S.F. 2178 Section 1. NEW SECTION . 423G.1 Special charter city sales 1 and services tax. 2 1. Subject to the provisions of this chapter, a special 3 charter city with a population greater than seventy-five 4 thousand may impose by ordinance a special charter city sales 5 and services tax at the rate of one percent on the sales price 6 taxed by the state under chapter 423, subchapter II. 7 a. A special charter city sales and services tax shall be 8 imposed on the same basis as the state sales and services tax 9 or, in the case of the use of natural gas, natural gas service, 10 electricity, or electric service, on the same basis as the 11 state use tax. 12 b. A special charter city sales and services tax shall not 13 be imposed on the sale of any property or on any service not 14 taxed by the state, except the tax shall not be imposed on 15 the sales price from the sale of motor fuel or special fuel 16 as defined in chapter 452A which is consumed for highway use 17 or in watercraft or aircraft if the fuel tax is paid on the 18 transaction and a refund has not or will not be allowed, on the 19 sales price from the sale of equipment by the state department 20 of transportation, or on the sales price from the sale or use 21 of natural gas, natural gas service, electricity, or electric 22 service in a city where the sales price from the sale of 23 natural gas or electric energy is subject to a franchise fee 24 or user fee during the period the franchise or user fee is 25 imposed. 26 c. A special charter city sales and services tax is 27 applicable to transactions within the incorporated areas of the 28 special charter city where it is imposed and shall be collected 29 by all persons required to collect state sales taxes. 30 d. The amount of the sale, for purposes of determining the 31 amount of the special charter city sales and services tax, does 32 not include the amount of any state sales tax or other local 33 option sales and services taxes. 34 e. A tax permit other than the state sales tax permit 35 -1- LSB 5844XS (3) 84 aw/sc 1/ 9

S.F. 2178 required under section 423.36 shall not be required by local 1 authorities. 2 2. If a special charter city sales and services tax is 3 imposed by a city pursuant to this chapter, a local excise tax 4 at the same rate shall be imposed by the city on the purchase 5 price of natural gas, natural gas service, electricity, or 6 electric service subject to tax under chapter 423, subchapter 7 III, and not exempted from tax by any provision of chapter 8 423, subchapter III. The local excise tax is applicable only 9 to the use of natural gas, natural gas service, electricity, 10 or electric service within the incorporated areas of the city 11 where it is imposed and, except as otherwise provided in this 12 chapter, shall be collected and administered in the same 13 manner as the special charter city sales and services tax. 14 For purposes of this chapter, “special charter city sales and 15 services tax” shall also include the local excise tax. 16 3. A special charter city sales and services tax under 17 this chapter may be imposed in addition to any local sales and 18 services tax imposed under chapter 423B in an area of the city. 19 Sec. 2. NEW SECTION . 423G.2 Election —— imposition —— 20 repeal. 21 1. Election requirement. A special charter city sales and 22 services tax shall be imposed pursuant to this chapter only 23 after an election at which a majority of those voting on the 24 question favors imposition and shall then be imposed until 25 repealed as provided in this section. 26 2. Manner of election. The question of whether a special 27 charter city sales and services tax shall be imposed in a 28 special charter city shall be submitted to the voters by one of 29 the following methods: 30 a. Upon its own motion, the governing body of the city 31 may within thirty days of adoption of the motion direct the 32 county commissioner of elections to submit the question of the 33 imposition of a special charter city sales and services tax to 34 the registered voters of the city. 35 -2- LSB 5844XS (3) 84 aw/sc 2/ 9

S.F. 2178 b. Upon the receipt of a petition signed by eligible 1 electors of the city, the governing body of the city shall 2 within thirty days direct the county commissioner of elections 3 to submit the question of the imposition of a special charter 4 city sales and services tax to the registered voters of the 5 city. A petition requesting imposition of a special charter 6 city sales and services tax shall be signed by a number of 7 eligible electors of the city equal to five percent of the 8 persons in the city who voted in the most recent general 9 election. 10 3. Timing and ballot requirements. 11 a. The county commissioner of elections shall submit the 12 question of imposition of a special charter city sales and 13 services tax at a special election held on a date specified 14 in section 39.2, subsection 4, paragraph “b” , except that 15 the election shall not be held sooner than sixty days after 16 publication of notice of the ballot proposition. 17 b. The ballot proposition shall specify the date the tax 18 will be imposed. The date of imposition shall be as provided 19 in section 423G.3, subsection 1. 20 c. The ballot proposition shall contain a statement of the 21 purposes for which the revenues shall be expended. Moneys 22 collected from a special charter city sales and services tax 23 shall be expended pursuant to section 423G.4, subsection 3. 24 d. When submitting the question of the imposition of a 25 special charter city sales and services tax, the governing 26 body of the city may direct that the ballot question contain 27 a provision for the repeal, without election, of the tax on 28 a specific date, which date shall be as provided in section 29 423G.3, subsection 1. 30 e. If a majority of those voting on the question of 31 imposition of the special charter city sales and services tax 32 favors imposition of the tax, the governing body of the city 33 shall impose the tax at the rate specified in section 423G.1, 34 subsection 1, for an unlimited period. 35 -3- LSB 5844XS (3) 84 aw/sc 3/ 9

