SF 587 (LSB 2179SV (3) 89)

SENATE FILE 587

BY  COMMITTEE ON WAYS AND MEANS

(SUCCESSOR TO SSB 1253)

A BILL FOR

An Act relating to state and local government financing, programs, and operations, by modifying provisions relating to mental health and disability services funding, school district funding, commercial and industrial property tax replacement payments, and other specified tax provisions, making appropriations, providing penalties, and including effective date and applicability provisions.
BE IT ENACTED BY THE GENERAL ASSEMBLY OF THE STATE OF IOWA:

DIVISION I
MENTAL HEALTH FUNDING

    Section 1.  Section 123.38, subsection 2, paragraph b, Code 2021, is amended to read as follows:
   b.  For purposes of this subsection, any portion of license or permit fees used for the purposes authorized in section 331.424, subsection 1, paragraph “a”, subparagraphs (1) and (2), and in section 331.424A, shall not be deemed received either by the division or by a local authority.
    Sec. 2.  Section 218.99, Code 2021, is amended to read as follows:
   218.99  Counties to be notified of patients’ personal accounts.
   The administrator in control of a state institution shall direct the business manager of each institution under the administrator’s jurisdiction which is mentioned in section 331.424, subsection 1, paragraph “a”, subparagraphs (1) and (2), and for which services are paid under section 331.424A

by the county of residence or a mental health and disability services region, to quarterly inform the county of residence of any patient or resident who has an amount in excess of two hundred dollars on account in the patients’ personal deposit fund and the amount on deposit. The administrators shall direct the business manager to further notify the county of residence at least fifteen days before the release of funds in excess of two hundred dollars or upon the death of the patient or resident. If the patient or resident has no residency in this state or the person’s residency is unknown, notice shall be made to the director of human services and the administrator in control of the institution involved.
    Sec. 3.  Section 225.24, Code 2021, is amended to read as follows:
   225.24  Collection of preliminary expense.
   Unless a committed private patient or those legally responsible for the patient’s support offer to settle the amount of the claims, the regional administrator for the person’s county of residence shall collect, by action if necessary, the amount of all claims for per diem and expenses that have been approved by the regional administrator for the county and paid by the regional administrator as provided under section 225.21. Any amount collected shall be credited to the county mental health and disabilities disability services fund region combined account created in accordance with section 331.424A 331.391.
    Sec. 4.  Section 249N.8, subsection 1, Code 2021, 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, Code 2021, or funds administered by a mental health and disability services region that are funded during the reporting period under the Iowa health and wellness plan.
    Sec. 5.  Section 331.389, subsection 1, paragraph b, Code 2021, is amended to read as follows:
   b.  If a county has been exempted prior to July 1, 2014, from the requirement to enter into a regional service system, the county and the county’s board of supervisors shall fulfill all requirements and be eligible as a region under this chapter and chapter chapters 222, 225, 225C, 226, 227, 229, and 230 for a regional service system, regional service system management plan, regional governing board, and regional administrator, and any other provisions applicable to a region of counties providing local mental health and disability services.  Additionally, a county exempted under this subsection shall be considered a region for purposes of chapter 426B.
    Sec. 6.  Section 331.389, subsection 5, paragraph a, subparagraph (2), Code 2021, is amended to read as follows:
   (2)  Reduce the amount of the annual state funding provided for the regional service system or exempted county, including amounts received under section 426B.3 or from the risk pool under section 426B.6, not to exceed fifteen percent of the amount.
    Sec. 7.  Section 331.391, subsection 1, Code 2021, is amended to read as follows:
   1.  The funding under the control of the governing board shall be maintained in a combined account, in separate county accounts that are under the control of the governing board, or pursuant to other arrangements authorized by law that limit the administrative burden of such control while facilitating public scrutiny of financial processes.  A county exempted under section 331.389, subsection 1, shall maintain a county mental health and disability services fund for the deposit of funding received under section 426B.3 or from the risk pool under section 426B.6 and appropriations specifically authorized to be made from the county mental health and disability services fund shall not be made from any other fund of the county. A county mental health and disability services fund established by an exempt county, to the extent feasible, shall be considered to be the same as a region combined account and shall be subject to the same requirements as a region’s combined account.
