HF 2441 (LSB 5556YH (3) 86)

HOUSE FILE 2441

BY  WESSEL-KROESCHELL, HANSON, WINCKLER, HEDDENS, OURTH, KELLEY, and STAED

A BILL FOR

An Act providing for an increase in the maximum local option sales tax rate to fund local natural resources and outdoor recreation projects.
BE IT ENACTED BY THE GENERAL ASSEMBLY OF THE STATE OF IOWA:

    Section 1.  Section 423B.1, subsection 5, Code 2016, is amended to read as follows:
   5.  The county commissioner of elections shall submit the question of imposition of a local option tax at an election held on a date specified in section 39.2, subsection 4, paragraph “a”. The election shall not be held sooner than sixty days after publication of notice of the ballot proposition. The ballot proposition shall specify the type and rate of tax and in the case of a vehicle tax the classes that will be exempt and in the case of a local sales and services tax the date it will be imposed which date shall not be earlier than ninety days following the election. The ballot proposition shall also specify the approximate amount of local option tax revenues that will be used for property tax relief and shall contain a statement as to the specific purpose or purposes for which the revenues shall otherwise be expended. If the county board of supervisors decides under subsection 6 to specify a date on which the local option sales and services tax shall automatically be repealed, the date of the repeal shall also be specified on the ballot. The rate of the vehicle tax shall be in increments of one dollar per vehicle as set by the petition seeking to impose the tax. The rate of a local sales and services tax shall not be more than one and three-eighths percent as set by the governing body. The state commissioner of elections shall establish by rule the form for the ballot proposition which form shall be uniform throughout the state.
    Sec. 2.  Section 423B.1, subsection 8, Code 2016, is amended to read as follows:
   8.  Local option taxes authorized to be imposed as provided in this chapter are a local sales and services tax and a local vehicle tax. The rate of the tax shall be in increments of one dollar per vehicle for a vehicle tax as set on the petition seeking to impose the vehicle tax. The rate of a local sales and services tax shall not be more than one and three-eighths percent as set by the governing body.
    Sec. 3.  Section 423B.5, unnumbered paragraph 1, Code 2016, is amended to read as follows:
   A local sales and services tax at the rate of not more than one and three-eighths percent may be imposed by a county on the sales price taxed by the state under chapter 423, subchapter II. A local sales and services tax shall be imposed on the same basis as the state sales and services tax or in the case of the use of natural gas, natural gas service, electricity, or electric service on the same basis as the state use tax and shall not be imposed on the sale of any property or on any service not taxed by the state, except the tax shall not be imposed on the sales price from the sale of motor fuel or special fuel as defined in chapter 452A which is consumed for highway use or in watercraft or aircraft if the fuel tax is paid on the transaction and a refund has not or will not be allowed, on the sales price from the sale of equipment by the state department of transportation, or on the sales price from the sale or use of natural gas, natural gas service, electricity, or electric service in a city or county where the sales price from the sale of natural gas or electric energy is subject to a franchise fee or user fee during the period the franchise or user fee is imposed. A local sales and services tax is applicable to transactions within those incorporated and unincorporated areas of the county where it is imposed and shall be collected by all persons required to collect state sales taxes. All cities contiguous to each other shall be treated as part of one incorporated area and the tax would be imposed in each of those contiguous cities only if the majority of those voting in the total area covered by the contiguous cities favors its imposition. In the case of a local sales and services tax submitted to the registered voters of two or more contiguous counties as provided in section 423B.1, subsection 4, paragraph “c”, all cities contiguous to each other shall be treated as part of one incorporated area, even if the corporate boundaries of one or more of the cities include areas of more than one county, and the tax shall be imposed in each of those contiguous cities only if a majority of those voting on the tax in the total area covered by the contiguous cities favored its imposition.
    Sec. 4.  Section 423B.7, subsection 1, paragraph a, Code 2016, is amended to read as follows:
   a.  Except as provided in paragraph paragraphs “b” and “c”, the director shall credit the local sales and services tax receipts and interest and penalties from a county-imposed tax to the county’s account in the local sales and services tax fund and from a city-imposed tax under section 423B.1, subsection 2, to the city’s account in the local sales and services tax fund. If the director is unable to determine from which county any of the receipts were collected, those receipts shall be allocated among the possible counties based on allocation rules adopted by the director.
    Sec. 5.  Section 423B.7, subsection 1, Code 2016, is amended by adding the following new paragraph:
   NEW PARAGRAPH.  c.  Notwithstanding paragraph “a”, for local sales and services tax receipts collected from a county-imposed tax for any period of time during which the county-imposed tax rate exceeds one percent, a proportion of such tax receipts equal to the same proportion that the amount of the tax rate in excess of one percent bears to the total tax rate shall be credited into a special county natural resources and outdoor recreation account in the local sales and services tax fund. This paragraph applies to tax receipts remaining after the credit provided in paragraph “b”.
    Sec. 6.  Section 423B.7, Code 2016, is amended by adding the following new subsection:
   NEW SUBSECTION.  6A.  From each special county natural resources and outdoor recreation account, the revenue shall be remitted as provided in subsections 3 and 4 and when received by the board of supervisors or city council shall be deposited in a special fund created by the county or city and used by the county or city as provided in section 423B.11.
    Sec. 7.  Section 423B.10, subsection 3, Code 2016, is amended by adding the following new paragraph:
