H.F. 76 Section 1. Section 423B.1, subsections 5 and 8, Code 2017, 1 are amended to read as follows: 2 5. The county commissioner of elections shall submit the 3 question of imposition of a local option tax at an election 4 held on a date specified in section 39.2, subsection 4 , 5 paragraph “a” . The election shall not be held sooner than sixty 6 days after publication of notice of the ballot proposition. 7 The ballot proposition shall specify the type and rate of tax 8 and in the case of a vehicle tax the classes that will be 9 exempt and in the case of a local sales and services tax the 10 date it will be imposed which date shall not be earlier than 11 ninety days following the election. The ballot proposition 12 shall also specify the approximate amount of local option tax 13 revenues that will be used for property tax relief and shall 14 contain a statement as to the specific purpose or purposes for 15 which the revenues shall otherwise be expended. If the county 16 board of supervisors decides under subsection 6 to specify a 17 date on which the local option sales and services tax shall 18 automatically be repealed, the date of the repeal shall also 19 be specified on the ballot. The rate of the vehicle tax shall 20 be in increments of one dollar per vehicle as set by the 21 petition seeking to impose the tax. The rate of a local sales 22 and services tax shall not be more than one and three-eighths 23 percent as set by the governing body. The state commissioner 24 of elections shall establish by rule the form for the ballot 25 proposition which form shall be uniform throughout the state. 26 8. Local option taxes authorized to be imposed as provided 27 in this chapter are a local sales and services tax and a local 28 vehicle tax. The rate of the tax shall be in increments of one 29 dollar per vehicle for a vehicle tax as set on the petition 30 seeking to impose the vehicle tax. The rate of a local sales 31 and services tax shall not be more than one and three-eighths 32 percent as set by the governing body. 33 Sec. 2. Section 423B.5, subsection 1, Code 2017, is amended 34 to read as follows: 35 -1- LSB 1133YH (2) 87 mm/sc 1/ 8

H.F. 76 1. A local sales and services tax at the rate of not 1 more than one and three-eighths percent may be imposed by a 2 county on the sales price taxed by the state under chapter 3 423, subchapter II . A local sales and services tax shall be 4 imposed on the same basis as the state sales and services tax 5 or in the case of the use of natural gas, natural gas service, 6 electricity, or electric service on the same basis as the state 7 use tax and shall not be imposed on the sale of any property 8 or on any service not taxed by the state, except the tax shall 9 not be imposed on the sales price from the sale of motor fuel 10 or special fuel as defined in chapter 452A which is consumed 11 for highway use or in watercraft or aircraft if the fuel tax 12 is paid on the transaction and a refund has not or will not 13 be allowed, on the sales price from the sale of equipment by 14 the state department of transportation, or on the sales price 15 from the sale or use of natural gas, natural gas service, 16 electricity, or electric service in a city or county where the 17 sales price from the sale of natural gas or electric energy is 18 subject to a franchise fee or user fee during the period the 19 franchise or user fee is imposed. A local sales and services 20 tax is applicable to transactions within those incorporated 21 and unincorporated areas of the county where it is imposed and 22 shall be collected by all persons required to collect state 23 sales taxes. All cities contiguous to each other shall be 24 treated as part of one incorporated area and the tax would be 25 imposed in each of those contiguous cities only if the majority 26 of those voting in the total area covered by the contiguous 27 cities favors its imposition. In the case of a local sales and 28 services tax submitted to the registered voters of two or more 29 contiguous counties as provided in section 423B.1, subsection 30 4 , paragraph “c” , all cities contiguous to each other shall be 31 treated as part of one incorporated area, even if the corporate 32 boundaries of one or more of the cities include areas of more 33 than one county, and the tax shall be imposed in each of those 34 contiguous cities only if a majority of those voting on the tax 35 -2- LSB 1133YH (2) 87 mm/sc 2/ 8