    Sec. 8.  Section 331.391, subsection 4, paragraphs a and b, Code 2021, are amended to read as follows:
   a.  If a region is meeting the financial obligations for implementation of its regional service system management plan for a fiscal year and residual funding is anticipated, the regional administrator shall may reserve an adequate amount of unobligated and unencumbered funds for cash flow of expenditure obligations in the next fiscal year.
   b.  Each region shall certify to the department of management human services on or before December 1, 2022 2021, and each December 1 thereafter, the amount of the region’s cash flow amount in the combined account that is attributable to each county within the region based upon each county’s proportionate amount of funding and contributions to the region or other methodology specified in the regional governance agreement or certify the cash flow amount for each separate county account that is under the control of the governing board at the conclusion of the most recently completed fiscal year.
    Sec. 9.  Section 331.391, subsection 4, paragraph c, Code 2021, is amended by striking the paragraph.
    Sec. 10.  Section 331.392, subsection 4, paragraph a, Code 2021, is amended to read as follows:
   a.  Methods for pooling, management, and expenditure of the funding under the control of the regional administrator. If the agreement does not provide for pooling of the participating county moneys in a single fund, the agreement shall specify how the participating county moneys will be subject to the control of the regional administrator.
    Sec. 11.  Section 331.393, subsection 10, Code 2021, is amended to read as follows:
   10.  The director’s approval of a regional plan shall not be construed to constitute certification of the respective county budgets or of the region’s budget.
    Sec. 12.  Section 331.394, subsection 4, Code 2021, is amended to read as follows:
   4.  If a county of residence is part of a mental health and disability services region that has agreed to pool funding and liability for services, the The responsibilities of the county under law regarding such mental health and disability services shall be performed on behalf of the county by the regional administrator. The county of residence or the county’s mental health and disability services region, as applicable, is responsible for paying the public costs of the mental health and disability services that are not covered by the medical assistance program under chapter 249A and are provided in accordance with the region’s approved service management plan to persons who are residents of the county or region.
    Sec. 13.  Section 331.424A, subsection 1, paragraph b, Code 2021, is amended by striking the paragraph.
    Sec. 14.  Section 331.424A, subsection 3, Code 2021, is amended to read as follows:
   3.  a.  County revenues from taxes and other sources designated by a county for mental health and disabilities services shall be credited to the county mental health and disabilities services fund which shall be created by the county. The Until the required transfer of funds under paragraph “b”, the board shall make appropriations from the fund for payment of services provided under the regional service system management plan approved pursuant to section 331.393. The For fiscal years beginning before July 1, 2022, the county may pay for the services in cooperation with other counties by pooling appropriations from the county services fund with appropriations from the county services fund of other counties through the county’s regional administrator, or through another arrangement specified in the regional governance agreement entered into by the county under section 331.392.
   b.  Notwithstanding section 331.432, subsection 3, upon conclusion of the fiscal year beginning July 1, 2021, except for an exempt county under section 331.391, subsection 1, the county treasurer shall transfer the remaining balance of the county’s county services fund created under paragraph “a”, including all unobligated and unencumbered funds, to the county’s region to which the county belongs in the fiscal year beginning July 1, 2022, for deposit in the region’s combined account under section 331.391.
    Sec. 15.  Section 331.424A, subsection 4, paragraph a, Code 2021, is amended to read as follows:
   a.  An amount of unobligated and unencumbered funds, as specified in the regional governance agreement entered into by the county under section 331.392, shall, for fiscal years beginning before July 1, 2022, be reserved in the county services fund to address cash flow obligations in the next fiscal year, subject to the limitations of this subsection.
    Sec. 16.  Section 331.424A, subsection 4, paragraphs c and d, Code 2021, are amended by striking the paragraphs.
    Sec. 17.  Section 331.424A, subsections 5, 6, and 9, Code 2021, are amended to read as follows:
   5.  Receipts from the state or federal government for fiscal years beginning before July 1, 2022, 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 and moneys allocated under chapter 426B.
   6.  For each fiscal year beginning before July 1, 2022, the county shall certify a levy for payment of services. For each such fiscal year, county revenues from taxes imposed by the county credited to the county services fund shall not exceed an amount equal to the county budgeted amount for the fiscal year. A levy certified under this section is not subject to the appeal provisions of section 331.426 or to any other provision in law authorizing a county to exceed, increase, or appeal a property tax levy limit.
