Senate Joint Resolution 1 - Introduced SENATE JOINT RESOLUTION 1 BY SCHNEIDER , ANDERSON , BEHN , BERTRAND , BREITBACH , BROWN , CHAPMAN , CHELGREN , COSTELLO , DAWSON , DIX , EDLER , FEENSTRA , GARRETT , GREENE , GUTH , C. JOHNSON , KAPUCIAN , KRAAYENBRINK , LOFGREN , ROZENBOOM , SCHULTZ , SEGEBART , SHIPLEY , SINCLAIR , SMITH , WHITVER , ZAUN , and ZUMBACH SENA TE JOINT RESOLUTION A Joint Resolution proposing an amendment to the Constitution 1 of the State of Iowa relating to the state budget by 2 creating a state general fund expenditure limitation. 3 BE IT RESOLVED BY THE GENERAL ASSEMBLY OF THE STATE OF IOWA: 4 TLSB 1682XS (5) 87 tm/sc

S.J.R. 1 Section 1. The following amendment to the Constitution of 1 the State of Iowa is proposed: 2 The Constitution of the State of Iowa is amended by adding 3 the following new section to a new Article: 4 ARTICLE _____. 5 EXPENDITURE LIMITATION. 6 General fund expenditure limitation. SECTION 1. 7 1. For the purposes of this section: 8 a. “Adjusted revenue estimate” means the most recent revenue 9 estimate determined before January 1, or a later and lower 10 revenue estimate determined before adjournment of the regular 11 session of the general assembly, for the general fund for the 12 following fiscal year, as determined by a revenue estimating 13 conference, adjusted by subtracting estimated refunds payable 14 from that estimated revenue. However, if the state general 15 fund expenditure limitation is calculated based upon the 16 adjusted revenue estimate and not based upon the net revenue 17 estimate and the general assembly holds an extraordinary 18 session prior to the commencement of the fiscal year to which 19 the adjusted revenue estimate applies and if before or during 20 the extraordinary session the revenue estimating conference 21 determines a lower revenue estimate, the lower estimate shall 22 be used for calculating the adjusted revenue estimate. 23 b. “Current fiscal year” means the fiscal year preceding 24 the fiscal year to which the state general fund expenditure 25 limitation applies. 26 c. “General fund” means the principal operating fund of the 27 state. 28 d. “Net revenue estimate” means the most recent revenue 29 estimate determined before January 1, or a later and lower 30 estimate determined before adjournment of the regular 31 session of the general assembly, for the general fund 32 for the current fiscal year, as determined by the revenue 33 estimating conference, and adjusted by subtracting estimated 34 refunds payable from that estimated revenue. However, if 35 -1- LSB 1682XS (5) 87 tm/sc 1/ 5

S.J.R. 1 the state general fund expenditure limitation is calculated 1 based upon the net revenue estimate and not based upon the 2 adjusted revenue estimate and the general assembly holds an 3 extraordinary session prior to the completion of the fiscal 4 year to which the net revenue estimate applies and if before 5 or during the extraordinary session the revenue estimating 6 conference determines a lower revenue estimate for the current 7 fiscal year, the lower estimate shall be used for calculating 8 the net revenue estimate for the general fund. 9 e. “New revenue” means moneys received by the general fund 10 due to increased tax rates or fees or newly created taxes or 11 fees over and above those moneys received by the general fund 12 due to state taxes or fees in effect as of January 1 following 13 the most recent meeting of the revenue estimating conference. 14 “New revenue” also includes moneys received by the general fund 15 due to new transfers to the general fund over and above those 16 moneys received by the general fund due to transfers in effect 17 as of January 1 following the most recent meeting of the state 18 revenue estimating conference. Except for transfers provided 19 for by law, the revenue estimating conference shall determine 20 whether transfers to the general fund are to be considered as 21 new revenue in determining the state general fund expenditure 22 limitation. 23 2. A state general fund expenditure limitation is created, 24 as calculated in subsection 3, for each fiscal year beginning 25 on or after July 1 following ratification by the voters of this 26 amendment to the Constitution of the State of Iowa. 27 3. The state general fund expenditure limitation for a 28 fiscal year shall be the lesser of the following amounts: 29 a. Ninety-nine percent of the adjusted revenue estimate for 30 the following fiscal year for the general fund. 31 b. One hundred four percent of the current fiscal year net 32 revenue estimate for the general fund. 33 4. The state general fund expenditure limitation shall be 34 used by the governor in the preparation and approval of the 35 -2- LSB 1682XS (5) 87 tm/sc 2/ 5

