HSB 657 (LSB 5731XL (18) 88)

SENATE/HOUSE FILE _____

BY  (PROPOSED GOVERNOR BILL)

A BILL FOR

An Act relating to state and local revenue and finances including modifying individual income taxes, sales and use taxes, water service tax, and certain tax credits and provisions relating to county juvenile court expenses and mental health region funding, making appropriations, and including effective date and applicability provisions.
BE IT ENACTED BY THE GENERAL ASSEMBLY OF THE STATE OF IOWA:

DIVISION I
INDIVIDUAL INCOME TAXES BEGINNING 2021 TAX YEAR

    Section 1.  Section 422.5A, Code 2020, is amended by striking the section and inserting in lieu thereof the following:
   422.5A  Tax rates.
   The tax imposed in section 422.5 shall be calculated at the following rates:
   1.  On all taxable income from 0 through $3,364, the rate of 0.30 percent.
   2.  On all taxable income exceeding $3,364 but not exceeding $6,728, the rate of 2.00 percent.
   3.  On all taxable income exceeding $6,728 but not exceeding $15,138, the rate of 3.73 percent.
   4.  On all taxable income exceeding $15,138 but not exceeding $25,230, the rate of 5.07 percent.
   5.  On all taxable income exceeding $25,230 but not exceeding $33,640, the rate of 5.36 percent.
   6.  On all taxable income exceeding $33,640 but not exceeding $50,460, the rate of 5.63 percent.
   7.  On all taxable income exceeding $50,460 but not exceeding $75,690, the rate of 6.97 percent.
   8.  On all taxable income exceeding $75,690, the rate of 7.48 percent.
    Sec. 2.  EFFECTIVE DATE.  This division of this Act takes effect January 1, 2021.
    Sec. 3.  APPLICABILITY.  This division of this Act applies to tax years beginning on or after January 1, 2021, but before the contingent effective date in 2018 Iowa Acts, chapter 1161, section 133.
DIVISION II
CONTINGENT EFFECTIVE DATE IN 2018 IOWA ACTS —— NET GENERAL FUND REVENUES CALCULATION

    Sec. 4.  2018 Iowa Acts, chapter 1161, section 133, subsection 1, unnumbered paragraph 1, is amended to read as follows:
   This division of this Act takes effect on January 1, 2023, if both of the following conditions are the following condition is satisfied:
    Sec. 5.  2018 Iowa Acts, chapter 1161, section 133, subsection 1, paragraph b, is amended by striking the paragraph.
    Sec. 6.  2018 Iowa Acts, chapter 1161, section 133, subsection 2, unnumbered paragraph 1, is amended to read as follows:
   If the provisions of subsection 1 are is not satisfied and this division of this Act does not take effect on January 1, 2023, then this division of this Act shall take effect on January 1 following the first fiscal year for which both of the following conditions are the following condition is satisfied:
    Sec. 7.  2018 Iowa Acts, chapter 1161, section 133, subsection 2, paragraph b, is amended by striking the paragraph.
DIVISION III
FUTURE CONTINGENT INDIVIDUAL INCOME TAXES BEGINNING IN 2023 TAX YEAR

    Sec. 8.  2018 Iowa Acts, chapter 1161, section 107, is amended to read as follows:
   SEC. 107.  Section 422.5A, as enacted in this Act, is amended by striking the section and inserting in lieu thereof the following:
   422.5A  Tax rates.
   1.  The tax imposed in section 422.5 shall be calculated at the following rates in the case of a married couple filing jointly:
   a.  On all taxable income from 0 through $12,000, the rate of 4.40 4.0 percent.
   b.  On all taxable income exceeding $12,000 but not exceeding $60,000, the rate of 4.82 4.45 percent.
   c.  On all taxable income exceeding $60,000 but not exceeding $150,000, the rate of 5.70 4.99 percent.
   d.  On all taxable income exceeding $150,000, the rate of 6.50 5.5 percent.
   2.  The tax imposed in section 422.5 shall be calculated at the following rates in the case of any taxpayer other than a married couple filing jointly:
   a.  On all taxable income from 0 through $6,000, the rate of 4.40 4.0 percent.
   b.  On all taxable income exceeding $6,000 but not exceeding $30,000, the rate of 4.82 4.45 percent.
   c.  On all taxable income exceeding $30,000 but not exceeding $75,000, the rate of 5.70 4.99 percent.
   d.  On all taxable income exceeding $75,000, the rate of 6.50 5.5 percent.
DIVISION IV
CHILD AND DEPENDENT CARE AND EARLY CHILDHOOD TAX CREDITS

    Sec. 9.  Section 422.12C, subsection 1, paragraphs f and g, Code 2020, are amended to read as follows:
   f.  For a taxpayer with net income of forty thousand dollars or more but less than forty-five ninety thousand dollars, thirty percent.
   g.  For a taxpayer with net income of forty-five ninety thousand dollars or more, zero percent.
    Sec. 10.  Section 422.12C, subsection 2, paragraph a, Code 2020, is amended to read as follows:
   a.  The taxes imposed under this division, less the amounts of nonrefundable credits allowed under this division, may be reduced by an early childhood development tax credit equal to twenty-five percent of the first one thousand dollars which the taxpayer has paid to others for each dependent, as defined in the Internal Revenue Code, ages three through five for early childhood development expenses. In determining the amount of early childhood development expenses for the tax year beginning in the 2006 calendar year only, such expenses paid during November and December of the previous tax year shall be considered paid in the tax year for which the tax credit is claimed. This credit is available to a taxpayer whose net income is less than forty-five ninety thousand dollars. If the early childhood development tax credit is claimed for a tax year, the taxpayer and the taxpayer’s spouse shall not claim the child and dependent care credit under subsection 1.
    Sec. 11.  APPLICABILITY.  This division of this Act applies to tax years beginning on or after January 1, 2021.
DIVISION V
PRECEPTOR TAX CREDIT

    Sec. 12.  NEW SECTION.  135.39E  Preceptor tax credit.
   1.  As used in this section, unless the context otherwise requires:
   a.  “Preceptor” means a licensed practicing physician who provides on-site education to a medical student or resident at a hospital or medical clinic in a rural area.
   b.  “Rural area” means any county in the state other than the ten largest counties according to the most recent federal decennial census. 
   2.  An eligible preceptor may apply to the department for tax credits under this section. The tax credit may be applied against income tax imposed under chapter 422, division II. The amount of the credit equals one thousand dollars per medical student or resident supervised by the preceptor up to a maximum of ten thousand dollars per year.
   3.  Any credit in excess of the tax liability is nonrefundable and shall not be credited to the tax liability for any following year. 
   4.  The credits shall be issued by the department on a first-come, first-served basis until the maximum amount of the tax credits authorized in subsection 5 is reached. 
   5.  The cumulative value of tax credits annually claimed shall not exceed one hundred thousand dollars. 
   6.  The department in collaboration with the department of revenue shall develop a system for the application, review, and authorization of tax credits issued pursuant to this section. 
   7.  The department and the department of revenue shall each adopt rules pursuant to chapter 17A to jointly administer this section, including establishing the number of hours a preceptor must supervise a medical student or resident in order to qualify for the tax credit.
    Sec. 13.  NEW SECTION.  422.12O  Preceptor tax credit.
   The taxes imposed under this division, less the credits allowed under section 422.12, shall be reduced by the preceptor tax credit allowed under section 135.39E.
    Sec. 14.  APPLICABILITY.  This division of this Act applies to tax years beginning on or after January 1, 2021.
DIVISION VI
SALES AND USE TAXES