   9.  a.  For the fiscal year beginning July 1, 2017, and each subsequent fiscal year beginning before July 1, 2022, 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 per capita expenditure target amount twenty-one dollars and fourteen cents 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 for a fiscal year beginning before July 1, 2022, 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 twenty-one dollars and fourteen cents 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. 18.  Section 331.424A, Code 2021, is amended by adding the following new subsection:
   NEW SUBSECTION.  10.  This section is repealed July 1, 2022.
    Sec. 19.  Section 331.432, subsection 3, Code 2021, is amended by striking the subsection and inserting in lieu thereof the following:
   3.  Payments or transfers of moneys from any fund of the county to a mental health and disability services region’s combined account under section 331.391 are prohibited.
    Sec. 20.  Section 347.7, subsection 1, paragraph c, Code 2021, is amended by striking the paragraph.
    Sec. 21.  Section 426B.1, subsection 2, Code 2021, is amended to read as follows:
   2.  Moneys shall be distributed from the property tax relief fund to counties for the mental health and disability regional service system for mental health and disabilities services, in accordance with the appropriations made to the fund and other statutory requirements.
    Sec. 22.  Section 426B.2, Code 2021, is amended to read as follows:
   426B.2  Property tax relief fund payments.
   The director of human services shall draw warrants on the property tax relief fund, payable to the county treasurer regional administrator in the amount due to a county mental health and disability services region in accordance with statutory requirements, and mail the warrants to the county auditors regional administrator in July and January of each year.
    Sec. 23.  NEW SECTION.  426B.3  Mental health and disability services regional supplement fund.
   1.  A mental health and disability services regional supplement fund is created in the office of the treasurer of state under the authority of the department of human services. 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 regional supplement payments under this section.
   2.  For each fiscal year beginning on or after July 1, 2021, there is appropriated from the general fund of the state to the mental health and disability services regional supplement fund an amount necessary to make all regional supplement payments under this section for that fiscal year.
   3.  For each fiscal year beginning on or after July 1, 2021, 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 mental health and disability services region, as defined in section 426B.6, on a per capita basis calculated under subsection 4 using each region’s population, as defined in section 426B.6, for that fiscal year. 
   4.  The amount of each region’s regional supplement payment shall be determined as follows:
   a.  For the fiscal year beginning July 1, 2021, an amount equal to the product of fifteen dollars and eighty-six cents multiplied by the sum of the region’s population for the fiscal year.
   b.  For the fiscal year beginning July 1, 2022, an amount equal to the product of thirty-eight dollars multiplied by the sum of the region’s population for the fiscal year.
   c.  For the fiscal year beginning July 1, 2023, an amount equal to the product of forty dollars multiplied by the sum of the region’s population for the fiscal year.
   d.  For the fiscal year beginning July 1, 2024, an amount equal to the product of forty-two dollars multiplied by the sum of the region’s population for the fiscal year.
   e.  (1)  For the fiscal year beginning July 1, 2025, and each succeeding fiscal year, an amount equal to the product of the sum of the region’s population for the fiscal year multiplied by the sum of the dollar amount used to calculate the regional supplement payments under this subsection for the immediately preceding fiscal year plus the regional supplement growth factor for the fiscal year.
   (2)  For purposes of this paragraph, “regional supplement growth factor” for a fiscal year is an amount equal to the product of the dollar amount used to calculate the regional supplement payments under this subsection for the immediately preceding fiscal year multiplied by the percent increase, if any, in the amount of sales tax revenue deposited into the general fund of the state under section 423.2A, subsection 1, paragraph “a”, less the transfers required under section 423.2A, subsection 2, between the fiscal year beginning three years prior to the applicable fiscal year and the fiscal year beginning two years prior to the applicable year, but not to exceed one and one-half percent.
   5.  Regional supplement payments received by a region shall be deposited in the region’s combined account under section 331.391 and used solely for providing mental health and disability services under the regional service system management plan.
   6.  Regional supplement payments from the mental health and disability services regional supplement fund shall be paid in quarterly installments to the appropriate regional administrator in July, October, January, and April of each fiscal year.