H.F. 76 in the total area covered by the contiguous cities favored its 1 imposition. 2 Sec. 3. Section 423B.7, subsection 1, paragraph a, Code 3 2017, is amended to read as follows: 4 a. Except as provided in paragraph paragraphs “b” and “c” , 5 the director shall credit the local sales and services tax 6 receipts and interest and penalties from a county-imposed 7 tax to the county’s account in the local sales and services 8 tax fund and from a city-imposed tax under section 423B.1, 9 subsection 2 , to the city’s account in the local sales and 10 services tax fund. If the director is unable to determine 11 from which county any of the receipts were collected, those 12 receipts shall be allocated among the possible counties based 13 on allocation rules adopted by the director. 14 Sec. 4. Section 423B.7, subsection 1, Code 2017, is amended 15 by adding the following new paragraph: 16 NEW PARAGRAPH . c. Notwithstanding paragraph “a” , for local 17 sales and services tax receipts collected from a county-imposed 18 tax for any period of time during which the county-imposed tax 19 rate exceeds one percent, a proportion of such tax receipts 20 equal to the same proportion that the amount of the tax rate 21 in excess of one percent bears to the total tax rate shall be 22 credited to a special county natural resources and outdoor 23 recreation account in the local sales and services tax fund. 24 This paragraph applies to tax receipts remaining after the 25 credit provided in paragraph “b” , as adjusted in section 26 423B.10, subsection 3, paragraph “d” . 27 Sec. 5. Section 423B.7, Code 2017, is amended by adding the 28 following new subsection: 29 NEW SUBSECTION . 6A. From each special county natural 30 resources and outdoor recreation account, the revenue shall be 31 remitted as provided in subsections 3 and 4 and when received 32 by the board of supervisors or city council shall be deposited 33 in a special fund created by the county or city and used by the 34 county or city as provided in section 423B.11. 35 -3- LSB 1133YH (2) 87 mm/sc 3/ 8

H.F. 76 Sec. 6. Section 423B.10, subsection 3, Code 2017, is amended 1 by adding the following new paragraph: 2 NEW PARAGRAPH . d. (1) The calculations in paragraphs 3 “a” and “b” shall not include county-imposed local sales and 4 services tax revenue attributable to any portion of a tax rate 5 that exceeds one percent. If the county-imposed local sales 6 and services tax rate exceeds one percent during the base year 7 or any fiscal year following the base year, the department of 8 revenue shall, for purposes of the applicable calculations in 9 paragraphs “a” and “b” , reduce the amount of county-imposed tax 10 revenue collected from retail establishments located in the 11 area comprising the urban renewal area by the same proportion 12 that the amount of the county-imposed tax rate in excess of one 13 percent bears to the total county-imposed tax rate. 14 (2) If the county-imposed tax rate exceeded one percent for 15 less than the entire applicable fiscal year, the department of 16 revenue shall make the adjustment required in subparagraph (1) 17 only to the county-imposed tax revenue collected from retail 18 establishments located in the area comprising the urban renewal 19 area for the period of time the tax rate exceeded one percent. 20 Sec. 7. Section 423B.10, subsection 5, Code 2017, is amended 21 to read as follows: 22 5. In addition to the moneys received pursuant to the 23 ordinance authorized under subsection 2 , an eligible city 24 may deposit any other local sales and services tax revenues 25 received by it pursuant to the distribution formula in section 26 423B.7, subsections 3, 4, and 5 , to the special fund described 27 in section 403.19, subsection 2 , except local sales and 28 services tax revenue deposited in the special fund of a city or 29 county pursuant to section 423B.7, subsection 6A . 30 Sec. 8. NEW SECTION . 423B.11 Funding natural resources and 31 outdoor recreation projects. 32 1. Moneys deposited in a special fund of a city or county 33 pursuant to section 423B.7, subsection 6A, shall be used by 34 the city or county only as provided in this section and only 35 -4- LSB 1133YH (2) 87 mm/sc 4/ 8

H.F. 76 to support voluntary initiatives and shall not be used for 1 regulatory efforts, enforcement actions, or litigation. 2 2. In addition to the moneys deposited pursuant to section 3 423B.7, subsection 6A, a city or county may deposit any other 4 local sales and services tax revenues received by it pursuant 5 to the distribution formula in section 423B.7, subsections 3, 6 4, and 5. 7 3. Two or more cities or counties may enter into an 8 agreement under chapter 28E to form an entity in order to carry 9 out any initiative described in this section. 10 4. Twenty-three percent of the moneys in each fund shall be 11 used to support the following initiatives: 12 a. The establishment, restoration, or enhancement of parks, 13 preserves, forests, wildlife areas, wildlife habitats, native 14 prairies, and wetlands. 15 b. Wildlife diversity. 16 c. Recreational purposes. 17 d. Technical assistance and financial incentives to private 18 landowners to promote the management of forests, fisheries, 19 wetlands, and wildlife. 20 e. The improvement of water trails, rivers, and streams. 21 f. Education and outreach that provide instruction regarding 22 natural history and the outdoors. The subjects of such 23 instruction may relate to opportunities involving recreational 24 purposes, outdoor safety, and ethics. 25 5. Twenty percent of the moneys in each fund shall be used 26 to support the following initiatives: 27 a. Soil conservation and watershed protection. 28 b. The conservation of highly erodible land. 29 c. Soil conservation or crop management practices used on 30 land producing biomass for biorefineries, including cellulosic 31 ethanol production. 32 6. Fourteen percent of the moneys in each fund shall be used 33 to support the following initiatives: 34 a. Water resource projects to preserve watersheds, including 35 -5- LSB 1133YH (2) 87 mm/sc 5/ 8