    Sec. 15.  Section 423.2, subsection 1, unnumbered paragraph 1, Code 2020, is amended to read as follows:
   There is imposed a tax of six percent at the rate specified in subsection 12 upon the sales price of all sales of tangible personal property, consisting of goods, wares, or merchandise, sold at retail in the state to consumers or users except as otherwise provided in this subchapter.
    Sec. 16.  Section 423.2, subsections 2 and 3, Code 2020, are amended to read as follows:
   2.  A tax of six percent at the rate specified in subsection 12 is imposed upon the sales price of the sale or furnishing of gas, electricity, water, heat, pay television service, and communication service, including the sales price from such sales by any municipal corporation or joint water utility furnishing gas, electricity, water, heat, pay television service, and communication service to the public in its proprietary capacity, except as otherwise provided in this subchapter, when sold at retail in the state to consumers or users.
   3.  A tax of six percent at the rate specified in subsection 12 is imposed upon the sales price of all sales of tickets or admissions to places of amusement, fairs, and athletic events except those of elementary and secondary educational institutions. A tax of six percent at the rate specified in subsection 12 is imposed on the sales price of an entry fee or like charge imposed solely for the privilege of participating in an activity at a place of amusement, fair, or athletic event unless the sales price of tickets or admissions charges for observing the same activity are taxable under this subchapter. A tax of six percent at the rate specified in subsection 12 is imposed upon that part of private club membership fees or charges paid for the privilege of participating in any athletic sports provided club members.
    Sec. 17.  Section 423.2, subsection 4, paragraph a, Code 2020, is amended to read as follows:
   a.  A tax of six percent at the rate specified in subsection 12 is imposed upon the sales price derived from the operation of all forms of amusement devices and games of skill, games of chance, raffles, and bingo games as defined in chapter 99B, and card game tournaments conducted under section 99B.27, that are operated or conducted within the state, the tax to be collected from the operator in the same manner as for the collection of taxes upon the sales price of tickets or admission as provided in this section. Nothing in this subsection shall legalize any games of skill or chance or slot-operated devices which are now prohibited by law.
    Sec. 18.  Section 423.2, subsection 5, Code 2020, is amended to read as follows:
   5.  There is imposed a tax of six percent at the rate specified in subsection 12 upon the sales price from the furnishing of services as defined in section 423.1.
    Sec. 19.  Section 423.2, subsection 7, paragraph a, unnumbered paragraph 1, Code 2020, is amended to read as follows:
   A tax of six percent at the rate specified in subsection 12 is imposed upon the sales price from the sales, furnishing, or service of solid waste collection and disposal service.
    Sec. 20.  Section 423.2, subsection 8, paragraph a, Code 2020, is amended to read as follows:
   a.  A tax of six percent at the rate specified in subsection 12 is imposed on the sales price from sales of bundled transactions. For the purposes of this subsection, a “bundled transaction” is the retail sale of two or more distinct and identifiable products, except real property and services to real property, which are sold for one nonitemized price. A “bundled transaction” does not include the sale of any products in which the sales price varies, or is negotiable, based on the selection by the purchaser of the products included in the transaction.
    Sec. 21.  Section 423.2, subsection 9, Code 2020, is amended to read as follows:
   9.  A tax of six percent at the rate specified in subsection 12 is imposed upon the sales price from any mobile telecommunications service, including all paging services, that this state is allowed to tax pursuant to the provisions of the federal Mobile Telecommunications Sourcing Act, Pub. L. No. 106-252, 4 U.S.C. §116 et seq. For purposes of this subsection, taxes on mobile telecommunications service, as defined under the federal Mobile Telecommunications Sourcing Act that are deemed to be provided by the customer’s home service provider, shall be paid to the taxing jurisdiction whose territorial limits encompass the customer’s place of primary use, regardless of where the mobile telecommunications service originates, terminates, or passes through and shall in all other respects be taxed in conformity with the federal Mobile Telecommunications Sourcing Act. All other provisions of the federal Mobile Telecommunications Sourcing Act are adopted by the state of Iowa and incorporated into this subsection by reference. With respect to mobile telecommunications service under the federal Mobile Telecommunications Sourcing Act, the director shall, if requested, enter into agreements consistent with the provisions of the federal Act.
    Sec. 22.  Section 423.2, subsection 10, paragraph a, Code 2020, is amended to read as follows:
   a.  A tax of six percent at the rate specified in subsection 12 is imposed on the sales price of specified digital products sold at retail in the state. The tax applies whether the purchaser obtains permanent use or less than permanent use of the specified digital product, whether the sale is conditioned or not conditioned upon continued payment from the purchaser, and whether the sale is on a subscription basis or is not on a subscription basis.
    Sec. 23.  Section 423.2, subsection 12, Code 2020, is amended by striking the subsection and inserting in lieu thereof the following:
   12.  a.  For the period beginning January 1, 2021, and ending December 31, 2051, the sales tax rate is seven percent.
   b.  Beginning January 1, 2051, the sales tax rate is six percent. 
    Sec. 24.  Section 423.2A, subsection 2, Code 2020, is amended by adding the following new paragraph:
   NEW PARAGRAPH.  0b.  Transfer one-seventh of the remaining revenues to the secure an advanced vision for education fund created in section 423F.2. This paragraph “0b” is repealed January 1, 2051. 
    Sec. 25.  Section 423.2A, subsection 2, paragraph b, Code 2020, is amended to read as follows:
   b.  Transfer from the remaining revenues the amounts required under Article VII, section 10, of the Constitution of the State of Iowa to the natural resources and outdoor recreation trust fund created in section 461.31, if applicable.
    Sec. 26.  Section 423.2A, subsection 2, paragraph c, Code 2020, is amended by striking the paragraph.
    Sec. 27.  Section 423.2A, subsection 2, paragraph d, Code 2020, is amended to read as follows:
   d.  Transfer to the baseball and softball complex sales tax rebate fund that portion of the sales tax receipts described in subsection 1, paragraph “b”, remaining after the transfers required under paragraphs “a”, “0b”, and “b”, and “c” of this subsection 2. This paragraph is repealed thirty days following the date on which five million dollars in total rebates have been provided under section 423.4, subsection 10.
    Sec. 28.  Section 423.5, subsection 1, unnumbered paragraph 1, Code 2020, is amended to read as follows:
   Except as provided in paragraph “c”, an excise tax at the rate of six percent specified in subsection 4 of the purchase price or installed purchase price is imposed on the following:
    Sec. 29.  Section 423.5, subsection 4, Code 2020, is amended by striking the subsection and inserting in lieu thereof the following:
   4.  a.  For the period beginning January 1, 2021, and ending December 31, 2051, the use tax rate is seven percent.
   b.  Beginning January 1, 2051, the use tax rate is six percent. 
    Sec. 30.  Section 423.43, subsection 1, paragraph b, Code 2020, is amended to read as follows:
   b.  Subsequent to the deposit into the general fund of the state and after the transfer of such revenues collected under chapter 423B, the department shall transfer one-sixth one-seventh of such remaining revenues to the secure an advanced vision for education fund created in section 423F.2. This paragraph is repealed January 1, 2051.
    Sec. 31.  EFFECTIVE DATE.  This division of this Act takes effect January 1, 2021.
DIVISION VII
WATER SERVICE TAX REPEAL

    Sec. 32.  Section 421.71, subsection 3, Code 2020, is amended to read as follows:
   3.  Private cause of action immunity for overpayment of certain taxes.
   a.  A taxpayer, or any person required to collect taxes imposed under chapters 423, 423A, 423B, 423C, and 423D, and chapter 423G, Code 2020, shall be immune from any private cause of action arising from or related to the overpayment of taxes imposed under chapters 423, 423A, 423B, 423C, and 423D, and chapter 423G, Code 2020, that are collected and remitted to the department. 
   b.  Nothing in this subsection shall apply to or otherwise limit any of the following:
   (1)  Any claim, action, mandate, power, remedy, or discretion of the department, or an agent or designee of the department. 
   (2)  A taxpayer’s right to seek a refund from the department related to taxes imposed under chapters 423, 423A, 423B, 423C, and 423D, and chapter 423G, and Code 2020, that are collected from or paid by the taxpayer. 
    Sec. 33.  Section 423G.7, Code 2020, is amended by striking the section and inserting in lieu thereof the following:
   423G.7  Repeal.
   This chapter is repealed January 1, 2021.
    Sec. 34.  EFFECTIVE DATE.  This division of this Act takes effect January 1, 2021.
DIVISION VIII
SALES AND USE TAX EXEMPTIONS

    Sec. 35.  Section 423.3, subsection 68, paragraph c, subparagraph (1), subparagraph division (a), Code 2020, is amended to read as follows:
   (a)  “Clothing” includes but is not limited to the following:  aprons, household and shop; athletic supporters; baby receiving blankets; bathing suits and caps; beach capes and coats; belts and suspenders; boots; coats and jackets; costumes; diapers (children and adults, including disposable diapers); earmuffs; footlets; formal wear; garters and garter belts; girdles; gloves and mittens for general use; hats and caps; hosiery; insoles for shoes; lab coats; neckties; overshoes; pantyhose; rainwear; rubber pants; sandals; scarves; shoes and shoelaces; slippers; sneakers; socks and stockings; steel-toed shoes; underwear; uniforms, athletic and nonathletic; and wedding apparel.
    Sec. 36.  Section 423.3, Code 2019, is amended by adding the following new subsections:
   NEW SUBSECTION.  107.  The sales price from the sale of feminine hygiene products. For purposes of this subsection, “feminine hygiene products” means sanitary napkins, tampons, or other similar items used for feminine hygiene.
   NEW SUBSECTION.  108.  The sales price from the sale of a child or adult diaper, whether cloth or disposable.
    Sec. 37.  EFFECTIVE DATE.  This division of this Act takes effect January 1, 2021.
DIVISION IX
JUVENILE COURT EXPENSES

