House Study Bill 224 - Introduced HOUSE FILE _____ BY (PROPOSED COMMITTEE ON WAYS AND MEANS BILL BY CHAIRPERSON SANDS) A BILL FOR An Act establishing a tax relief fund and including effective 1 date and applicability provisions. 2 BE IT ENACTED BY THE GENERAL ASSEMBLY OF THE STATE OF IOWA: 3 TLSB 2270YC (3) 84 md/jp

H.F. _____ Section 1. Section 8.55, subsection 2, Code 2011, is amended 1 to read as follows: 2 2. a. The maximum balance of the fund is the amount equal 3 to two and one-half percent of the adjusted revenue estimate 4 for the fiscal year. If the amount of moneys in the Iowa 5 economic emergency fund is equal to the maximum balance, moneys 6 in excess of this amount shall be transferred to the general 7 tax relief fund. 8 b. Notwithstanding paragraph “a” , any moneys in excess of 9 the maximum balance in the economic emergency fund after the 10 distribution of the surplus in the general fund of the state 11 at the conclusion of each fiscal year shall not be transferred 12 to the general tax relief fund of the state but shall be 13 transferred to the senior living trust fund. The total amount 14 appropriated, reverted, or transferred, in the aggregate, under 15 this paragraph, section 8.57, subsection 2 , and any other law 16 providing for an appropriation or reversion or transfer of an 17 appropriation to the credit of the senior living trust fund, 18 for all fiscal years beginning on or after July 1, 2004, shall 19 not exceed the amount specified in section 8.57, subsection 2 , 20 paragraph “c” . 21 Sec. 2. NEW SECTION . 8.57E Tax relief fund. 22 1. The tax relief fund is created. The fund shall be 23 separate from the general fund of the state and the balance 24 in the fund shall not be considered part of the balance of 25 the general fund of the state. The fund shall consist of 26 appropriations made to the fund and transfers of interest, 27 earnings, and moneys from other funds as provided by law. The 28 moneys credited to the fund are not subject to section 8.33 and 29 shall not be transferred, used, obligated, appropriated, or 30 otherwise encumbered except as provided in this section. 31 2. Moneys in the tax relief fund shall only be used in 32 accordance with enactments by the general assembly for purposes 33 of reducing taxes. 34 3. a. Moneys in the fund may be used for cash flow purposes 35 -1- LSB 2270YC (3) 84 md/jp 1/ 4

H.F. _____ during a fiscal year provided that any moneys so allocated are 1 returned to the fund by the end of that fiscal year. 2 b. Except as provided in section 8.58, the tax relief fund 3 shall be considered a special account for the purposes of 4 section 8.53 in determining the cash position of the general 5 fund of the state for the payment of state obligations. 6 4. Notwithstanding section 12C.7, subsection 2, interest 7 or earnings on moneys deposited in the tax relief fund shall 8 be credited to the fund. 9 Sec. 3. Section 8.58, Code 2011, is amended to read as 10 follows: 11 8.58 Exemption from automatic application. 12 1. To the extent that moneys appropriated under section 13 8.57 do not result in moneys being credited to the general 14 fund under section 8.55, subsection 2 , moneys appropriated 15 under section 8.57 and moneys contained in the cash reserve 16 fund, rebuild Iowa infrastructure fund, environment first 17 fund, and Iowa economic emergency fund , and tax relief fund 18 shall not be considered in the application of any formula, 19 index, or other statutory triggering mechanism which would 20 affect appropriations, payments, or taxation rates, contrary 21 provisions of the Code notwithstanding. 22 2. To the extent that moneys appropriated under section 23 8.57 do not result in moneys being credited to the general fund 24 under section 8.55, subsection 2 , moneys appropriated under 25 section 8.57 and moneys contained in the cash reserve fund, 26 rebuild Iowa infrastructure fund, environment first fund, and 27 Iowa economic emergency fund , and tax relief fund shall not be 28 considered by an arbitrator or in negotiations under chapter 29 20 . 30 Sec. 4. TAX RELIEF FUND —— LEGISLATIVE INTENT. It is the 31 intent of the general assembly to enact appropriations from 32 the tax relief fund created by this Act pursuant to tax relief 33 legislation which shall be proposed by the standing committees 34 on ways and means of the senate and house of representatives. 35 -2- LSB 2270YC (3) 84 md/jp 2/ 4

H.F. _____ Sec. 5. EFFECTIVE DATE AND APPLICABILITY. 1 1. This Act, being deemed of immediate importance, takes 2 effect upon enactment. 3 2. The section of this Act amending section 8.55 by 4 providing for transfer of moneys from the Iowa economic 5 emergency fund to the tax relief fund instead of the general 6 fund of the state applies to transfers made from the Iowa 7 economic emergency fund after the effective date of this 8 division and the state general fund expenditure limitation 9 calculated for the fiscal year beginning July 1, 2011, shall 10 be adjusted accordingly. 11 EXPLANATION 12 This bill creates the tax relief fund in new Code section 13 8.57E. The fund consists of transfers from other funds as 14 provided in the bill and other appropriations made to the fund 15 and transfers of interest, earnings, and moneys from other 16 funds as provided by law. The fund is to be used to make 17 appropriations providing tax relief. Legislative intent is 18 provided to enact appropriations for purposes of tax relief 19 pursuant to recommendations made by the general assembly’s 20 standing committees on ways and means. 21 Code section 8.55 is amended to provide that when the Iowa 22 economic emergency fund achieves its maximum balance the excess 23 funds are transferred to the tax relief fund instead of the 24 general fund of the state. 25 Code section 8.58, exempting the balances in existing 26 reserve funds from being considered in the application of any 27 formula, index, or other statutory triggering mechanism which 28 would affect appropriations, payments, or taxation rates, and 29 by an arbitrator or collective bargaining negotiation under 30 Code chapter 20, is amended by adding the new tax relief fund 31 to the list. 32 The bill takes effect upon enactment, applies to transfers 33 made from the Iowa economic emergency fund to the tax relief 34 fund instead of the general fund on or after the effective 35 -3- LSB 2270YC (3) 84 md/jp 3/ 4

H.F. _____ date, and requires the effect of such transfers to be reflected 1 by adjusting the state general fund expenditure limitation 2 calculated for fiscal year 2011-2012 accordingly. 3 -4- LSB 2270YC (3) 84 md/jp 4/ 4