S.F. 2178 f. If the question of whether to impose a special charter 1 city sales and services tax fails to gain approval by the 2 required percentage of votes, a question of whether to impose a 3 special charter city sales and services tax that proposes to 4 use the receipts in substantially the same manner shall not be 5 submitted to the registered voters again for a period of at 6 least four years following the date of the election at which 7 the question was defeated. 8 4. Repeal by election. 9 a. A special charter city sales and services tax may be 10 repealed after an election at which a majority of those voting 11 on the question of repeal favors the repeal. The date on which 12 the repeal takes effect shall not be earlier than ninety days 13 following the election. 14 b. The election at which the question of a repeal of the 15 special charter city sales and services tax is submitted to the 16 registered voters shall be called and held in the same manner 17 and under the same conditions as provided in subsections 2 and 18 3. 19 c. An election to repeal a special charter city sales and 20 services tax shall not be submitted to the registered voters of 21 a city more than once every four years. 22 5. Notice to the director of revenue. Within ten days of the 23 election at which a majority of those voting on the question 24 favors the imposition or repeal of a special charter city sales 25 and services tax, the county auditor shall give written notice 26 of the result of the election by sending a copy of the abstract 27 of the votes from the election to the director of revenue. 28 The director shall have the authority to waive the notice 29 requirement. 30 Sec. 3. NEW SECTION . 423G.3 Administration. 31 1. a. A special charter city sales and services tax 32 shall be imposed either January 1 or July 1 following the 33 notification of the director of revenue but not sooner than 34 ninety days following the passage of the ordinance and not 35 -4- LSB 5844XS (3) 84 aw/sc 4/ 9

S.F. 2178 sooner than sixty days following notice to sellers, as defined 1 in section 423.1. 2 b. A special charter city sales and services tax shall be 3 repealed only on June 30 or December 31, but not sooner than 4 ninety days following the repeal of the ordinance. However, 5 the sales and services tax shall not be repealed before the tax 6 has been in effect for one year. 7 c. At least forty days before the imposition or repeal of 8 the tax, a city shall provide notice of the action by certified 9 mail to the director of revenue. 10 d. The imposition of a special charter city sales and 11 services tax shall not be applied to purchases from a printed 12 catalog wherein a purchaser computes the local tax based on 13 rates published in the catalog unless a minimum of one hundred 14 twenty days’ notice of the imposition has been given to the 15 seller and the first day of a calendar quarter has occurred on 16 or after the one hundred twentieth day. 17 2. a. The director of revenue shall administer a special 18 charter city sales and services tax as nearly as possible in 19 conjunction with the administration of state sales tax laws. 20 The director shall provide appropriate forms or provide space 21 on the regular state tax forms for reporting special charter 22 city sales and services tax liability. 23 b. The ordinance of a city imposing a special charter city 24 sales and services tax shall adopt by reference the applicable 25 provisions of the appropriate sections of chapter 423. All 26 powers and requirements of the director to administer the 27 state sales tax law and use tax law are applicable to the 28 administration of a special charter city sales and services tax 29 law and the local excise tax, including but not limited to the 30 provisions of section 422.25, subsection 4, sections 422.30, 31 422.67, and 422.68, section 422.69, subsection 1, sections 32 422.70 to 422.75, section 423.14, subsection 1 and subsection 33 2, paragraphs “b” through “e” , and sections 423.15, 423.23, 34 423.24, 423.25, 423.31 to 423.35, 423.37 to 423.42, 423.46, 35 -5- LSB 5844XS (3) 84 aw/sc 5/ 9

S.F. 2178 and 423.47. Local officials shall confer with the director of 1 revenue for assistance in drafting the ordinance imposing a 2 special charter city sales and services tax. A certified copy 3 of the ordinance shall be filed with the director as soon as 4 possible after passage of the ordinance. 5 c. Frequency of deposits and quarterly reports of a special 6 charter city sales and services tax with the department of 7 revenue are governed by the tax provisions in section 423.31. 8 Local tax collections shall not be included in computation of 9 the total tax to determine frequency of filing under section 10 423.31. 11 d. The director shall apply a boundary change of a city 12 imposing or collecting the special charter city sales and 13 services tax to the imposition or collection of that tax only 14 on the first day of a calendar quarter which occurs sixty days 15 or more after the director has given notice of the boundary 16 change to sellers. 17 3. a. The director, in consultation with local officials, 18 shall collect and account for a special charter city sales and 19 services tax. The director shall certify each quarter the 20 amount of sales and services tax receipts and any interest and 21 penalties to be credited to a special charter city sales and 22 services tax fund of that city established in the office of the 23 treasurer of state. All taxes collected under this chapter by 24 a retailer or any individual are deemed to be held in trust 25 for the state of Iowa and the local jurisdictions imposing the 26 taxes. 27 b. All local tax moneys and interest and penalties received 28 or refunded one hundred eighty days or more after the date 29 on which the city repeals its special charter city sales and 30 services tax shall be deposited in or withdrawn from the 31 general fund of the state. 32 Sec. 4. NEW SECTION . 423G.4 Payment to the city —— use of 33 receipts. 34 1. The director shall credit the special charter city sales 35 -6- LSB 5844XS (3) 84 aw/sc 6/ 9