    Sec. 38.  Section 232.141, subsection 2, unnumbered paragraph 1, Code 2020, is amended to read as follows:
   All of the following juvenile court expenses are a charge upon the county in which the proceedings are held, to the extent provided in subsection 3 shall be paid from the indigent defense fund established in section 815.11 in accordance with this chapter and chapters 13B and 815:
    Sec. 39.  Section 232.141, subsections 3 and 7, Code 2020, are amended by striking the subsections.
    Sec. 40.  Section 602.1302, subsection 4, Code 2020, is amended to read as follows:
   4.  The judicial branch shall reimburse counties for the costs of witness and mileage fees and for attorney fees to the extent paid pursuant to section 232.141, subsection 1.
    Sec. 41.  Section 602.1303, subsection 4, Code 2020, is amended to read as follows:
   4.  A county shall pay the costs incurred in connection with the administration of juvenile justice to the extent provided under section 232.141.
    Sec. 42.  Section 815.11, Code 2020, is amended to read as follows:
   815.11  Appropriations for indigent defense —— fund created.
   Costs incurred for legal representation by a court-appointed attorney under chapter 229A, 665, 822, or 908, or section 232.141, subsection 3, paragraph “d” 2, or section 598.23A, 600A.6B, 814.9, 814.10, 814.11, 815.4, 815.7, or 815.10 on behalf of an indigent shall be paid from moneys appropriated by the general assembly to the office of the state public defender in the department of inspections and appeals and deposited in an account to be known as the indigent defense fund. Costs incurred representing an indigent defendant in a contempt action, or representing an indigent juvenile in a juvenile court proceeding, are also payable from the fund. However, costs incurred in any administrative proceeding or in any other proceeding under this chapter or chapter 598, 600, 600A, 633, 633A, 814, or 915 or other provisions of the Code or administrative rules are not payable from the fund.
DIVISION X
MENTAL HEALTH REGION FUNDING

    Sec. 43.  Section 225C.4, subsection 1, paragraph i, Code 2020, is amended by striking the paragraph.
    Sec. 44.  Section 225C.7A, Code 2020, is amended by striking the section and inserting in lieu thereof the following:
   225C.7A  Mental health and disability services state supplement fund.
   1.  A mental health and disability services state supplement fund is created in the office of the treasurer of state under the authority of the department. The fund shall be separate from the general fund of the state and the balance in the fund shall not be considered part of the balance of the general fund of the state. Moneys in the fund include appropriations made to the fund, and other moneys deposited into the fund. Moneys in the fund shall be used solely for purposes of making state supplement payments under this section. For each fiscal year beginning on or after July 1, 2020, the moneys available in a fiscal year in the mental health and disability services state supplement fund are appropriated to the department and shall be distributed to each county on a per capita basis calculated using each county’s population, as defined in section 331.424A, for that fiscal year.
   2.  For a county to be eligible to receive a state supplement payment under this section, the county, or the county’s mental health and disability services region on behalf of the county, shall submit a core services domain report to the department on or before a date established by the department by rule. The contents of the report, to be determined by rule of the department in consultation with the commission, shall enable the department to evaluate, along with other information available to the department, including annual reports and annual service and budget plans submitted under section 331.393, whether each county or the county’s mental health and disability services region is in substantial compliance with the required core service domains under section 331.397, subsection 4, and section 331.397A, subsection 4. On or before a date established by the department by rule, the department shall review all core service domain reports and notify each county of the results of the review. If the county is not in substantial compliance with the required core service domains under section 331.397, subsection 4, and section 331.397A, subsection 4, and the county or the county’s region has failed to comply with the corrective action plan under section 331.389, subsection 5, paragraph “a”, the department shall reduce the amount of the state supplement payment by an amount commensurate with the level of noncompliance, not to exceed fifteen percent of the state supplement payment amount pursuant to section 331.389, subsection 5, paragraph “b”.
   3.  State supplement payments received by a county shall be deposited in the county services fund under section 331.424A and used solely for the purposes authorized in section 331.424A, subsection 3.
    Sec. 45.  Section 249N.8, subsection 1, Code 2020, is amended to read as follows:
   1.  Biennially, a report of the results of a review, by county and region, of mental health services previously funded through taxes levied by counties pursuant to section 331.424A, that are funded during the reporting period under the Iowa health and wellness plan.
    Sec. 46.  Section 331.389, subsection 5, paragraph b, Code 2020, is amended to read as follows:
   b.  Reduce the amount of the annual state funding provided for the regional service system, including state supplement payment amounts under section 225C.7A, not to exceed fifteen percent of the amount.
    Sec. 47.  Section 331.391, subsection 3, Code 2020, is amended by striking the subsection.
    Sec. 48.  Section 331.398, subsection 1, Code 2020, is amended to read as follows:
   1.  The financing of a regional mental health and disability service system is limited to a fixed budget amount. The fixed budget amount shall be the amount identified in a regional service system management plan and budget for the fiscal year. A region shall receive state funding for growth in non-Medicaid expenditures through the mental health and disability regional services fund created in section 225C.7A to address increased service costs, additional service populations, additional core service domains, and increased numbers of persons receiving services.
    Sec. 49.  Section 331.424A, subsection 1, paragraphs a and g, Code 2020, are amended by striking the paragraphs.
    Sec. 50.  Section 331.424A, subsection 1, paragraph h, Code 2020, is amended to read as follows:
   h.  “Statewide per capita expenditure target amount” means forty-seven twelve dollars and twenty-eight fifty cents.
    Sec. 51.  Section 331.424A, subsection 5, Code 2020, is amended to read as follows:
   5.  Receipts from the state or federal government for the mental health and disability services administered or paid for by a county shall be credited to the county services fund, including moneys distributed to the county from the department of human services under section 225C.7A and moneys allocated under chapter 426B.
    Sec. 52.  Section 331.424A, subsection 8, Code 2020, is amended by striking the subsection.
    Sec. 53.  Section 331.424A, subsection 9, Code 2020, is amended to read as follows:
   9.  a.  For the fiscal year beginning July 1, 2017 2020, and each subsequent fiscal year, the county budgeted amount determined for each county shall be the amount necessary to meet the county’s financial obligations for the payment of services provided under the regional service system management plan approved pursuant to section 331.393, not to exceed an amount equal to the product of the regional statewide per capita expenditure target amount multiplied by the county’s population, and, for fiscal years beginning on or after July 1, 2023, reduced by the amount of the county’s cash flow reduction amount for the fiscal year calculated under subsection 4, if applicable.
   b.  If a county officially joins a different region, the county’s budgeted amount shall be the amount necessary to meet the county’s financial obligations for payment of services provided under the new region’s regional service system management plan approved pursuant to section 331.393, not to exceed an amount equal to the product of the new region’s regional per capita expenditure target amount multiplied by the county’s population, and, for fiscal years beginning on or after July 1, 2023, reduced by the amount of the county’s cash flow reduction amount for the fiscal year calculated under subsection 4, if applicable.
    Sec. 54.  Section 347.7, subsection 1, paragraph c, Code 2020, is amended to read as follows:
   c.  For the fiscal years beginning July 1, 2017, July 1, 2018, and July 1, 2019, if a county public hospital is located in a county having a population of two hundred twenty-five thousand or over and having a county budgeted amount for the fiscal year under section 331.424A, subsection 9, Code 2020, equal to the product of the regional per capita expenditure target amount multiplied by the county’s population, as those terms are defined in section 331.424A, Code 2020, the board of trustees shall appropriate for payment on July 1 of each such fiscal year from the county public hospital fund to the board of supervisors for deposit in the county services fund created pursuant to section 331.424A, two million eight hundred thousand dollars, and the county public hospital shall, in each such fiscal year, contract with the county in which the county public hospital is located to provide care and treatment to patients who are residents of the county and whose costs for such care and treatment would otherwise qualify for payment from the county services fund under section 331.424A, in an amount equal to three million five hundred thousand dollars.
    Sec. 55.  COUNTY BUDGET RECERTIFICATION —— REGIONAL SERVICE SYSTEM MANAGEMENT PLAN AMENDMENT —— TAXES CERTIFIED.
   1.  If this Act takes effect on or after March 31, 2020, notwithstanding section 24.17, for the fiscal year beginning July 1, 2020, a county may recertify the county’s budget as necessary to implement the provisions of this division of this Act. A budget recertified pursuant to this section must be recertified in duplicate to the county auditor not later than thirty days after the effective date of this division of this Act, and protests to the budget shall be filed not later than ten days after the county’s budget is recertified.
   2.  To the extent necessary to implement the provisions of this division of this Act, a mental health and disability services region may amend the region’s regional service system management plan or annual service and budget plan approved under section 331.393 for the fiscal year beginning July 1, 2020.
   3.  To the extent necessary to implement the provisions of this division of this Act, the department of management may, notwithstanding section 24.17, for the fiscal year beginning July 1, 2020, certify the taxes back to the applicable county auditor after June 15. 
    Sec. 56.  EMERGENCY RULES.  The department of human services may adopt emergency rules under section 17A.4, subsection 3, and section 17A.5, subsection 2, paragraph “b”, to implement the provisions of this division of this Act and the rules shall be effective immediately upon filing unless a later date is specified in the rules. Any rules adopted in accordance with this section shall also be published as a notice of intended action as provided in section 17A.4.
    Sec. 57.  APPLICABILITY.  This division of this Act applies July 1, 2020, for fiscal years beginning on or after that date.
    Sec. 58.  EFFECTIVE DATE.  This division of this Act, being deemed of immediate importance, takes effect upon enactment.
DIVISION XI
NATURAL RESOURCES AND OUTDOOR RECREATION TRUST FUND

