House File 606 - Introduced HOUSE FILE 606 BY DOLECHECK A BILL FOR An Act providing for the imposition by a county of a local 1 option use tax. 2 BE IT ENACTED BY THE GENERAL ASSEMBLY OF THE STATE OF IOWA: 3 TLSB 2285YH (2) 87 mm/rj

H.F. 606 DIVISION I 1 LOCAL OPTION USE TAX 2 Section 1. Section 423B.1, subsections 3, 4, and 5, Code 3 2017, are amended to read as follows: 4 3. A local option tax shall be imposed only after an 5 election at which a majority of those voting on the question 6 favors imposition and shall then be imposed until repealed 7 as provided in subsection 6 , paragraph “a” . If the tax is a 8 local vehicle tax imposed by a county, it shall apply to all 9 incorporated and unincorporated areas of the county. If the 10 tax is a local sales and services tax imposed by a county, 11 it shall only apply to those incorporated areas and the 12 unincorporated area of that county in which a majority of those 13 voting in the area on the tax favors its imposition. If the 14 tax is a local use tax, it shall only be imposed by a county 15 if the county is also imposing a local sales and services 16 tax, and shall only apply to those incorporated areas and the 17 unincorporated area of that county in which a majority of those 18 voting in the area on the tax favors imposition, and in which 19 the local sales and services tax is also imposed. For purposes 20 of the local sales and services tax and the local use tax , all 21 cities contiguous to each other shall be treated as part of 22 one incorporated area and the tax would be imposed in each of 23 those contiguous cities only if the majority of those voting 24 in the total area covered by the contiguous cities favors its 25 imposition. In the case of a local sales and services tax or a 26 local use tax submitted to the registered voters of two or more 27 contiguous counties as provided in subsection 4 , paragraph “c” , 28 all cities contiguous to each other shall be treated as part of 29 one incorporated area, even if the corporate boundaries of one 30 or more of the cities include areas of more than one county, 31 and the tax shall be imposed in each of those contiguous cities 32 only if a majority of those voting on the tax in the total area 33 covered by the contiguous cities favored its imposition. For 34 purposes of the local sales and services tax and the local use 35 -1- LSB 2285YH (2) 87 mm/rj 1/ 19

H.F. 606 tax , a city is not contiguous to another city if the only road 1 access between the two cities is through another state. 2 4. a. A county board of supervisors shall direct within 3 thirty days the county commissioner of elections to submit the 4 question of imposition of a local vehicle tax , or a local sales 5 and services tax , or a local use tax to the registered voters 6 of the incorporated and unincorporated areas of the county 7 upon receipt of a petition, requesting imposition of a local 8 vehicle tax , or a local sales and services tax , or a local use 9 tax , signed by eligible electors of the whole county equal in 10 number to five percent of the persons in the whole county who 11 voted at the last preceding general election. In the case of 12 a local vehicle tax, the petition requesting imposition shall 13 specify the rate of tax and the classes, if any, that are to 14 be exempt. If more than one valid petition is received, the 15 earliest received petition shall be used. 16 b. The question of the imposition of a local sales and 17 services tax or a local use tax shall be submitted to the 18 registered voters of the incorporated and unincorporated 19 areas of the county upon receipt by the county commissioner 20 of elections of the motion or motions, requesting such 21 submission, adopted by the governing body or bodies of the 22 city or cities located within the county or of the county, for 23 the unincorporated areas of the county, representing at least 24 one half of the population of the county. Upon adoption of 25 such motion, the governing body of the city or county, for the 26 unincorporated areas, shall submit the motion to the county 27 commissioner of elections and in the case of the governing 28 body of the city shall notify the board of supervisors of the 29 adoption of the motion. The county commissioner of elections 30 shall keep a file on all the motions received and, upon 31 reaching the population requirements, shall publish notice of 32 the ballot proposition concerning the imposition of the local 33 sales and services tax or the local use tax . A motion ceases 34 to be valid at the time of the holding of the regular election 35 -2- LSB 2285YH (2) 87 mm/rj 2/ 19