S.F. 2178 and services tax receipts and interest and penalties from a 1 city-imposed tax to the city’s special charter city sales and 2 services tax fund. 3 2. a. The director of revenue by August 15 of each fiscal 4 year shall send to the city where the special charter city tax 5 is imposed an estimate of the amount of tax moneys the city 6 will receive for the year and for each month of the year. At 7 the end of each month, the director may revise the estimates 8 for the year and remaining months. 9 b. The director of revenue shall remit ninety-five percent 10 of the estimated tax receipts for the city to the city on or 11 before August 31 of the fiscal year and on or before the last 12 day of each following month. 13 c. The director of revenue shall remit a final payment of 14 the remainder of tax moneys due the city for the fiscal year 15 before November 10 of the next fiscal year. If an overpayment 16 has resulted during the previous fiscal year, the November 17 payment shall be adjusted to reflect any overpayment. 18 3. All special charter city sales and services tax revenues 19 received by the city under this chapter shall be deposited in a 20 special fund of the city and shall be used as follows: 21 a. Ninety percent of the moneys shall be used to provide 22 financial assistance to the following: 23 (1) Resident students of the special charter city 24 graduating from a public or nonpublic school located in the 25 special charter city who have enrolled in an institution of 26 higher education. For purposes of this subparagraph, “financial 27 assistance” includes loans, forgivable loans, grants, and 28 scholarships, and “institution of higher education” includes 29 a four-year college or university, a community college, or a 30 technical or vocational school. 31 (2) Eligible members of the armed forces of the United 32 States for the purchase of residences or the establishment or 33 expansion of businesses located in the special charter city. 34 For purposes of this subparagraph, “eligible member of the armed 35 -7- LSB 5844XS (3) 84 aw/sc 7/ 9

S.F. 2178 forces of the United States” means a person who is or was a 1 member of the national guard, reserve, or regular component 2 of the armed forces of the United States who has served at 3 least ninety days of active duty service beginning on or after 4 September 11, 2001. “Eligible member of the armed forces of the 5 United States” also means a former member of the national guard, 6 reserve, or regular component of the armed forces of the United 7 States who was honorably discharged due to injuries incurred 8 while on active federal service beginning on or after September 9 11, 2001, that precluded completion of a minimum aggregate of 10 ninety days of active federal service. 11 b. Ten percent of the moneys shall be used to hire 12 additional public safety personnel. 13 EXPLANATION 14 This bill authorizes special charter cities of 75,000 or 15 more in population to impose a 1-percent special charter city 16 sales and services tax on the same basis as the state sales tax 17 or in the case of the use of natural gas, natural gas service, 18 electricity, or electric service on the same basis as the state 19 use tax. 20 The tax cannot be imposed unless approved at an election. 21 The issue can be submitted either upon a motion by the 22 governing body of a city or by petition of eligible electors 23 equal in number to 5 percent of voters at the most recent 24 general election. 25 The question of the imposition of the tax must be submitted 26 at a special election. The ballot proposition for the tax must 27 include certain information including the type and rate of the 28 tax, the date it will be imposed, and the purposes for which 29 the revenues shall be expended. 30 The tax can be repealed at election by a majority vote, or a 31 repeal date can be included on the ballot at the election where 32 its imposition is proposed. A vote to repeal the tax must 33 be conducted in the same manner as the election imposing the 34 tax. An election to repeal a special charter city sales and 35 -8- LSB 5844XS (3) 84 aw/sc 8/ 9

S.F. 2178 services tax shall not be submitted to voters more than once 1 every four years. The bill requires that the county auditor 2 provide written notice to the director of revenue within 10 3 days following a favorable vote to impose or repeal such a tax. 4 All revenues collected from the special charter city sales 5 and services tax must be spent by the city as follows: 90 6 percent for providing scholarships to graduating high school 7 students in the city who are enrolling in college and for 8 eligible veterans purchasing a residence in the city or 9 establishing or expanding a business in the city and 10 percent 10 for hiring additional public safety personnel. 11 -9- LSB 5844XS (3) 84 aw/sc 9/ 9