   7.  a.  For the fiscal year beginning July 1, 2021, each mental health and disability services region for which the amount certified during the fiscal year under section 331.391, subsection 4, paragraph “b”, exceeds forty percent of the proposed gross expenditures of the region for the fiscal year, the remaining quarterly payments of the region’s regional supplement payment shall be reduced by an amount equal to the amount by which the region’s amount certified under section 331.391, subsection 4, paragraph “b”, exceeds forty percent of the proposed gross expenditures of the region for the fiscal year, but the amount of the reduction shall not exceed the total amount of the region’s regional supplement payment for the fiscal year. If the region’s remaining quarterly payments are insufficient to effectuate the required reductions under this paragraph, the region is required to pay to the department of human services any amount for which the reduction in quarterly payments could not be made. The amount of reductions to quarterly payments and amounts paid to the department under this paragraph shall be transferred and credited to the risk pool under section 426B.6.
   b.  For the fiscal year beginning July 1, 2022, each mental health and disability services region for which the amount certified during the fiscal year under section 331.391, subsection 4, paragraph “b”, exceeds twenty percent of the proposed gross expenditures of the region for the fiscal year, the remaining quarterly payments of the region’s regional supplement payment shall be reduced by an amount equal to the amount by which the region’s amount certified under section 331.391, subsection 4, paragraph “b”, exceeds twenty percent of the proposed gross expenditures of the region for the fiscal year, but the amount of the reduction shall not exceed the total amount of the region’s regional supplement payment for the fiscal year. If the region’s remaining quarterly payments are insufficient to effectuate the required reductions under this paragraph, the region is required to pay to the department of human services any amount for which the reduction in quarterly payments could not be made. The amount of reductions to quarterly payments and amounts paid to the department under this paragraph shall be transferred and credited to the risk pool under section 426B.6.
   c.  For the fiscal year beginning July 1, 2023, and each succeeding fiscal year, each mental health and disability services region for which an amount greater than zero is certified during the fiscal year under section 331.391, subsection 4, paragraph “b”, the remaining quarterly payments of the region’s regional supplement payment shall be reduced by an amount equal to the amount certified under section 331.391, subsection 4, paragraph “b”, but the amount of the reduction shall not exceed the total amount of the region’s regional supplement payment for the fiscal year. If the region’s remaining quarterly payments are insufficient to effectuate the required reductions under this paragraph, the region is required to pay to the department of human services any amount for which the reduction in quarterly payments could not be made. The amount of reductions to quarterly payments and amounts paid to the department under this paragraph shall be transferred and credited to the risk pool under section 426B.6.
    Sec. 24.  Section 426B.4, Code 2021, is amended to read as follows:
   426B.4  Rules.
   The mental health and disability services commission shall consult with county representatives regional administrators and the director of human services in prescribing forms and adopting rules pursuant to chapter 17A to administer this chapter.
    Sec. 25.  NEW SECTION.  426B.6  Risk pool.
   1.  For the purposes of this chapter, unless the context otherwise requires:
   a.  “Mental health and disability services region” means a mental health and disability services region formed in accordance with section 331.389.
   b.  “Population” means, as of July 1 of the fiscal year preceding the fiscal year in which the population figure is applied, the county population shown by the latest preceding certified federal census or the latest applicable population estimate issued by the United States census bureau, whichever is most recent.
   c.  “Regional administrator” means the regional administrator of a mental health and disability services region, as defined in section 331.388.
   2.  A risk pool is created in the property tax relief fund under section 426B.1. The pool shall consist of the moneys appropriated or credited to the pool by law, including amounts credited to the risk pool under section 426B.3, subsection 7. For fiscal years beginning on or after July 1, 2021, there is appropriated from the general fund of the state to the risk pool the following amounts to be used for the purposes of this section:
   a.  For the fiscal year beginning July 1, 2021, nine million nine hundred sixty thousand five hundred ninety dollars.
   b.  For the fiscal year beginning July 1, 2022, five million one hundred seven thousand three hundred forty dollars.
   c.  (1)  For each fiscal year beginning on or after July 1, 2025, an amount equal to the risk pool growth factor multiplied by the ending balance of the risk pool at the conclusion of the fiscal year ending June 30 immediately preceding the application deadline under subsection 4 for the fiscal year for which the appropriation is made.