    Sec. 59.  Section 2.45, Code 2020, is amended by adding the following new subsection:
   NEW SUBSECTION.  5A.  a.  The legislative natural resources and outdoor recreation trust fund review committee which shall be composed of ten members of the general assembly, consisting of five members from each chamber, to be appointed by the legislative council. In appointing the five members of each chamber to the committee, the council shall appoint three members from the majority party and two members from the minority party.
   b.  The legislative natural resources and outdoor recreation trust fund review committee shall have the powers and duties described in section 2.49.
   c.  This subsection is repealed December 31, 2050. 
    Sec. 60.  NEW SECTION.  2.49  Legislative natural resources and outdoor recreation trust fund review committee.
   1.  The legislative natural resources and outdoor recreation trust fund review committee shall meet during the legislative interim in calendar years 2029, 2039, and 2049. The committee shall consider the most effective ways to manage trust fund moneys to further the purpose of Article VII, section 10, of the Constitution of the State of Iowa. As part of its duties, the committee may consider any of the following:
   a.  The administration of the trust fund, trust accounts, and designated funds as provided in chapter 461.
   b.  The effectiveness of initiatives supported by trust fund moneys as provided in chapter 461.
   2.  The committee shall report to the legislative council the results of its considerations, which may include recommendations and proposed legislation for consideration during the next session of the general assembly.
   3.  This section is repealed December 31, 2050.
    Sec. 61.  Section 8.57, subsection 5, paragraph f, subparagraph (1), subparagraph division (c), Code 2020, is amended by striking the subparagraph division.
    Sec. 62.  Section 8.57, subsection 5, paragraph f, subparagraph (1), subparagraph division (f), Code 2020, is amended to read as follows:
   (f)  For the fiscal year beginning July 1, 2018, and for each fiscal year thereafter, the total moneys in excess of the moneys deposited under this paragraph “f” in the revenue bonds debt service fund, the revenue bonds federal subsidy holdback fund, the vision Iowa fund, the water quality infrastructure fund, the Iowa skilled worker and job creation fund, and the general fund of the state shall be deposited in the rebuild Iowa infrastructure fund and shall be used as provided in this section, notwithstanding section 8.60.
    Sec. 63.  Section 8.57B, subsection 1, Code 2020, is amended to read as follows:
   1.  a.  A water quality infrastructure fund is created within the division of soil conservation and water quality of the department of agriculture and land stewardship.
   b.  The fund shall consist of moneys deposited in the fund pursuant to section 8.57, subsection 5, paragraph “f”, subparagraph (1), subparagraph division (c), moneys all of the following:
   (1)  (a)  Moneys transferred to the fund pursuant to section 423G.6, and 461.33.
   (b)  This subparagraph (1) is repealed December 31, 2050.
   (2)  Moneys transferred or appropriations made to the fund and transfers of interest, earnings, and moneys from other funds as provided by law.
    Sec. 64.  Section 16.134A, subsection 2, paragraph a, Code 2020, is amended to read as follows:
   a.  (1)  Moneys transferred to the fund pursuant to section 423G.6 sections 461.33 and 461.34.
   (2)  This paragraph “a” is repealed on January 1, 2030 December 31, 2050.
    Sec. 65.  Section 455A.17, Code 2020, is amended by striking the section and inserting in lieu thereof the following:
   455A.17  Regional meetings.
   1.  Beginning in calendar year 2023, and every four calendar years thereafter, the department shall arrange and conduct regional meetings to identify opportunities for regional resource enhancement and protection, and to review and recommend changes in resource enhancement and protection policies, programs, and funding. The department shall provide outreach and educational services to those attending, which shall include the distribution of information regarding resource enhancement and protection expenditures. The department shall promote attendance of interested persons for each regional meeting.
   2.  The expenses of the department in making the arrangements for and conducting regional meetings and providing outreach and educational services shall be paid from moneys credited to the administration fund created in section 456A.17.
    Sec. 66.  Section 455A.18, subsection 1, Code 2020, is amended to read as follows:
   1.  a.  An Iowa resources enhancement and protection fund is created in the office of the treasurer of state.
   b.  The fund consists of all revenues of the following:
   (1)  (a)  Moneys allocated from the natural resources and outdoor recreation trust fund as provided in section 461.35.
   (b)  This subparagraph (1) is repealed December 31, 2050.
   (2)  Revenue and all other moneys lawfully credited or transferred to the fund.
   c.  The director shall certify monthly the portions of the fund that are allocated to the various accounts as provided under section 455A.19. The director shall certify before the twentieth of each month the portions of the fund resulting from the previous month’s receipts to be allocated to the various accounts.
    Sec. 67.  Section 455A.18, subsection 3, Code 2020, is amended to read as follows:
   3.  a.  For each fiscal year of the fiscal period beginning July 1, 1997, and ending June 30, 2021, there is appropriated from the general fund, to the Iowa resources enhancement and protection fund, the amount of twenty million dollars, to be used as provided in this chapter. However, in any fiscal year of the fiscal period, if moneys from the lottery are appropriated by the state to the fund, the amount appropriated under this subsection shall be reduced by the amount appropriated from the lottery.
   b.  Section 8.33 does not apply to moneys appropriated under this subsection credited to the fund.
    Sec. 68.  Section 461.2, Code 2020, is amended to read as follows:
   461.2  Definitions.
   As used in this chapter, unless the context otherwise requires:
   1.  “Authority” means the economic development authority created in section 15.105.
   2.  “Department” “Custodial department” means the department of agriculture and land stewardship, the department of management, the department of natural resources, or the department of transportation.
   3.  “Designated fund” means the water quality infrastructure fund created in section 8.57B, the water quality financial assistance fund created in section 16.134A, or the Iowa resources enhancement and protection fund created in section 455A.18.
   2.  4.  “Fiscal year” means the state fiscal year effective as provided in section 3.12.
   3.  5.  “Initiative” includes a program, project, practice, strategy, or plan established or administered by an agency that furthers, or under the supervision or oversight of, a custodial department or the Iowa finance authority, if the initiative is supported in whole or in part by trust fund moneys to further a constitutional purpose as provided in section 461.3.
   6.  “Iowa nutrient reduction strategy” means the same as defined in section 455B.171.
   7.  “Nonpoint source” means a source of pollution other than a point source.
   8.  “Point source” means the same as defined in section 455B.171.
   9.  “Public use area” means a park, preserve, recreation area, forest, water body, or a land or water trail owned or managed by the state or a political subdivision of the state.
   4.  10.  “Recreational purpose” includes means only hunting,; trapping,; angling,; horseback riding,; swimming,; boating,; camping,; picnicking,; hiking,; biking; recreational shooting; archery; using land or water trails; bird watching,; nature study,; water skiing,; snowmobiling, other summer and winter sports, and; or viewing or enjoying historical, archaeological, scenic, or scientific sites.
   11.  “Trust account” means the natural resources trust account created in section 461.32, the soil conservation and nonpoint source water protection trust account created in section 461.33, the watershed protection trust account created in section 461.34, the local conservation partnership trust account created in section 461.36, the water and land trails trust account created in section 461.37, or the lake and stream restoration trust account created in section 461.38.
   5.  12.  “Trust fund” means the natural resources and outdoor recreation trust fund created in section 461.31.
   6.  13.  “Trust fund moneys” means moneys originating from credited to the natural resources and outdoor recreation trust fund or moneys allocated from the trust fund, including but not limited to moneys allocated to a trust account or allocated or transferred to a designated fund.
   14.  “Water trail” means a point-to-point travel system on a navigable water body capable of supporting a floating vessel capable of carrying one or more persons on a recommended route connecting the points.
    Sec. 69.  Section 461.3, Code 2020, is amended to read as follows:
   461.3  Constitutional purpose, and implementation, and revenue.
   1.  This chapter is created for the constitutional purposes of protecting and enhancing water quality and natural areas in this state, including parks, trails, and fish and wildlife habitat, and conserving agricultural soils in this state.
   2.  This chapter is intended to implement Article VII, section 10, of the Constitution of the State of Iowa by establishing the natural resources and outdoor recreation trust fund, accounts in the including trust fund accounts, and appropriating or allocating trust fund moneys to support initiatives specified in subchapter IV.  This chapter shall not be construed to require the state to appropriate, allocate, or transfer other moneys to support those initiatives or constitutional purposes.
    Sec. 70.  Section 461.11, subsection 2, Code 2020, is amended to read as follows:
   2.  The heads of each department receiving trust fund moneys the custodial departments and the director of the authority shall regularly meet and whenever practicable collaborate in decision making including by adopting rules, providing for the administration of the trust fund and trust accounts, establishing funding priorities, and determining when it is beneficial to provide joint funding of initiatives.
    Sec. 71.  NEW SECTION.  461.20  Information regarding trust fund moneys.
   1.  Each year the department of revenue shall calculate an estimate of the total revenue to be transferred to the trust fund during the following fiscal year as required pursuant to section 423.2A. Not later than May 1 of each year, the department of revenue shall submit the estimate to each custodial department, the authority, and the legislative services agency. 
   2.  A custodial department shall at least annually notify the legislative services agency of transfers of trust fund moneys from a trust account to another trust account or designated fund as authorized in this chapter.
    Sec. 72.  Section 461.21, Code 2020, is amended to read as follows:
   461.21  Audit.
   1.  The auditor of state or a certified public accounting firm appointed by the auditor of state shall conduct an annual audit of the trust fund and all trust accounts and transactions of the trust fund and trust accounts in the same manner as provided for departments pursuant to chapter 11, subchapter I.
   2.  The auditor of state or the certified public accounting firm appointed by the auditor as provided in subsection 1 shall be paid from trust fund moneys without reducing the percentage of trust fund moneys distributed allocated to the Iowa resources enhancement and protection fund or any one a trust account established or designated fund pursuant to this chapter subchapter IV.