H.F. 606 for the election of members of the governing body which 1 adopted the motion. The county commissioner of elections shall 2 eliminate from the file any motion that ceases to be valid. 3 The manner provided under this paragraph for the submission of 4 the question of imposition of a local sales and services tax 5 or a local use tax is an alternative to the manner provided in 6 paragraph “a” . 7 c. Upon receipt of petitions or motions calling for the 8 submission of the question of the imposition of a local sales 9 and services tax or a local use tax as described in paragraph 10 “a” or “b” , the boards of supervisors of two or more contiguous 11 counties in which the question is to be submitted may enter 12 into a joint agreement providing that for purposes of this 13 chapter , a city whose corporate boundaries include areas of 14 more than one county shall be treated as part of the county 15 in which a majority of the residents of the city reside. In 16 such event, the county commissioners of elections from each 17 such county shall cooperate in the selection of a single date 18 upon which the election shall be held, and for all purposes of 19 this chapter relating to the imposition, repeal, change of use, 20 or collection of the tax, such a city shall be deemed to be 21 part of the county in which a majority of the residents of the 22 city reside. A copy of the joint agreement shall be provided 23 promptly to the director of revenue. 24 5. The county commissioner of elections shall submit the 25 question of imposition of a local option tax at an election 26 held on a date specified in section 39.2, subsection 4 , 27 paragraph “a” . The election shall not be held sooner than sixty 28 days after publication of notice of the ballot proposition. 29 The ballot proposition shall specify the type and rate of tax 30 and in the case of a vehicle tax the classes that will be 31 exempt and in the case of a local sales and services tax or 32 a local use tax the date it will be imposed which date shall 33 not be earlier than ninety days following the election. The 34 ballot proposition shall also specify the approximate amount 35 -3- LSB 2285YH (2) 87 mm/rj 3/ 19

H.F. 606 of local option tax revenues that will be used for property 1 tax relief and shall contain a statement as to the specific 2 purpose or purposes for which the revenues shall otherwise be 3 expended. If the county board of supervisors decides under 4 subsection 6 to specify a date on which the local option sales 5 and services tax or a local use tax shall automatically be 6 repealed, the date of the repeal shall also be specified on the 7 ballot. The rate of the vehicle tax shall be in increments of 8 one dollar per vehicle as set by the petition seeking to impose 9 the tax. The rate of a local sales and services tax shall not 10 be more than one percent as set by the governing body. The rate 11 of a local use tax shall be the same as the local sales and 12 services tax rate set by the same governing body. The state 13 commissioner of elections shall establish by rule the form for 14 the ballot proposition which form shall be uniform throughout 15 the state. 16 Sec. 2. Section 423B.1, subsection 6, paragraph a, Code 17 2017, is amended to read as follows: 18 a. (1) If a majority of those voting on the question of 19 imposition of a local option tax favors imposition of a local 20 option tax, the governing body of that county shall impose the 21 tax at the rate specified for an unlimited period. However, 22 in the case of a local sales and services tax or a local use 23 tax , the county shall not impose the tax in any incorporated 24 area or the unincorporated area if the majority of those voting 25 on the tax in that area did not favor its imposition and, in 26 the case of a local use tax, shall not impose the tax in any 27 incorporated area or the unincorporated area in which the 28 local sales and services tax is not imposed . For purposes of 29 the local sales and services tax and the local use tax , all 30 cities contiguous to each other shall be treated as part of one 31 incorporated area and the tax shall be imposed in each of those 32 contiguous cities only if the majority of those voting on the 33 tax in the total area covered by the contiguous cities favored 34 its imposition. In the case of a local sales and services 35 -4- LSB 2285YH (2) 87 mm/rj 4/ 19