   (2)  For purposes of this paragraph, the “risk pool growth factor” for each fiscal year is the percent increase, if any, in the amount of sales tax revenue deposited into the general fund of the state under section 423.2A, subsection 1, paragraph “a”, less the transfers required under section 423.2A, subsection 2, between the fiscal year beginning three years prior to the applicable fiscal year and the fiscal year beginning two years prior to the applicable year, minus one and one-half percent, and the risk pool growth factor for any fiscal year shall not exceed three and one-half percent.
   3.  A risk pool board is created. The board shall consist of two county supervisors, two county auditors, a member of the mental health and disability services commission who is not a member of a county board of supervisors, a member of the county finance committee created in chapter 333A who is not an elected official, a representative of a provider of mental health or developmental disabilities services selected from nominees submitted by the Iowa association of community providers, and two staff members of regional administrators of county mental health and disability services regions, all appointed by the governor, and one member appointed by the director of human services. All members appointed by the governor shall be subject to confirmation by the senate. Members shall serve for three-year terms. A vacancy shall be filled in the same manner as the original appointment. Expenses and other costs of the risk pool board members representing counties shall be paid by the county of origin. Expenses and other costs of risk pool board members who do not represent counties shall be paid by the department of human services. Staff assistance to the board shall be provided by the department of human services. Actuarial expenses and other direct administrative costs shall be charged to the pool.
   4.  To receive assistance from the risk pool, a regional administrator must apply to the risk pool board on or before October 31 preceding the fiscal year for which assistance is requested. The purpose of the assistance shall be to provide financial support for services provided by the regional administrator’s mental health and disability services region. The risk pool board shall make its final decisions on or before December 15 regarding acceptance or rejection of the applications for assistance and the total amount accepted shall be considered obligated.
   5.  Basic eligibility for risk pool assistance requires that a mental health and disability services region meet all of the following conditions:
   a.  The mental health and disability services region is in compliance with the regional service system management plan requirements of section 331.393.
   b.  (1)  For applications for assistance for the fiscal year beginning July 1, 2021, and the fiscal year beginning July 1, 2022, in the fiscal year that commenced two years prior to the fiscal year of application for assistance, the ending balance, under generally accepted accounting principles, of the mental health and disability services region’s combined services funds was equal to or less than the ending balance threshold under subparagraph (2) for the fiscal year for which assistance is requested.
   (2)  For purposes of this paragraph “b”, “ending balance threshold” means the following:
   (a)  For applications for assistance for the fiscal year beginning July 1, 2021, forty percent of the actual gross expenditures of the mental health and disability services region for the fiscal year that commenced two years prior to the fiscal year of application for assistance.
   (b)  For applications for assistance for the fiscal year beginning July 1, 2022, twenty percent of the actual gross expenditures of the mental health and disability services region for the fiscal year that commenced two years prior to the fiscal year of application for assistance.
   6.  The board shall review the fiscal year-end financial records for all mental health and disability services regions that are granted risk pool assistance. If the board determines a mental health and disability services region’s actual need for risk pool assistance was less than the amount of risk pool assistance granted to the mental health and disability services region, the mental health and disability services region shall refund the difference between the amount of assistance granted and the actual need. The mental health and disability services region shall submit the refund within thirty days of receiving notice from the board. Refunds shall be credited to the risk pool. The mental health and disability services commission shall adopt rules pursuant to chapter 17A providing criteria for the purposes of this subsection and as necessary to implement the other provisions of this section.
   7.  The board shall determine application requirements to ensure prudent use of risk pool assistance. The board may accept or reject an application for assistance in whole or in part. The decision of the board is final.
   8.  The total amount of risk pool assistance shall be limited to the amount available in the risk pool for a fiscal year. Any unobligated balance in the risk pool at the close of a fiscal year shall remain in the risk pool for distribution in the succeeding fiscal year.