    Sec. 73.  Section 461.22, Code 2020, is amended to read as follows:
   461.22  Report Trust fund report.
   The three departments department of management shall jointly prepare and submit to the governor and the general assembly not later than January 15 of each year a complete trust fund report for the preceding fiscal year in an electronic format detailing all of the following:
   1.  The receipts and expenditures of the trust fund and its trust accounts, a summary of initiatives supported by trust fund moneys, the results of those expenditures, any performance goals or measurements, and plans for future short-term or long-term expenditures.
   2.  Recommendations An evaluation of the use of trust fund moneys to further progress in achieving the goals of the Iowa nutrient reduction strategy as prepared by the department of agriculture and land stewardship, the department of natural resources, and the college of agriculture and life sciences of the Iowa state university of science and technology. The evaluation shall be based on the latest credible findings and recommendations recognized by those entities. The evaluation may include recommendations to the governor and general assembly, including legislation proposed by one or more of the departments entities.
    Sec. 74.  Section 461.23, Code 2020, is amended to read as follows:
   461.23  Rules.
   The department of revenue, the department of agriculture and land stewardship, the department of management, the department of natural resources, and the department of transportation, the Iowa finance authority, and the economic development authority shall adopt rules separately or jointly as necessary in order to implement and administer this chapter. 
    Sec. 75.  Section 461.24, Code 2020, is amended by striking the section and inserting in lieu thereof the following:
   461.24  Public listing.
   The department of management shall publish and maintain a public listing of moneys credited to and allocated from the trust fund, trust fund moneys allocated or transferred from trust accounts, and trust fund moneys allocated or transferred to designated funds to support initiatives. This section does not require the disclosure of information that is confidential as provided by rules adopted pursuant to section 461.23.
    Sec. 76.  NEW SECTION.  461.25  Use of trust fund moneys.
   1.  A custodial department shall not appropriate, allocate, or transfer trust fund moneys except as provided in this chapter. However, this subsection shall not be construed to limit a custodial department from using trust fund moneys with another person, including a custodial department, when engaging in a joint initiative as authorized by law.
   2.  During any fiscal year, a custodial department shall not use more than five percent of trust fund moneys allocated to a trust account to pay for expenses incurred in administering trust fund moneys allocated to that trust account.
   3.  In administering the use of trust fund moneys allocated to a trust account, a custodial department shall provide a higher priority to supporting initiatives that further goals of the Iowa nutrient reduction strategy.
   4.  A custodial department shall administer the use of trust fund moneys to support an initiative having primarily a recreational purpose only if such use is in cooperation with the authority. The authority shall review, score, and rank applications to support such initiatives as part of a competitive evaluation process. The scoring criteria must further the economic development policy of the state as provided in chapter 15. 
   5.  When making a determination to support competing proposed initiatives relating to a public use area that benefits a locality, a custodial department or the authority shall provide a higher priority to supporting an initiative to improve an existing public use area.
   6.  When making a determination to support a proposed initiative to establish, improve, or expand a land trail, the proposal shall not be approved unless the sponsor of the proposal demonstrates to the custodial department or other entity making the funding decision how the trail is to be maintained by other sources of revenue.
   7.  In administering the use of trust fund moneys allocated to a trust account to support an initiative relating to the management of land, this chapter does not do any of the following:
   a.  Prohibit the farming of the land in a manner that is consistent with the Iowa nutrient reduction strategy.
   b.  Require a separation distance between an animal feeding operation and a public use area that is more restrictive than if the land were not managed pursuant to the initiative.
   8.  Trust fund moneys shall not be used to support any of the following:
   a.  An initiative that establishes, improves, or expands a single or multipurpose athletic field, baseball or softball diamond, tennis court, golf course, swimming pool, or other group or organized sport facility.
   b.  The taking of property by exercising the power of eminent domain, including by acquiring property as provided in chapters 6A and 6B.
    Sec. 77.  Section 461.31, Code 2020, is amended to read as follows:
   461.31  Natural resources and outdoor recreation trust fund —— creation.
   1.  A natural resources and outdoor recreation trust fund is created within the state treasury.  The trust fund shall be administered by the department of management.
   2.  a.  The trust fund shall be composed comprised of moneys all of the following:
   (1)  Moneys transferred to the trust fund pursuant to section 423.2A.
   (2)  Other moneys required to be credited to the trust fund by law and moneys accepted by a custodial department for placement in an account established in this subchapter and the trust fund from any source.
   b.  Trust fund moneys are exclusively appropriated by law to carry out the constitutional purposes provided described in section 461.3.
   c.  Trust fund moneys shall supplement and not replace moneys appropriated by the general assembly to support the constitutional purposes provided in section 461.3.
   d.  Trust fund moneys shall only be used to support voluntary initiatives and shall not be used for regulatory efforts, enforcement actions, or litigation.
   3.  In administering a trust fund account, a custodial department may contract, sue and be sued, and authorize payment for costs, fees, commissions, and other reasonable expenses from the trust account. However, a custodial department shall not in any manner directly or indirectly pledge the credit of this state.
   4.  a.  Except as provided in paragraph “b”, the treasurer of state shall, each month as directed by the department of management, allocate all trust fund moneys that have been credited to the trust fund, including moneys transferred to the trust fund as provided in section 423.2A, to each trust account and designated fund as provided in this subchapter.
   b.  Notwithstanding sections 461.32 through 461.38, for the fiscal year beginning July 1, 2021, and for each subsequent fiscal year, only that amount as authorized by an Act of the general assembly shall be allocated from the trust fund to a trust account or designated fund as provided in this subchapter. However, if for a fiscal year no Act of the general assembly authorizes trust fund moneys to be allocated from the trust fund, the trust fund moneys shall be allocated from the trust fund to the trust accounts and designated funds as provided in this subchapter by operation of law.
   5.  a.  Notwithstanding section 8.33, any unexpended balance in the trust fund or in an a trust account created within the trust fund at the end of each fiscal year shall be retained in the trust fund or the respective trust account.
   b.  Notwithstanding section 12C.7, subsection 2, interest or earnings on investments or time deposits of the moneys in the trust fund and its respective trust accounts shall be credited to the trust fund and its respective trust accounts.
   c.  The recapture of awards originating from an a trust account and other repayments to an a trust account shall be retained in that trust account.
    Sec. 78.  Section 461.32, Code 2020, is amended to read as follows:
   461.32  Natural resources trust account —— allocations.
   1.  A natural resources trust account is created in the trust fund. Twenty-three The trust account shall be administered by the department of natural resources.
   2.  Eighteen percent of the moneys credited to the trust fund shall be allocated to the trust account.
   2.  3.  The trust account shall be used by the department of natural resources to support all of the following initiatives:
   a.  The establishment, restoration, or enhancement of state parks, state preserves, state forests, wildlife areas, wildlife habitats, native prairies, and wetlands.
   (1)  A higher priority shall be provided to supporting initiatives for the maintenance, preservation, or restoration of land and a lower priority shall be provided to supporting initiatives for the purchase or acquisition of land.
   (2)  The department shall utilize an index that includes a comprehensive assessment mechanism to produce a statistically verifiable basis for determining whether to approve or disapprove the purchase or acquisition of the land. The department shall establish index criteria that justifies the land’s removal from private ownership and use.
   b.  The construction or improvement of facilities located on land owned or managed by the department.
   b.  c.  Wildlife diversity.
   c.  d.  Recreational purposes.
   d.  e.  Technical assistance and financial incentives provided to private landowners to promote the management of forests, fisheries, recreational areas, wetlands, and wildlife.
   e.  f.  The improvement of water trails, rivers, and streams.
   f.  g.  Education and outreach that provide instruction regarding natural history and the outdoors. The subjects of such instruction may relate to opportunities involving a recreational purposes purpose, outdoor safety, and or ethics.
   3.  The department of natural resources shall to every extent possible consider its comprehensive plan provided in section 456A.31 when making funding decisions.
    Sec. 79.  Section 461.33, Code 2020, is amended to read as follows:
   461.33  Soil conservation and nonpoint source water protection trust account —— allocations.
   1.  A soil conservation and nonpoint source water protection trust account is created in the trust fund. Twenty The trust account shall be administered by the department of agriculture and land stewardship.
   2.  Thirty-four percent of the moneys credited to the trust fund shall be allocated to the trust account.
   3.  Forty-seven percent of trust fund moneys allocated to the trust account shall first be transferred as directed by the department to any or all of the following:
   a.  The water quality infrastructure fund created in section 8.57B to support water quality agriculture infrastructure programs created in section 466B.43 in order to reduce nutrient loads from nonpoint sources.
   b.  The water quality financial assistance fund created in section 16.134A to support the water quality urban infrastructure program created in section 466B.44.
   2.  4.  a.  The account shall be used by the department of agriculture and land stewardship remaining trust fund moneys allocated to the trust account shall be used by the department to support all of the following initiatives: 
   a.  (1)  Soil conservation and watershed protection, including by supporting the department’s division of soil conservation and water quality within the department of agriculture and land stewardship and soil and water conservation district commissioners. The department and commissioners may provide for the installation establishment of conservation practices and watershed protection improvements as provided in chapters 161A, 161C, 461A, and 466, and 466B.