H.F. 606 tax or a local use tax submitted to the registered voters of 1 two or more contiguous counties as provided in subsection 4 , 2 paragraph “c” , all cities contiguous to each other shall be 3 treated as part of one incorporated area, even if the corporate 4 boundaries of one or more of the cities include areas of more 5 than one county, and the tax shall be imposed in each of those 6 contiguous cities only if a majority of those voting on the tax 7 in the total area covered by the contiguous cities favored its 8 imposition. 9 (2) The local option tax may be repealed or the rate 10 increased or decreased or the use thereof changed after an 11 election at which a majority of those voting on the question of 12 repeal or rate or use change favored the repeal or rate or use 13 change. However, if a local sales and services tax is repealed 14 or the rate decreased, the local use tax imposed within that 15 county, if any, shall be deemed to be repealed or reduced 16 by the same action repealing or reducing the local sales and 17 services tax. The date on which the repeal, rate, or use 18 change is to take effect shall not be earlier than ninety days 19 following the election. The election at which the question 20 of repeal or rate or use change is offered shall be called 21 and held in the same manner and under the same conditions 22 as provided in subsections 4 and 5 for the election on the 23 imposition of the local option tax. However, in the case of 24 a local sales and services tax and a local use tax where the 25 tax has not been imposed countywide, the question of repeal or 26 imposition or rate or use change shall be voted on only by the 27 registered voters of the areas of the county where the tax has 28 been imposed or has not been imposed, as appropriate. However, 29 the governing body of the incorporated area or unincorporated 30 area where the local sales and services tax and the local 31 use tax is imposed may, upon its own motion, request the 32 county commissioner of elections to hold an election in the 33 incorporated or unincorporated area, as appropriate, on the 34 question of the change in use of local sales and services tax 35 -5- LSB 2285YH (2) 87 mm/rj 5/ 19

H.F. 606 or the local use tax revenues. The election may be held at 1 any time but not sooner than sixty days following publication 2 of the ballot proposition. If a majority of those voting 3 in the incorporated or unincorporated area on the change in 4 use favors the change, the governing body of that area shall 5 change the use to which the revenues shall be used. The ballot 6 proposition shall list the present use of the revenues, the 7 proposed use, and the date after which revenues received will 8 be used for the new use. 9 (3) When submitting the question of the imposition of a 10 local sales and services tax or a local use tax , the county 11 board of supervisors may direct that the question contain a 12 provision for the repeal, without election, of the local sales 13 and services tax or the local use tax on a specific date, which 14 date shall be as provided in section 423B.6, subsection 1 . 15 Sec. 3. Section 423B.1, subsections 8, 9, and 10, Code 2017, 16 are amended to read as follows: 17 8. Local option taxes authorized to be imposed as provided 18 in this chapter are a local sales and services tax , and a local 19 vehicle tax , and a local use tax . The rate of the tax shall 20 be in increments of one dollar per vehicle for a vehicle tax 21 as set on the petition seeking to impose the vehicle tax. The 22 rate of a local sales and services tax shall not be more than 23 one percent as set by the governing body. The rate of a local 24 use tax shall be the same as the local sales and services tax 25 rate set by the same governing body. 26 9. In a county that has imposed a local option sales 27 and services tax or a local option use tax , the board of 28 supervisors shall, notwithstanding any contrary provision of 29 this chapter , repeal the local option sales and services tax or 30 the local option use tax in the unincorporated areas or in an 31 incorporated city area in which the tax has been imposed upon 32 adoption of its own motion for repeal in the unincorporated 33 areas or upon receipt of a motion adopted by the governing 34 body of that incorporated city area requesting repeal. If a 35 -6- LSB 2285YH (2) 87 mm/rj 6/ 19