   9.  Risk pool assistance shall only be made available to address one or more of the following circumstances:
   a.  Continuing support for mandated services.
   b.  Avoiding the need for reduction or elimination of critical services when the reduction or elimination places consumers’ health or safety at risk.
   c.  Avoiding the need for reduction or elimination of a mobile crisis team or other critical emergency services when the reduction or elimination places the public’s health or safety at risk.
   d.  Avoiding the need for reduction or elimination of the services or other support provided to entire populations of consumers with disabilities.
   e.  Avoiding the need for reduction or elimination of services or other support that maintain consumers in a community setting or that would create a risk that the consumers would be placed in more restrictive, higher cost settings.
   10.  Subject to the amount available and obligated from the risk pool for a fiscal year, the department of human services shall annually calculate the amount of moneys due to eligible mental health and disability services regions in accordance with the board’s decisions and that amount is appropriated from the risk pool to the department for payment of the moneys due. The department shall authorize the issuance of warrants payable to the mental health and disability services regions for the amounts due and the warrants shall be issued on or before January 1.
   11.  On or before March 1 and September 1 of each fiscal year, the department of human services shall provide the risk pool board with a report of the financial condition of each funding source administered by the board. The report shall include but is not limited to an itemization of the funding source’s balances, types and amount of revenues credited, and payees and payment amounts for the expenditures made from the funding source during the reporting period.
   12.  If the board has made its decisions but has determined that there are otherwise qualifying requests for risk pool assistance that are beyond the amount available in the risk pool fund for a fiscal year, the board shall compile a list of such requests and the supporting information for the requests. The list and information shall be submitted to the mental health and disability services commission, the department of human services, and the general assembly. 
    Sec. 26.  ADJUSTMENT TO PROPERTY TAXES CERTIFIED UNDER SECTION 331.424A —— FY 2021-2022.  If this division of this Act takes effect after March 31, 2021, for each county for which the amount of taxes certified for levy for the purposes of section 331.424A for the fiscal year beginning July 1, 2021, exceeds the product of the population of the county as determined under section 331.424A, subsection 1, paragraph “e”, multiplied by twenty-one dollars and fourteen cents, the department of management shall reduce the amount of such taxes certified for levy to an amount not to exceed the product of the population of the county as determined under section 331.424A, subsection 1, paragraph “e”, multiplied by twenty-one dollars and fourteen cents and shall revise the rate of taxation as necessary to raise the reduced amount. The department of management shall report the reduction in the certified taxes and the revised rate of taxation to the county auditors by June 15, 2021.
    Sec. 27.  IMPLEMENTATION OF RISK POOL UNDER SECTION 426B.6 —— EMERGENCY RULEMAKING.
   1.  In order to timely implement the provisions of this division of this Act establishing the risk pool for mental health and disability services regions for the fiscal year beginning July 1, 2021, and the fiscal year beginning July 1, 2022, the director of human services shall, subject to the membership requirements of section 426B.6, subsection 3, appoint temporary members of the risk pool board to review and approve risk pool assistance applications and establish alternative application deadlines and expedited application review and approval timelines.
   2.  The department of human services may adopt administrative rules under section 17A.4, subsection 3, and section 17A.5, subsection 2, paragraph “b”, to implement provisions of this division of this Act and the rules shall become effective immediately upon filing or on a later effective date specified in the rules, unless the effective date of the rules is delayed or the applicability of the rules is suspended by the administrative rules review committee. Any rules adopted in accordance with this section shall not take effect before the rules are reviewed by the administrative rules review committee. The delay authority provided to the administrative rules review committee under section 17A.8, subsection 9, shall be applicable to a delay imposed under this section, notwithstanding a provision in that section making it inapplicable to section 17A.5, subsection 2, paragraph “b”. Any rules adopted in accordance with the provisions of this section shall also be published as a notice of intended action as provided in section 17A.4.
    Sec. 28.  EFFECTIVE DATE.  Except as provided in this division of this Act, this division of this Act, being deemed of immediate importance, takes effect upon enactment.
    Sec. 29.  EFFECTIVE DATE.  The following take effect July 1, 2022:
   1.  The section of this division of this Act amending section 331.432, subsection 3.
   2.  The section of this division of this Act amending section 347.7, subsection 1, paragraph “c”.
DIVISION II
COMMERCIAL AND INDUSTRIAL PROPERTY TAX REPLACEMENT PAYMENTS

    Sec. 30.  Section 2.48, subsection 3, paragraph f, subparagraph (6), Code 2021, is amended by striking the subparagraph.