   b.  (2)  The conservation of highly erodible land. The department of agriculture and land stewardship may execute contracts with private landowners who agree to reserve such land only for uses that prevent erosion in excess of the applicable soil loss limits as established in section 161A.44.
   c.  (3)  Soil conservation or crop management practices used on land producing biomass for biorefineries, including cellulosic ethanol production.
   3.  b.  The department of agriculture and land stewardship may use unencumbered or unobligated trust fund moneys allocated to the trust account to provide financial incentives or technical assistance to landowners.
   5.  During a fiscal year, the department may transfer unencumbered or unobligated trust fund moneys allocated to the trust account for use by the department as is provided in subsection 4 to any of the following:
   a.  The water quality infrastructure fund created in section 8.57B to support water quality agriculture infrastructure programs created in section 466B.43 in order to reduce nutrient loads from nonpoint sources.
   b.  The water quality financial assistance fund created in section 16.134A to support the water quality urban infrastructure program created in section 466B.44.
    Sec. 80.  Section 461.34, Code 2020, is amended to read as follows:
   461.34  Watershed protection trust account —— allocations.
   1.  A watershed protection trust account is created in the trust fund. Fourteen The trust account shall be administered by the department of natural resources.
   2.  Fifteen percent of the moneys credited to the trust fund shall be allocated to the trust account.
   3.  Forty-seven percent of trust fund moneys allocated to the trust account shall first be transferred to the water quality financial assistance fund created in section 16.134A for appropriation as provided in that section.
   2.  4.  The account Of the remaining trust fund moneys allocated to the trust account, fifty percent shall be used cooperatively distributed for use by the department of natural resources and the department of agriculture and land stewardship to support all of the following initiatives:
   a.  Water water quality resource projects administered by the department of natural resources to preserve watersheds, including but not limited to all of the following:
   (1)  a.  Projects to protect, restore, or enhance water quality in the state through the provision of financial assistance to communities for impairment-based, locally directed watershed projects. The department may use the account  trust fund moneys to support the water resource restoration sponsor program as provided in section 455B.199.
   (2)  b.  Regional and community watershed assessment, planning, and prioritization efforts, including as provided in chapter 466B.
   c.  Water quality protection programs provided in section 466.7 that relate to any of the following:
   (1)  The administration of geographic information systems for use in developing, monitoring, and displaying local watershed information. 
   (2)  An activity to support the collection and analysis of water quality monitoring.
   (3)  Floodplain permitting.
   (4)  Flood protection education to provide information to local officials regarding floodplain management.
   b.  5.  Surface Of the remaining trust fund moneys allocated to the trust account, fifty percent shall be distributed for use by the department of agriculture and land stewardship to support surface water protection projects and practices administered by the department of agriculture and land stewardship or the department of natural resources, as described in the Iowa nutrient reduction strategy including but not limited to the installation of permanent vegetation cover, filter strips, grass waterways, edge of field practices, and riparian forest buffers; dredging; and bank stabilization. The departments of agriculture and land stewardship and natural resources department may use the account trust fund moneys to support the conservation buffer strip program provided in section 466.4 and the conservation reserve enhancement program as provided in section 466.5.
   3.  6.  The departments’ A decision by a department to prioritize initiatives may be based on the priority list of watersheds provided in section 456A.33A.
   7.  During a fiscal year, the department of natural resources or the department of agriculture and land stewardship may transfer unencumbered or unobligated trust fund moneys distributed to the custodial department pursuant to subsection 4 or 5 to the water quality financial assistance fund created in section 16.134A.
    Sec. 81.  Section 461.35, Code 2020, is amended to read as follows:
   461.35  Iowa resources enhancement and protection fund —— allocation.
   Thirteen Ten percent of the moneys credited to the trust fund shall be allocated to the Iowa resources enhancement and protection fund created in section 455A.18 for further allocation as provided in section 455A.19.
    Sec. 82.  Section 461.36, Code 2020, is amended by striking the section and inserting in lieu thereof the following:
   461.36  Local conservation partnership trust account —— allocations.
   1.  A local conservation partnership trust account is created in the trust fund. The trust account shall be administered by the department of natural resources. 
   2.  Nine percent of the moneys credited to the trust fund shall be allocated to the trust account.
   3.  The department shall allocate the trust fund moneys credited to the account to local communities participating in the local conservation partnership program as provided in section 461.36A.
    Sec. 83.  NEW SECTION.  461.36A  Local conservation partnership program.
   1.  As used in this section, unless the context otherwise requires:
   a.  “Department” means the department of natural resources.
   b.  “Local community” includes a political subdivision or a watershed management authority created pursuant to section 466B.22.
   2.  The department shall establish and administer a local conservation partnership program to provide financing to local communities to do any of the following:
   a.  Maintain and improve parks, preserves, wildlife areas, wildlife habitats, native prairies, forests, or wetlands.
   b.  Promote wildlife diversity.
   c.  Further a recreational purpose.
   d.  Improve rivers and streams.
   e.  Sponsor 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 a recreational purpose, outdoor safety, or ethics. The programs and projects may assist Iowa students studying in fields of science, technology, engineering, and mathematics.
   f.  Further any other purpose described in section 350.1.
   3.  As part of a local conservation partnership under the program, two or more local communities may enter into chapter 28E agreements, and a local community may cooperate with the federal government or a nongovernmental organization. A nongovernmental organization shall not be eligible to participate in a local community partnership under the program unless the nongovernmental organization submits an application in association with a political subdivision or county conservation board and enters into a chapter 28E agreement with the political subdivision or county conservation board. 
   4.  a.  A local community is not eligible to receive moneys from the department under the program to support a local conservation partnership, unless the local community finances a minimum percentage of the estimated or total cost of the initiative, whichever is less. 
   b.  The minimum amount of the cost-share contribution by a local community, as described in paragraph “a”, shall be as follows:
   (1)  Ten percent for a local community located in a county having a population of fifteen thousand or less. 
   (2)  Twenty-five percent for a local community located in a county having a population of more than fifteen thousand but less than one hundred thousand.
   (3)  Seventy-five percent for a local community located in a county having a population of one hundred thousand or more.
    Sec. 84.  Section 461.37, Code 2020, is amended to read as follows:
   461.37  Trails Water and land trails trust account —— allocations.
   1.  A water and land trails trust account is created in the trust fund. Ten The trust account shall be administered by the department of transportation.
   2.  Four percent of the moneys credited to the trust fund shall be allocated to the trust account.
   2.  3.  The Of the amount of trust fund moneys allocated to the trust account, fifty percent shall be distributed for use by the department of transportation and the department of natural resources shall use moneys in the account to support initiatives related to the design, establishment, maintenance, improvement, and expansion of land trails.
   3.  4.  The Of the amount of trust fund moneys allocated to the trust account, fifty percent shall be distributed for use by the department of natural resources may use the account to support the design, establishment, maintenance, improvement, and expansion of water trails.  The department shall provide priority to stream restoration.
   5.  a.  During a fiscal year, and pursuant to an agreement between the department of transportation and the department of natural resources, either custodial department that is distributed trust fund moneys for use under this section may transfer unencumbered or unobligated trust fund moneys to the other custodial department for use by the other custodial department as provided in this section.
   b.  During a fiscal year, and pursuant to an agreement between the department of transportation and the department of natural resources, the department of transportation may transfer unencumbered or unobligated trust fund moneys allocated to the trust account and distributed for use by the department of transportation to another trust account administered by the department of natural resources for use by the department of natural resources.
    Sec. 85.  Section 461.38, Code 2020, is amended to read as follows:
   461.38  Lake and stream restoration trust account —— allocations.
   1.  A lake and stream restoration trust account is created in the trust fund. Seven The trust account shall be administered by the department of natural resources.
   2.  Ten percent of the moneys credited to the trust fund shall be allocated to the trust account.
   2.  3.  The department of natural resources shall use moneys in allocated to the trust account to support public all of the following:
   a.  Public lake restoration initiatives as follows:
   a.  (1)  An initiative shall account for a lake’s recreational purpose, and provide for environmental, aesthetic, ecological, and social value. It must improve water quality further a goal of the Iowa nutrient reduction strategy.
   b.  (2)  The department’s A decision by the department to prioritize an initiative may be based on the department’s lake restoration plan and report as provided in section 456A.33B and the Iowa nutrient reduction strategy.
   b.  The stabilization and restoration of stream banks.
    Sec. 86.  NEW SECTION.  461.51  Repeal.
   This chapter is repealed December 31, 2050.
    Sec. 87.  CODE EDITOR DIRECTIVE.
   1.  The Code editor is directed to make the following transfers:
   a.  Section 461.36A, as enacted in this division of this Act, to section 455A.31.
   b.  Section 461.35, as amended in this division of this Act, to section 461.41.
   2.  The Code editor shall correct internal references in the Code and in any enacted legislation as necessary due to the enactment of this section.
    Sec. 88.  REPEAL.  Section 455A.20, Code 2020, is repealed.
    Sec. 89.  EFFECTIVE DATE.  This division of this Act takes effect January 1, 2021.
EXPLANATION
The inclusion of this explanation does not constitute agreement with