H.F. 606 local sales and services tax is repealed pursuant to such a 1 motion, the local use tax imposed within the same incorporated 2 city area or the unincorporated area, if any, shall be deemed 3 to be repealed by the same motion repealing the local sales 4 and services tax. The board of supervisors shall repeal the 5 local option sales and services tax or the local option use 6 tax effective on the later of the date of the adoption of the 7 repeal motion or the earliest date specified in section 423B.6, 8 subsection 1 . For purposes of this subsection , incorporated 9 city area includes an incorporated city which is contiguous to 10 another incorporated city. 11 10. Notwithstanding subsection 9 or any other contrary 12 provision of this chapter , a local option sales and services 13 tax and a local use tax shall not be repealed or reduced in rate 14 if obligations are outstanding which are payable as provided in 15 section 423B.9 , unless funds sufficient to pay the principal, 16 interest, and premium, if any, on the outstanding obligations 17 at and prior to maturity have been properly set aside and 18 pledged for that purpose. 19 Sec. 4. NEW SECTION . 423B.5A Local use tax. 20 1. A county that is imposing a local sales and services tax 21 under section 423B.5 may impose a local use tax at the same 22 rate on the purchase price or installed purchase price taxed by 23 the state under chapter 423, subchapter III. A local use tax 24 shall be imposed on the same basis as the state use tax except 25 it shall not be imposed on any of the following: 26 a. The purchase price on the use of natural gas, natural gas 27 service, electricity, or electric service. 28 b. The purchase price on the use of any property or on the 29 use of any service not taxed by the state. 30 c. The purchase price from the use of motor fuel or special 31 fuel as defined in chapter 452A which is consumed for highway 32 use or in watercraft or aircraft if the fuel tax is paid on the 33 transaction and a refund has not or will not be allowed. 34 d. The purchase price from the use of equipment by the state 35 -7- LSB 2285YH (2) 87 mm/rj 7/ 19

H.F. 606 department of transportation. 1 2. A local use tax is applicable to uses of property or 2 services within those incorporated and unincorporated areas 3 of the county where it is imposed and shall be collected by 4 all persons required to collect state use taxes, and if not 5 collected by such persons shall be paid by the person using 6 the property or service. All cities contiguous to each other 7 shall be treated as part of one incorporated area and the tax 8 is imposed in each of those contiguous cities only if the 9 majority of those voting in the total area covered by the 10 contiguous cities favors its imposition. In the case of a 11 local use tax submitted to the registered voters of two or more 12 contiguous counties as provided in section 423B.1, subsection 13 4, paragraph “c” , all cities contiguous to each other shall be 14 treated as part of one incorporated area, even if the corporate 15 boundaries of one or more of the cities include areas of more 16 than one county, and the tax shall be imposed in each of those 17 contiguous cities only if a majority of those voting on the tax 18 in the total area covered by the contiguous cities favor its 19 imposition. 20 3. For purposes of the proper administration of the local 21 use tax and to prevent its evasion, evidence that tangible 22 personal property was sold by any person for delivery to a 23 location in this state shall be prima facie evidence that such 24 tangible personal property was sold for use at that location 25 in this state. 26 4. The amount of the purchase price, for purposes of 27 determining the amount of the local use tax, does not include 28 the amount of any state use tax. 29 5. A tax permit other than the state use tax permit 30 required under section 423.36 shall not be required by local 31 authorities. 32 Sec. 5. Section 423B.6, Code 2017, is amended to read as 33 follows: 34 423B.6 Administration. 35 -8- LSB 2285YH (2) 87 mm/rj 8/ 19