H.F. 76 but not limited to all of the following: 1 (1) Projects to protect, restore, or enhance water 2 quality through the provision of financial assistance for 3 impairment-based, locally directed watershed projects, 4 including water resource restoration projects as defined in 5 section 384.80. 6 (2) Regional and community watershed assessment, planning, 7 and prioritization efforts, including as provided in chapter 8 466B. 9 b. Surface water protection projects and practices, 10 including but not limited to the installation of permanent 11 vegetation cover, filter strips, grass waterways, and riparian 12 forest buffers; dredging; and bank stabilization. 13 7. Thirteen percent of the moneys in each fund shall be used 14 as follows: 15 a. Fifty-two percent shall be used to support initiatives 16 involving the acquisition, protection, and development of 17 parks, preserves, and open spaces, including multipurpose 18 trails, restroom facilities, shelter houses, and picnic 19 facilities, but excluding athletic fields, baseball or softball 20 diamonds, tennis courts, golf courses, swimming pools, and 21 other sport facilities. 22 b. Twenty percent shall be used to support the same 23 initiatives listed in subsection 8 of this section. 24 c. Twenty percent shall be used to support soil and water 25 enhancement programs, including but not limited to woodland 26 protection and enhancement, wildlife habitat preservation and 27 enhancement, protection of highly erodible soils, and clean 28 water. 29 d. Five percent shall be used to support historical resource 30 development programs. 31 e. Three percent shall be used for the development and 32 implementation of integrated roadside vegetation plans. 33 8. Thirteen percent of the moneys in each fund shall be used 34 to support the following initiatives: 35 -6- LSB 1133YH (2) 87 mm/sc 6/ 8

H.F. 76 a. The maintenance and improvement of parks, preserves, 1 wildlife areas, wildlife habitats, native prairies, and 2 wetlands. 3 b. Wildlife diversity. 4 c. Recreational purposes. 5 d. The improvement of water trails, rivers, and streams. 6 e. Education and outreach programs and projects that provide 7 instruction regarding natural history and the outdoors. The 8 subjects of such instruction may relate to opportunities 9 involving recreational purposes, outdoor safety, and ethics. 10 f. Any other purpose described in section 350.1. 11 9. Ten percent of the moneys in each fund shall be used 12 to support initiatives related to the design, establishment, 13 maintenance, improvement, and expansion of land trails and 14 water trails. 15 10. Seven percent of the moneys in each fund shall be used 16 to support public lake restoration initiatives. An initiative 17 shall account for a lake’s recreational, environmental, 18 aesthetic, ecological, and social value, and must improve water 19 quality. 20 EXPLANATION 21 The inclusion of this explanation does not constitute agreement with 22 the explanation’s substance by the members of the general assembly. 23 This bill provides for an increase in the maximum local 24 option sales tax rate to fund local natural resources and 25 outdoor recreation projects. 26 BACKGROUND. Under current law, counties may impose a sales 27 tax at the local level upon a petition of the voters or motions 28 of city councils or the board of supervisors and after an 29 election at which a majority of those voting favors imposition. 30 A majority vote is also required for a repeal or rate change, 31 but the governing body on its own motion may repeal the sales 32 tax under certain circumstances. The local option sales tax 33 rate may not exceed one percent. 34 Local option tax revenues collected in a county are remitted 35 -7- LSB 1133YH (2) 87 mm/sc 7/ 8

H.F. 76 to the department of revenue (department) and, except for 1 certain revenues attributable to urban renewal projects, 2 distributed back to the county and cities within the county 3 using a statutory formula involving population and historical 4 property tax revenues. 5 BILL CHANGES. The bill increases the maximum local option 6 sales tax rate that may be imposed by a county to one and 7 three-eighths percent (1.375 percent) from one percent. If a 8 county votes to initially impose or to increase the tax rate 9 above one percent, the bill requires tax revenues collected 10 on the amount of the tax rate in excess of one percent to be 11 remitted to counties and cities using the existing statutory 12 formula, and then deposited in a special fund of the city or 13 county and used exclusively for funding natural resources and 14 outdoor recreation projects as described in the bill. 15 The special fund moneys shall only be used to support 16 voluntary initiatives and shall not be used for regulatory 17 efforts, enforcement actions, or litigation. The bill allows 18 for two or more cities or counties to enter into an agreement 19 under Code chapter 28E to form an entity in order to carry 20 out any authorized initiative, and allows a city or county to 21 deposit other local sales and services tax revenues it receives 22 in its special natural resources and outdoor recreation fund. 23 The bill also amends the calculation for determining the 24 funding of urban renewal projects with local option sales tax 25 revenues to ensure that such calculation is not impacted by 26 local option sales tax revenues collected on the amount of the 27 tax rate in excess of one percent. 28 -8- LSB 1133YH (2) 87 mm/sc 8/ 8