S.J.R. 1 budget and by the general assembly in the budget process. 1 5. If a new revenue source is proposed, the budget revenue 2 projection used for that new revenue source for the period 3 beginning on the effective date of the new revenue source and 4 ending in the fiscal year in which that source is included in 5 the adjusted revenue estimate or the net revenue estimate, 6 as applicable, shall be ninety-five percent of the amount 7 remaining after subtracting estimated refunds payable from 8 the projected revenue from that source. If a new revenue 9 source is established and implemented, the state general fund 10 expenditure limitation amount calculated in subsection 3 shall 11 be recalculated to include ninety-five percent of the estimated 12 revenue from that source that is attributed to the revenue 13 estimate used to calculate the limitation amount. 14 6. The scope of the state general fund expenditure 15 limitation calculated in accordance with this section shall not 16 include federal funds, donations, constitutionally dedicated 17 moneys, and moneys expended from a state retirement system. 18 7. The governor shall submit and the general assembly shall 19 pass a budget which does not exceed the state general fund 20 expenditure limitation. The governor shall not approve or 21 disapprove appropriation bills or items of appropriation bills 22 passed by the general assembly in a manner that would cause 23 the final budget approved by the governor to exceed the state 24 general fund expenditure limitation. 25 8. The governor shall not submit and the general assembly 26 shall not pass a budget which in order to balance assumes 27 reversion of any part of the total of the appropriations 28 included in the budget. 29 9. The state shall use consistent standards, in accordance 30 with generally accepted accounting principles, for all state 31 budgeting and accounting purposes. 32 10. The general assembly shall establish by law a general 33 fund of the state and a revenue estimating conference. The 34 general assembly shall enact laws to implement this section. 35 -3- LSB 1682XS (5) 87 tm/sc 3/ 5

S.J.R. 1 Sec. 2. REFERRAL AND PUBLICATION. The foregoing amendment 1 to the Constitution of the State of Iowa is referred to the 2 general assembly to be chosen at the next general election 3 for members of the general assembly, and the secretary of 4 state is directed to cause the same to be published for three 5 consecutive months previous to the date of that election as 6 provided by law. 7 EXPLANATION 8 The inclusion of this explanation does not constitute agreement with 9 the explanation’s substance by the members of the general assembly. 10 This resolution proposes an amendment establishing a new 11 Article to the Constitution of the State of Iowa that relates 12 to state budgets and state revenue. 13 The amendment creates a state general fund expenditure 14 limitation. The amount of the limitation is the lesser of 15 99 percent of the adjusted revenue estimate for the general 16 fund of the state for the following fiscal year or 104 percent 17 of the net revenue estimate for the general fund for the 18 current fiscal year. The amendment defines adjusted revenue 19 estimate and net revenue estimate and requires that the 20 estimates be determined by a revenue estimating conference 21 which is to be created by the general assembly by law. The 22 expenditure limitation is required to be used by the governor 23 in preparation of the governor’s budget and by the general 24 assembly in the budget process. The governor is prohibited 25 from approving or disapproving of appropriations in a manner 26 that would cause the final budget approved by the governor to 27 exceed the expenditure limitation. 28 If a new revenue source is established and implemented, 95 29 percent of the estimate of that new revenue shall be included 30 in the revenue estimate used to calculate the expenditure 31 limitation. 32 The amendment also requires the state to use generally 33 accepted accounting principles for state budgeting and 34 accounting purposes. The amendment provides that the general 35 -4- LSB 1682XS (5) 87 tm/sc 4/ 5