H.F. 606 1. a. A local sales and services tax or a local use tax 1 shall be imposed either January 1 or July 1 following the 2 notification of the director of revenue but not sooner than 3 ninety days following the favorable election and not sooner 4 than sixty days following notice to sellers, as defined in 5 section 423.1 . However, a jurisdiction which has voted to 6 continue imposition of the tax may impose that tax without 7 repeal of the prior tax. 8 b. A local sales and services tax or a local use tax shall 9 be repealed only on June 30 or December 31 but not sooner than 10 ninety days following the favorable election if one is held. 11 However, a local sales and services tax shall not be repealed 12 before the tax has been in effect for one year. At least forty 13 days before the imposition or repeal of the tax, a county shall 14 provide notice of the action by certified mail to the director 15 of revenue. 16 c. The imposition of or a rate change for a local sales 17 and services tax or a local use tax shall not be applied to 18 purchases from a printed catalog wherein a purchaser computes 19 the local tax based on rates published in the catalog unless a 20 minimum of one hundred twenty days’ notice of the imposition or 21 rate change has been given to the seller from the catalog and 22 the first day of a calendar quarter has occurred on or after 23 the one hundred twentieth day. 24 d. If a local sales and services tax has been imposed 25 prior to April 1, 2000, and at the time of the election a date 26 for repeal was specified on the ballot, the local sales and 27 services tax may be repealed on that date, notwithstanding 28 paragraph “b” . 29 2. a. The director of revenue shall administer a local 30 sales and services tax and a local use tax as nearly as 31 possible in conjunction with the administration of state sales 32 and use tax laws. The director shall provide appropriate forms 33 or provide on the regular state tax forms for reporting local 34 sales and services tax liability and local use tax liability . 35 -9- LSB 2285YH (2) 87 mm/rj 9/ 19

H.F. 606 b. The ordinance of a county board of supervisors imposing 1 a local sales and services tax or a local use tax shall adopt 2 by reference the applicable provisions of the appropriate 3 sections of chapter 423 . All powers and requirements of the 4 director to administer the state sales tax law and use tax 5 law are applicable to the administration of a local sales and 6 services tax law , and the local excise tax, and the local use 7 tax, including but not limited to the provisions of section 8 422.25, subsection 4 , sections 422.30 , 422.67 , and 422.68 , 9 section 422.69, subsection 1 , sections 422.70 through 422.75 , 10 section and sections 423.14, subsection 1 and subsection 2, 11 paragraphs “b” through “e” , and sections 423.15, 423.23 , 423.24 , 12 423.25 , 423.31 through 423.35 , 423.37 through 423.42 , 423.46 , 13 and 423.47 . Local officials shall confer with the director of 14 revenue for assistance in drafting the ordinance imposing a 15 local sales and services tax or a local use tax . A certified 16 copy of the ordinance shall be filed with the director as soon 17 as possible after passage. 18 c. Frequency of deposits and quarterly reports of with the 19 department of revenue are governed by the tax provisions in 20 section 423.31 for a local sales and services tax with the 21 department of revenue and are governed by the tax provisions 22 in section 423.31 423.32 for a local use tax . Local tax 23 collections shall not be included in computation of the total 24 tax to determine frequency of filing under section 423.31 or 25 432.32 . 26 d. The director shall apply a boundary change of a county or 27 city imposing or collecting the local sales and services tax 28 or the local use tax to the imposition or collection of that 29 tax only on the first day of a calendar quarter which occurs 30 sixty days or more after the director has given notice of the 31 boundary change to sellers. 32 3. a. The director, in consultation with local officials, 33 shall collect and account for a local sales and services tax 34 and a local use tax . The director shall certify each quarter 35 -10- LSB 2285YH (2) 87 mm/rj 10/ 19

H.F. 606 the amount of local sales and services tax receipts and any 1 interest and penalties to be credited to the “local sales and 2 services tax fund” established in the office of the treasurer 3 of state. The director shall certify each quarter the amount 4 of local use tax receipts and any interest and penalties to 5 be credited to the “local use tax fund” established in the 6 office of the treasurer of state. All taxes collected under 7 this chapter by a retailer or any individual are deemed to be 8 held in trust for the state of Iowa and the local jurisdictions 9 imposing the taxes. 10 b. All local tax moneys and interest and penalties received 11 or refunded one hundred eighty days or more after the date on 12 which the county repeals its local sales and services tax or 13 local use tax shall be deposited in or withdrawn from the state 14 general fund. 15 Sec. 6. Section 423B.7, subsection 1, paragraph a, Code 16 2017, is amended to read as follows: 17 a. Except as provided in paragraph “b” , the director shall 18 credit the local sales and services tax receipts and interest 19 and penalties from a county-imposed tax to the county’s 20 account in the local sales and services tax fund and from a 21 city-imposed tax under section 423B.1, subsection 2 , to the 22 city’s account in the local sales and services tax fund. The 23 director shall credit the local use tax receipts and interest 24 and penalties from a county-imposed tax to the county’s account 25 in the local use tax fund. If the director is unable to 26 determine from which county any of the receipts were collected, 27 those receipts shall be allocated among the possible counties 28 based on allocation rules adopted by the director. 29 Sec. 7. Section 423B.7, subsection 7, Code 2017, is amended 30 to read as follows: 31 7. Local sales and services tax moneys and local use tax 32 moneys received by a city or county may be expended for any 33 lawful purpose of the city or county. 34 Sec. 8. Section 423B.8, Code 2017, is amended to read as 35 -11- LSB 2285YH (2) 87 mm/rj 11/ 19