   NEW PARAGRAPH.  d.  (1)  The calculations in paragraphs “a” and “b” shall not include county-imposed local sales and services tax revenue attributable to any portion of a tax rate that exceeds one percent. If the county-imposed local sales and services tax rate exceeds one percent during the base year or any fiscal year following the base year, the department of revenue shall, for purposes of the applicable calculations in paragraphs “a” and “b”, reduce the amount of county-imposed tax revenue collected from retail establishments located in the area comprising the urban renewal area by the same proportion that the amount of the county-imposed tax rate in excess of one percent bears to the total county-imposed tax rate.
   (2)  If the county-imposed tax rate exceeded one percent for less than the entire applicable fiscal year, the department of revenue shall make the adjustment required in subparagraph (1) only to the county-imposed tax revenue collected from retail establishments located in the area comprising the urban renewal area for the period of time the tax rate exceeded one percent.
    Sec. 8.  Section 423B.10, subsection 5, Code 2016, is amended to read as follows:
   5.  In addition to the moneys received pursuant to the ordinance authorized under subsection 2, an eligible city may deposit any other local sales and services tax revenues received by it pursuant to the distribution formula in section 423B.7, subsections 3, 4, and 5, to the special fund described in section 403.19, subsection 2, except local sales and services tax revenue deposited in the special fund of a city or county pursuant to section 423B.7, subsection 6A.
    Sec. 9.  NEW SECTION.  423B.11  Funding natural resources and outdoor recreation projects.
   1.  Moneys deposited in a special fund of a city or county pursuant to section 423B.7, subsection 6A, shall be used by the city or county only as provided in this section and only to support voluntary initiatives and shall not be used for regulatory efforts, enforcement actions, or litigation.
   2.  In addition to the moneys deposited pursuant to section 423B.7, subsection 6A, a city or county may deposit any other local sales and services tax revenues received by it pursuant to the distribution formula in section 423B.7, subsections 3, 4, and 5.
   3.  Two or more cities or counties may enter into an agreement under chapter 28E to form an entity in order to carry out any initiative described in this section.
   4.  Twenty-three percent of the moneys in each fund shall be used to support the following initiatives:
   a.  The establishment, restoration, or enhancement of parks, preserves, forests, wildlife areas, wildlife habitats, native prairies, and wetlands.
   b.  Wildlife diversity.
   c.  Recreational purposes.
   d.  Technical assistance and financial incentives to private landowners to promote the management of forests, fisheries, wetlands, and wildlife.
   e.  The improvement of water trails, rivers, and streams.
   f.  Education and outreach that provide instruction regarding natural history and the outdoors. The subjects of such instruction may relate to opportunities involving recreational purposes, outdoor safety, and ethics.
   5.  Twenty percent of the moneys in each fund shall be used to support the following initiatives:
   a.  Soil conservation and watershed protection.
   b.  The conservation of highly erodible land.
   c.  Soil conservation or crop management practices used on land producing biomass for biorefineries, including cellulosic ethanol production.
   6.  Fourteen percent of the moneys in each fund shall be used to support the following initiatives: 
   a.  Water resource projects to preserve watersheds, including but not limited to all of the following:
   (1)  Projects to protect, restore, or enhance water quality through the provision of financial assistance for impairment-based, locally directed watershed projects, including water resource restoration projects as defined in section 384.80. 
   (2)  Regional and community watershed assessment, planning, and prioritization efforts, including as provided in chapter 466B.
   b.  Surface water protection projects and practices, including but not limited to the installation of permanent vegetation cover, filter strips, grass waterways, and riparian forest buffers; dredging; and bank stabilization.
   7.  Thirteen percent of the moneys in each fund shall be used as follows:
   a.  Fifty-two percent shall be used to support initiatives involving the acquisition, protection, and development of parks, preserves, and open spaces, including multipurpose trails, restroom facilities, shelter houses, and picnic facilities, but excluding athletic fields, baseball or softball diamonds, tennis courts, golf courses, swimming pools, and other sport facilities.
   b.  Twenty percent shall be used to support the same initiatives listed in subsection 8.
   c.  Twenty percent shall be used to support soil and water enhancement programs, including but not limited to woodland protection and enhancement, wildlife habitat preservation and enhancement, protection of highly erodible soils, and clean water.
   d.  Five percent shall be used to support historical resource development programs.
   e.  Three percent shall be used for the development and implementation of integrated roadside vegetation plans.
   8.  Thirteen percent of the moneys in each fund shall be used to support the following initiatives:
   a.  The maintenance and improvement of parks, preserves, wildlife areas, wildlife habitats, native prairies, and wetlands.
   b.  Wildlife diversity.
   c.  Recreational purposes.
   d.  The improvement of water trails, rivers, and streams.
   e.  Education and outreach programs and projects that provide instruction regarding natural history and the outdoors. The subjects of such instruction may relate to opportunities involving recreational purposes, outdoor safety, and ethics.
   f.  Any other purpose described in section 350.1.
   9.  Ten percent of the moneys in each fund shall be used to support initiatives related to the design, establishment, maintenance, improvement, and expansion of land trails and water trails.
   10.  Seven percent of the moneys in each fund shall be used to support public lake restoration initiatives. An initiative shall account for a lake’s recreational, environmental, aesthetic, ecological, and social value, and must improve water quality.
EXPLANATION
The inclusion of this explanation does not constitute agreement with