the explanation’s substance by the members of the general assembly.
   This bill relates to state and local revenue and finances including modifying individual income taxes, sales and use taxes, water service tax, certain tax credits, and provisions relating to county juvenile court expenses and mental health region funding. The bill is organized into divisions. 
   DIVISION I —— INDIVIDUAL INCOME TAX BRACKETS AND RATES BEGINNING 2021 TAX YEAR. Current law provides nine regular tax brackets containing progressively higher amounts of taxable income that are taxed at progressively higher tax rates, from a low of 0.33 percent, to a high of 8.53 percent. The taxable income amounts in each tax bracket are indexed to inflation and increased each year. For tax years beginning on or after January 1, 2021, the bill reduces the tax rate in each bracket, and reduces the number of brackets to eight, as follows:
Income over:          But not over:                    Tax
1) $0          $3,364                    0.30%
2) $3,364          $6,728                    2.00%
3) $6,728          $15,138                    3.73%
4) $15,138          $25,230                    5.07%
5) $25,230          $33,640                    5.36%
6) $33,640          $50,460                    5.63%
7) $50,460          $75,690                    6.97%
8) $75,690 or more                              7.48%

   The individual tax rates listed above apply for all tax years beginning on or after January 1, 2021, until such time as a different tax rate takes effect as described in division III.
   DIVISION II —— CONTINGENT EFFECTIVE DATE IN 2018 IOWA ACTS —— NET GENERAL FUND REVENUES CALCULATION. For purposes of describing contingent individual income tax changes in 2018 Iowa Acts, chapter 1161, section 133, the term “trigger year” means the first tax year after the following occurrence: the net general fund revenues for FY 2022 equal or exceed $8,314,600,000, and also equal or exceed 104 percent of the net general fund revenues for FY 2021; or if the previous conditions are not satisfied, on or after the January 1 following the first fiscal year for which the net general fund revenues equal or exceed $8,314,600,000, and also equal or exceed 104 percent of the net general fund revenues for the fiscal year immediately preceding that fiscal year. The bill strikes the above-mentioned condition relating to net general fund revenues exceeding 104 percent of the net general fund revenues for the preceding fiscal year. Therefore, the “trigger year” occurs when net general fund revenues equal or exceed $8,314,600,000 during FY 2022 or any fiscal year thereafter, and the contingent individual income tax changes described in division III of the bill become effective as well as other tax changes in 2018 Iowa Acts, chapter 1161, sections 99 through 134. 
   DIVISION III —— FUTURE CONTINGENT INDIVIDUAL INCOME TAXES BEGINNING IN 2023 TAX YEAR. Commencing with the tax year beginning January 1, 2023, the bill reduces the number of individual income tax brackets to four and reduces the tax rates in the aggregate if certain net tax receipt revenue targets are met or exceeded as described in division II of the bill. For a married couple filing a joint return, the taxable income amounts in each individual bracket are doubled. The taxable income amounts in each tax bracket are indexed to inflation and increased each year. The contingent individual income tax brackets and rates are as follows for individuals other than a married couple filing jointly if the certain net tax receipt revenue targets are met or exceeded:
Income over:          But not over:                    Tax
1) $0          $6,000                    4.00%
2) $6,000          $30,000                    4.45%
3) $30,000          $75,000                    4.99%
4) $75,000 or more                              5.50%
   The contingent income tax brackets and rates for a married couple filing a joint return are as follows if the certain net tax receipt revenue targets are met or exceeded:
Income over:          But not over:                    Tax
1) $0          $12,000                    4.00%
2) $12,000          $60,000                    4.45%
3) $60,000          $150,000                    4.99%
4) $150,000 or more                              5.50%
   Current Iowa law allows married persons to file separately on a combined return so there are no separate tax brackets for a married couple filing a joint return. However, the ability for married persons to file separately on a combined return is repealed in the “trigger year” in 2018 Iowa Acts, chapter 1161, due to the starting point to calculate Iowa income taxes moving from federal adjusted gross income to federal taxable income, and federal law does not permit married persons to file separately on a combined return.
   DIVISION IV —— CHILD AND DEPENDENT CARE AND EARLY CHILDHOOD TAX CREDITS. Currently, an individual may claim 30 percent of the federal child and dependent care credit provided in section 21 of the Internal Revenue Code against the individual income tax if the individual’s net income is less than $45,000. Under the bill, an individual may claim 30 percent of the federal child and dependent care credit provided in section 21 of the Internal Revenue Code against the individual income tax if the individual’s net income is less than $90,000.
   The bill also increases the income threshold determining the eligibility of a taxpayer for the early childhood development tax credit. The bill increases the eligibility threshold from a taxpayer whose net income is less than $45,000 per year to less than $90,000 per year. By increasing the eligibility threshold, taxpayers whose net income is less than $90,000 are now eligible to take the early childhood development tax credit equaling 25 percent of the first $1,000 which the taxpayer has paid to others for early childhood development expenses for each dependent ages three through five.
   The changes in the division apply to tax years beginning on or after January 1, 2021.
   DIVISION V —— PRECEPTOR TAX CREDIT. The bill establishes a preceptor tax credit to be administered by the department of public health and the department of revenue.
   The bill defines “preceptor” to mean a licensed practicing physician who provides on-site education to a medical student or resident at a hospital or medical clinic in a rural area.
   The bill defines “rural area” to mean any county in the state other than the 10 largest counties according to the most recent federal decennial census. 
   The bill allows a tax credit against the taxes imposed in Code chapter 422, division II (personal income tax), equal to $1,000 per medical student or resident supervised by the preceptor up to a maximum of $10,000 per year.
   Any tax credit in excess of the preceptor’s tax liability for the tax year is not refundable and shall not be credited to the tax liability for any following year. 
   The credits shall be issued annually on a first-come, first-served basis and shall not exceed $100,000 in cumulative value. 
   The bill specifies that the department of public health in collaboration with the department of revenue shall develop a system for the application, review, and authorization of the issuance of the preceptor tax credit. 
   The bill requires the department of public health and the department of revenue to adopt rules to administer the tax credit.
   The tax credit applies to tax years beginning on or after January 1, 2021.
   DIVISION VI —— SALES AND USE TAX. An amendment to the Iowa Constitution was ratified on November 2, 2010, which created a natural resources and outdoor recreation trust fund (fund) and dedicated a portion of state revenues to the fund for the purposes of protecting and enhancing water quality and natural areas in the state including parks, trails, and fish and wildlife habitat, and conserving agricultural soils in the state (article VII, section 10). The fund is codified in Code section 461.31. Pursuant to the amendment, the amount credited to the fund will be equal to the amount generated by an increase in the state sales tax rate occurring after the effective date of the constitutional amendment, but shall not exceed the amount that a state sales tax rate of 0.375 percent would generate. The state sales tax rate has not been increased since the effective date of the constitutional amendment, so no amounts have been credited to the fund. The bill increases the sales tax rate and the use tax rate from 6 percent to 7 percent on January 1, 2021. The bill allocates the moneys from the natural resources and outdoor recreation trust fund in another part of the bill. The bill also amends the transfer of sales and use tax revenues to the secure an advanced vision for education fund (SAVE) in Code sections 423.2A(2) and 423.43 to ensure that SAVE receives the same amount of sales and use tax revenues as it did prior to the sales and use tax increases provided in the bill.
   DIVISION VII —— WATER SERVICE TAX REPEAL. Currently, an excise tax at the rate of 6 percent is imposed on the sales price from the sale or furnishing by a water utility of a water service in the state to consumers or users. The bill strikes and replaces the current future repeal provisions of the water service tax in Code section 423G.7 and provides that the water service tax is repealed January 1, 2021. 
   The amendment to Code section 421.71 specifies that the applicable law related to a private cause of action associated with the collection of the water service tax remains in the 2020 Code, despite the repeal of the water service tax in the bill.
   DIVISION VIII —— SALES AND USE TAX EXEMPTIONS. Beginning January 1, 2021, the bill exempts the sale of feminine hygiene products as defined in the bill from the sales tax. The bill also exempts the sale of child and adult diapers on or after January 1, 2021, whether cloth or disposable. 