H.F. 606 follows: 1 423B.8 Construction contractor refunds. 2 1. Construction contractors may make application to the 3 department for a refund of the additional local sales and 4 services tax or local use tax paid under this chapter by 5 reason of taxes paid on goods, wares, or merchandise under the 6 following conditions: 7 a. The goods, wares, or merchandise are incorporated into an 8 improvement to real estate in fulfillment of a written contract 9 fully executed prior to the date of the imposition or increase 10 in rate of a local sales and services tax or a local use tax 11 under this chapter . The refund shall not apply to equipment 12 transferred in fulfillment of a mixed construction contract. 13 b. The contractor has paid to the department or to a 14 retailer the full amount of the state and local tax. 15 c. The claim is filed on forms provided by the department 16 and is filed within one year of the date the tax is paid. 17 2. The department shall pay the refund from the appropriate 18 city’s or county’s account in the local sales and services tax 19 fund or the local use tax fund . 20 3. A contractor who makes an erroneous application for 21 refund shall be liable for payment of the excess refund paid 22 plus interest at the rate in effect under section 421.7 . In 23 addition, a contractor who willfully makes a false application 24 for refund is guilty of a simple misdemeanor and is liable 25 for a penalty equal to fifty percent of the excess refund 26 claimed. Excess refunds, penalties, and interest due under 27 this subsection may be enforced and collected in the same 28 manner as the local sales and services tax and the local use 29 tax imposed under this chapter . 30 Sec. 9. Section 423B.9, subsections 1, 2, and 3, Code 2017, 31 are amended to read as follows: 32 1. For purposes of this section unless the context otherwise 33 requires: 34 a. “Bond issuer” or “issuer” means a city, a county, or a 35 -12- LSB 2285YH (2) 87 mm/rj 12/ 19

H.F. 606 secondary recipient. 1 b. “Designated portion” means the portion of the local 2 option sales and services tax revenues or the local option use 3 tax revenues which is authorized to be expended for one or a 4 combination of purposes under an adopted public measure. 5 c. “Secondary recipient” means a political subdivision of 6 the state which is to receive revenues from a local option 7 sales and services tax or a local use tax over a period of years 8 pursuant to the terms of a chapter 28E agreement with one or 9 more cities or counties. 10 2. An issuer of public bonds which is a recipient of 11 revenues from a local option sales and services tax or a local 12 use tax imposed pursuant to this chapter may issue bonds in 13 anticipation of the collection of one or more designated 14 portions of the local option sales and services tax or the 15 local option use tax and may pledge irrevocably an amount of 16 the revenue derived from the designated portions for each of 17 the years the bonds remain outstanding to the payment of the 18 bonds. Bonds may be issued only for one or more of the purposes 19 set forth on the ballot proposition concerning the imposition 20 of the local option sales and services tax or the local option 21 use tax , except bonds shall not be issued which are payable 22 from that portion of tax revenues designated for property 23 tax relief. The bonds may be issued in accordance with the 24 procedures set forth in either subsection 3 or 4 . 25 3. The governing body of an issuer may authorize the 26 issuance of bonds which are payable from the designated portion 27 of the revenues of the local option sales and services tax 28 or the local option use tax , and not from property tax, by 29 following the authorization procedures set forth for cities 30 in section 384.83 . Bonds may be issued for the purpose of 31 refunding outstanding and previously issued bonds under this 32 subsection without otherwise complying with the provisions of 33 this subsection . 34 Sec. 10. Section 423B.9, subsection 4, paragraph b, Code 35 -13- LSB 2285YH (2) 87 mm/rj 13/ 19