the explanation’s substance by the members of the general assembly.
   This bill provides for an increase in the maximum local option sales tax rate to fund local natural resources and outdoor recreation projects.
   BACKGROUND. Under current law, counties may impose a sales tax at the local level upon a petition of the voters or motions of city councils or the board of supervisors and after an election at which a majority of those voting favors imposition. A majority vote is also required for a repeal or rate change, but the governing body on its own motion may repeal the sales tax under certain circumstances. The local option sales tax rate may not exceed one percent.
   Local option tax revenues collected in a county are remitted to the department of revenue (department) and, except for certain revenues attributable to urban renewal projects, distributed back to the county and cities within the county using a statutory formula involving population and historical property tax revenues.
   BILL CHANGES. The bill increases the maximum local option sales tax rate that may be imposed by a county to one and three-eighths percent (1.375 percent) from one percent. If a county votes to initially impose or to increase the tax rate above one percent, the bill requires tax revenues collected on the amount of the tax rate in excess of one percent to be remitted to counties and cities using the existing statutory formula, and then deposited in a special fund of the city or county and used exclusively for funding natural resources and outdoor recreation projects as described in the bill.
   The special fund moneys shall only be used to support voluntary initiatives and shall not be used for regulatory efforts, enforcement actions, or litigation. The bill allows for two or more cities or counties to enter into an agreement under Code chapter 28E to form an entity in order to carry out any authorized initiative, and allows a city or county to deposit other local sales and services tax revenues it receives in its special natural resources and outdoor recreation fund.
   The bill also amends the calculation for determining the funding of urban renewal projects to ensure that such calculation is not impacted by local option sales tax revenues collected on the amount of the tax rate in excess of one percent.