   The bill makes a conforming amendment in Code section 423.3(68)(c)(1)(a) by striking a reference to child and adult diapers that relate to the tax-free holiday. 
   By operation of Code section 423.6, an item exempt from the imposition of the sales tax is also exempt from the use tax imposed in Code section 423.5.
   DIVISION IX —— JUVENILE COURT EXPENSES. The bill provides that juvenile court expenses shall be paid from the indigent defense fund established in Code section 815.11. Currently, most juvenile court expenses incurred by a county are eventually paid by the state through the indigent defense fund; however, certain juvenile expenses are a charge upon the county in which the juvenile proceedings are held pursuant to a formula in Code section 232.141(3). The bill strikes the county expense formula in Code section 232.141(3), therefore allowing most juvenile court expenses to be paid from the indigent defense fund without the county paying some expenses based upon the formula.
   DIVISION X —— MENTAL HEALTH REGION FUNDING. The bill strikes current Code section 225C.7A containing the mental health and disability regional services fund and replaces that Code section by establishing a mental health and disability services state supplement fund under the authority of the department of human services. Moneys in the fund shall be used solely for purposes of making state supplement payments under the Code section. For each fiscal year beginning on or after July 1, 2020, the moneys available in a fiscal year in the mental health and disability services state supplement fund are appropriated to the department of human services and shall be distributed to each county on a per capita basis.
   For a county to be eligible to receive a state supplement payment, the county, or the county’s mental health and disability services region on behalf of the county, shall submit a core services domain report to the department of human services on or before a date established by the department by rule. The contents of the report shall enable the department to evaluate, along with other available information, whether each county or the county’s mental health and disability services region is in substantial compliance with the required core service domains under Code section 331.397(4) and Code section 331.397A(4). If the county is not in substantial compliance with the required core service domains and has failed to comply with a corrective action plan required by the department of human services, the department shall reduce the amount of the state supplement payment by an amount commensurate with the level of noncompliance, not to exceed 15 percent of the state supplement payment amount.
   State supplement payments received by a county under new Code section 225C.7A shall be deposited in the county services fund under Code section 331.424A and used solely for payment of services provided under the regional service system management plan.
   Code section 331.424A(6) establishes the amount certified for levy by the county each fiscal year to raise funds for mental health and disability services under the regional service system. Revenues from taxes imposed by the county credited to the county mental health and disability services fund shall not exceed an amount equal to the county budgeted amount, which is the amount necessary to meet the county’s financial obligations for the payment of services provided under the regional service system management plan, not to exceed an amount equal to the product of the regional per capita expenditure target amount multiplied by the county’s population, and, for fiscal years beginning on or after July 1, 2023, reduced by the amount of the county’s cash flow reduction amount. The bill modifies the county budgeted amount that may be certified for levy by the county for such services. For the fiscal year beginning July 1, 2020, and each subsequent fiscal year, the county budgeted amount determined for each county shall be the amount necessary to meet the county’s financial obligations for the payment of services provided under the regional service system management plan approved pursuant to Code section 331.393, not to exceed an amount equal to the product of the statewide per capita expenditure target amount multiplied by the county’s population, and, for fiscal years beginning on or after July 1, 2023, reduced by the amount of the county’s cash flow reduction amount, if applicable. The statewide per capita expenditure target amount is reduced in the bill from $47.28 to $12.50. 
   If division X of the bill takes effect on or after March 31, 2020, a county may recertify the county’s budget for the fiscal year beginning July 1, 2020, as necessary to implement the provisions of division X of the bill. Similarly, to the extent necessary to implement the provisions of division X of the bill, a mental health and disability services region may amend the region’s regional service system management plan or annual service and budget plan for the fiscal year beginning July 1, 2020, and the department of management may, for the fiscal year beginning July 1, 2020, certify the taxes back to the applicable county auditor after June 15. 
   Division X of the bill authorizes the department of human services to adopt emergency rules to implement the provisions of division X of the bill and the rules shall be effective immediately upon filing unless a later date is specified in the rules. However, any emergency rules adopted shall also be published as a notice of intended action as provided in Code section 17A.4.
   The division takes effect upon enactment and applies July 1, 2020, for fiscal years beginning on or after that date.
   DIVISION XI —— CONSTITUTIONAL IMPLEMENTATION. The bill amends provisions in Code chapter 461 (the natural resources and outdoor recreation Act) that is to implement Article VII, section 10, of the Constitution of the State of Iowa when the sales tax is increased. The Code chapter establishes the natural resources and outdoor recreation trust fund (trust fund) and associated accounts (renamed trust accounts) supported by a portion of state revenue generated by an increase in the state’s sales tax. The purpose of the constitutional provision is to protect and enhance water quality and natural areas, including parks, trails, and fish and wildlife habitat, and conserve agricultural soils in this state.
   ALLOCATIONS OF TRUST FUND MONEYS. The bill alters the percentage of moneys to be allocated from the trust fund (trust fund moneys) to its trust accounts, including the natural resources trust account administered by the department of natural resources (DNR), the soil conservation and water protection trust account (renamed the soil conservation and nonpoint source water protection trust account) administered by the department of agriculture and land stewardship (DALS), the watershed protection trust account administered by DNR in cooperation with DALS, the local conservation partnership trust account administered by DNR, the trails trust account (renamed the water and land trails trust account) administered by DOT in cooperation with DNR, and the lake restoration trust account (renamed the lake and stream restoration trust account) administered by DNR. It also reduces the allocations of trust fund moneys to the Iowa resources enhancement and protection (REAP) fund administered by DNR. It transfers trust fund moneys allocated to the renamed soil conservation and nonpoint source water protection trust account and the watershed protection trust account to the water quality infrastructure fund used to support nonpoint water quality programs administered by DALS; and to the water quality financial assistance fund administered by the Iowa finance authority (IFA) to support the wastewater and drinking water treatment financial assistance program (administered by IFA), the water quality financing program (administered by IFA), and the water quality urban infrastructure program (administered by DALS). The bill revises provisions in the local conservation partnership trust account as a program to be administered by DNR. The bill provides that trust fund moneys may be transferred from the renamed soil conservation and nonpoint source water protection trust account to the water quality infrastructure fund and from the watershed protection trust account to the water quality financial assistance fund upon direction by the custodial department. The bill eliminates current funding sources, including the annual appropriation to the REAP fund from the general fund which is due to expire on June 30, 2021, and both a tax on the sales price on water service, which another division of this bill repeals, and the use of wagering tax receipts, which would otherwise expire on July 1, 2029. 
   ADMINISTRATION. The bill provides that the legislative council is to appoint a committee to review the trust fund and its allocations. The bill requires the economic development authority to be involved in decisions that use trust fund moneys to support initiatives with a recreational purpose. In making decisions to expend trust fund moneys, a higher priority is given to supporting an initiative that furthers a goal of the Iowa nutrient reduction strategy. A higher priority is provided to maintaining or preserving existing public use lands rather than acquiring new land. Several provisions place restrictions upon the use of trust fund moneys for support relating to certain initiatives, including athletic fields or facilities. Trust fund moneys cannot be used to support an exercise of eminent domain powers.
   REPEAL. Code chapter 461 is repealed December 31, 2050. 
   EFFECTIVE DATE. The division of the bill takes effect January 1, 2021.