H.F. 606 2017, is amended to read as follows: 1 b. The provisions of chapter 76 apply to the bonds payable 2 as provided in this subsection , except that the mandatory levy 3 to be assessed pursuant to section 76.2 shall be at a rate 4 to generate an amount which together with the receipts from 5 the pledged designated portion of the local option sales and 6 services tax or the local option use tax is sufficient to pay 7 the interest and principal on the bonds. All amounts collected 8 as a result of the levy assessed pursuant to section 76.2 and 9 paid out in the first instance for bond principal and interest 10 shall be repaid to the bond issuer which levied the tax from 11 the first available designated portion of local option sales 12 and services tax or local option use tax collections received 13 in excess of the requirement for the payment of the principal 14 and interest of the bonds and when repaid shall be applied in 15 reduction of property taxes. The amount of bonds which may be 16 issued under section 76.3 shall be the amount which could be 17 retired from the actual collections of the designated portions 18 of the local option sales and services tax or the local option 19 use tax for the last four calendar quarters, as certified by 20 the director of revenue. The amount of tax revenues pledged 21 jointly by other cities or counties may be considered for the 22 purpose of determining the amount of bonds which may be issued. 23 If the local option sales and services tax or the local 24 option use tax has been in effect for less than four calendar 25 quarters, the tax collected within the shorter period may be 26 adjusted to project the collections of the designated portion 27 for the full year for the purpose of determining the amount of 28 the bonds which may be issued. The provisions of this section 29 constitute separate authorization for the issuance of bonds and 30 shall prevail in the event of conflict with any other provision 31 of the Code limiting the amount of bonds which may be issued or 32 the source of payment of the bonds. Bonds issued under this 33 section shall not limit or restrict the authority of the bond 34 issuer to issue bonds under other provisions of the Code. 35 -14- LSB 2285YH (2) 87 mm/rj 14/ 19

H.F. 606 Sec. 11. Section 423B.9, subsection 5, Code 2017, is amended 1 to read as follows: 2 5. A city or county, jointly with one or more other 3 political subdivisions as provided in chapter 28E , may pledge 4 irrevocably any amount derived from the designated portions of 5 the revenues of the local option sales and services tax or the 6 local option use tax to the support or payment of bonds of an 7 issuer, issued for one or more purposes set forth on the ballot 8 proposition concerning the imposition of the local option sales 9 and services tax or the local option use tax or a political 10 subdivision may apply the proceeds of its bonds to the support 11 of any such purpose. 12 DIVISION II 13 CORRESPONDING AMENDMENTS 14 Sec. 12. Section 15J.7, subsection 2, Code 2017, is amended 15 to read as follows: 16 2. In addition to the moneys received pursuant to section 17 15J.6 , a municipality may deposit in the reinvestment project 18 fund any other moneys lawfully at the municipality’s disposal, 19 including but not limited to local sales and services tax or 20 local use tax receipts collected under chapter 423B if such 21 use is a purpose authorized for the municipality under chapter 22 423B . 23 Sec. 13. Section 49.73, subsection 1, paragraph b, Code 24 2017, is amended to read as follows: 25 b. Any election conducted for a city, including a local 26 option sales and services tax or a local use tax election 27 conducted pursuant to section 423B.1 . At elections conducted 28 pursuant to chapter 423B , all polling places shall have the 29 same voting hours. 30 Sec. 14. Section 76.4, Code 2017, is amended to read as 31 follows: 32 76.4 Permissive application of funds. 33 Whenever the governing authority of such political 34 subdivision shall have on hand funds derived from any other 35 -15- LSB 2285YH (2) 87 mm/rj 15/ 19

