution proposes two amendments within a new Article 20 XIII to the Constitution of the State of Iowa which relates to 21 state budgets and state revenues. 22 The first amendment creates a state general fund expenditure 23 limitation. The amount of the limitation is 99 percent of the 24 adjusted revenue estimate. The amendment defines adjusted 25 revenue estimate and requires that that estimate be determined 26 by a revenue estimating conference which is to be created by 27 the general assembly by law. The amendment requires that the 28 expenditure limitation be used by the governor in preparation 29 of the governor’s budget and by the general assembly in the 30 budget process. The governor is prohibited from approving or 31 disapproving of appropriations in a manner that would cause the 32 final budget approved by the governor to exceed the expenditure 33 limitation. 34 The first amendment also provides that if a new revenue 35 -5- LSB 5334YH (10) 84 jp/sc 5/ 7

H.J.R. 2006 source is established and implemented, 95 percent of the 1 estimate of that new revenue shall be included in the 2 expenditure limitation. 3 The first amendment provides that if there is a surplus 4 existing at the end of a fiscal year which exceeds 10 percent 5 of the adjusted revenue for the fiscal year and the actual 6 net revenue for the general fund for the fiscal year exceeds 7 the adjusted revenue estimate for the fiscal year, a portion 8 of the surplus is required to be transferred to a taxpayers 9 trust fund. The maximum transfer amount is required to be 10 established by statute but cannot be less than 1 percent of the 11 adjusted revenue estimate for the fiscal year. After taking 12 into account any anticipated transfer to the taxpayers trust 13 fund, the remaining amount of any surplus anticipated to exceed 14 10 percent of the adjusted revenue estimate is required to be 15 included in the adjusted revenue estimate for the following 16 fiscal year. Any surplus which is equal to 10 percent or less 17 of the amount of the adjusted revenue estimate may be included 18 in the following year’s adjusted revenue estimate if inclusion 19 is approved in a bill by at least three-fifths of the members 20 elected to each house of the general assembly. 21 The first amendment requires that enactment of a bill or 22 joint resolution providing for new or expanded authority to 23 issue revenue or appropriations bonds funded in whole or in 24 part from revenues from the general fund or from another 25 portion of the state treasury requires a vote of at least 26 two-thirds of the members elected to each house of the general 27 assembly. In addition, the appropriations of such revenues are 28 required to be included in the state general fund expenditure 29 limitation for each applicable fiscal year. 30 The first amendment also requires the state to use generally 31 accepted accounting principles for state budgeting and 32 accounting purposes. The amendment provides that the general 33 assembly shall enact laws to implement the amendment. 34 The second amendment contained in the resolution requires 35 -6- LSB 5334YH (10) 84 jp/sc 6/ 7

H.J.R. 2006 a three-fifths majority vote of the members elected to each 1 house of the general assembly for certain tax law changes. 2 The amendment provides that any bill that enacts, amends, 3 or repeals the state income tax or the state sales and use 4 tax, and which causes, in the aggregate, an increase in state 5 tax revenues, as determined by the general assembly, must be 6 adopted by at least three-fifths of the members elected to each 7 house of the general assembly. The amendment also requires 8 a three-fifths majority vote of the members elected to each 9 house of the general assembly in order to enact a new state tax 10 to be imposed by the state. A lawsuit challenging enactment 11 of a bill subject to either three-fifths majority passage 12 requirement must be filed no later than one year from the date 13 of enactment of the bill. Finally, the amendment provides 14 that the general assembly shall enact laws to implement the 15 amendment. 16 The resolution, if adopted, will be referred to the next 17 general assembly. If the next general assembly adopts this 18 resolution, the amendments will be submitted to the voters for 19 their decision on ratification. 20 -7- LSB 5334YH (10) 84 jp/sc 7/ 7