H.F. 606 source than taxation which may be appropriated to the payment 1 either of interest or principal, or both principal and interest 2 of such bonds, such funds may be so appropriated and used and 3 the levy for the payment of the bonds correspondingly reduced. 4 This section shall not restrict the authority of a political 5 subdivision to apply local sales and services tax or local 6 use tax receipts collected pursuant to chapter 423B for such 7 purpose. Notwithstanding section 423F.3 , a school district may 8 apply tax receipts received pursuant to chapter 423F for the 9 purposes of this section . 10 Sec. 15. Section 279.63, subsection 2, paragraph a, Code 11 2017, is amended to read as follows: 12 a. All property tax levies, income surtaxes, and 13 local option sales and use taxes in place in the school 14 district, listed by type of levy, rate, amount, duration, 15 and notification of the maximum rate and amount limitations 16 permitted by statute. 17 Sec. 16. Section 418.13, subsection 2, Code 2017, is amended 18 to read as follows: 19 2. In addition to the moneys received pursuant to section 20 418.10 or 418.12 , a governmental entity may deposit in the 21 flood project fund any other moneys lawfully received by the 22 governmental entity, including but not limited to local sales 23 and services tax or local use tax receipts collected under 24 chapter 423B . 25 Sec. 17. Section 423.4, subsection 7, paragraph f, Code 26 2017, is amended to read as follows: 27 f. The refund in this subsection applies only to state sales 28 and use tax paid and does not apply to local option sales and 29 services taxes or local option use taxes imposed pursuant to 30 chapter 423B . Notwithstanding the state sales tax imposed 31 in section 423.2 , a refund issued pursuant to this section 32 shall not exceed an amount equal to five percent of the sales 33 price of the fuel used to create heat, power, and steam for 34 processing or generating electrical current or from the sale 35 -16- LSB 2285YH (2) 87 mm/rj 16/ 19

H.F. 606 price of electricity consumed by computers, machinery, or other 1 equipment for operation of the data center business facility. 2 Sec. 18. Section 423.4, subsection 8, paragraph g, Code 3 2017, is amended to read as follows: 4 g. The refund in this subsection applies only to state sales 5 and use tax paid and does not apply to local option sales and 6 services taxes or local option use taxes imposed pursuant to 7 chapter 423B . Notwithstanding the state sales tax imposed in 8 section 423.2 , a refund issued pursuant to this section shall 9 not exceed an amount equal to five percent of the sales price 10 of the items listed in paragraph “a” , subparagraphs (1), (2), 11 and (3). 12 Sec. 19. Section 423.34A, unnumbered paragraph 1, Code 13 2017, is amended to read as follows: 14 A purchaser is relieved of liability for payment of state 15 sales or use tax, for payment of any local option sales or use 16 tax, for payment of interest, or for payment of any penalty for 17 nonpayment of tax which nonpayment is not fraudulent, willful, 18 or intentional, under the following circumstances: 19 EXPLANATION 20 The inclusion of this explanation does not constitute agreement with 21 the explanation’s substance by the members of the general assembly. 22 BACKGROUND. Iowa law currently imposes a state sales tax and 23 a state use tax. The state sales tax applies to retail sales of 24 property and certain services within Iowa. The state use tax 25 is complementary to the state sales tax and generally applies 26 to the purchase of property or a service that would be subject 27 to the state sales tax if the transaction was consummated in 28 Iowa, but that is instead consummated outside of Iowa but 29 purchased for use in Iowa and used in Iowa. 30 Iowa law also currently allows Iowa counties to impose a 31 local sales and services tax that, with a few exceptions, 32 applies to the same sales of property and services as are 33 subject to the state sales tax. The local option sales and 34 services tax generally applies to sales occurring, and services 35 -17- LSB 2285YH (2) 87 mm/rj 17/ 19