    Sec. 31.  Section 331.512, subsection 15, Code 2021, is amended by striking the subsection.
    Sec. 32.  Section 331.559, subsection 27, Code 2021, is amended by striking the subsection.
    Sec. 33.  Section 441.21A, subsection 1, paragraph a, Code 2021, is amended to read as follows:
   a.  For each fiscal year beginning on or after July 1, 2014, but before July 1, 2027, there is appropriated from the general fund of the state to the department of revenue an amount necessary for the payment of all commercial and industrial property tax replacement claims under this section for the fiscal year. However, for a the fiscal year years beginning on or after July 1, 2017, July 1, 2018, July 1, 2019, July 1, 2020, and July 1, 2021, the total amount of moneys appropriated from the general fund of the state to the department of revenue for the payment of commercial and industrial property tax replacement claims in that each fiscal year shall not exceed the total amount of money necessary to pay all commercial and industrial property tax replacement claims for the fiscal year beginning July 1, 2016.
    Sec. 34.  Section 441.21A, subsections 2 and 3, Code 2021, are amended to read as follows:
   2.  a.  Beginning with the For each fiscal year beginning on or after July 1, 2014, but before July 1, 2022, each county treasurer shall be paid by the department of revenue an amount equal to the amount of the commercial and industrial property tax replacement claims in the county, as calculated in subsection 4. If an amount appropriated for a the fiscal year beginning on July 1, 2017, July 1, 2018, July 1, 2019, July 1, 2020, or July 1, 2021, is insufficient to pay all replacement claims for the fiscal year, the director of revenue shall prorate the payment of replacement claims to the county treasurers and shall notify the county auditors of the pro rata percentage on or before September 30.
   b.  For each fiscal year beginning on or after July 1, 2022, but before July 1, 2027, each taxing authority shall be paid by the department of revenue an amount equal to the amount of the commercial and industrial property tax replacement claim for the taxing authority, as calculated in subsection 4A.
   3.  a.  On or before July 1 of each fiscal year beginning on or after July 1, 2014, but before July 1, 2022, the assessor shall report to the county auditor the total actual value of all commercial property and industrial property in the county that is subject to assessment and taxation for the assessment year used to calculate the taxes due and payable in that fiscal year.
   b.  On or before July 1, 2022, the department of revenue, in consultation with the department of management, shall calculate for each taxing authority in this state that is a city or a county all of the following:
   (1)  The total assessed value as of January 1, 2012, of all taxable property located in the taxing authority that is subject to assessment and taxation used to calculate taxes which are due and payable in the fiscal year beginning July 1, 2013, excluding property subject to the statewide property tax imposed under section 437A.18 or 437B.14.
   (2)  The total assessed value as of January 1, 2019, of all taxable property located in the taxing authority that is subject to assessment and taxation used to calculate taxes which are due and payable in the fiscal year beginning July 1, 2020, excluding property subject to the statewide property tax imposed under section 437A.18 or 437B.14.
    Sec. 35.  Section 441.21A, subsection 4, unnumbered paragraph 1, Code 2021, is amended to read as follows:
   On or before a date established by rule of the department of revenue of each fiscal year beginning on or after July 1, 2014, but before July 1, 2022, the county auditor shall prepare a statement, based upon the report received pursuant to subsection 3, paragraph “a”, listing for each taxing district in the county:
    Sec. 36.  Section 441.21A, Code 2021, is amended by adding the following new subsection:
   NEW SUBSECTION.  4A.  a.  As used in this subsection, unless the context clearly requires otherwise:
   (1)  “Qualified taxing authority” means any of the following:
   (a)  A taxing authority that is not a city or a county.
   (b)  A taxing authority that is a city or county for which the amount determined under subsection 3, paragraph “b”, subparagraph (2), is less than one hundred thirty-one and fourteen hundredths percent of the amount determined under subsection 3, paragraph “b”, subparagraph (1).
   (2)  “Taxing authority” means a city, county, community college, or other governmental entity or political subdivision in this state authorized to certify a levy on property located within such authority, but does not include a school district.
   b.  For fiscal years beginning on or after July 1, 2022, but before July 1, 2027, the amount of each taxing authority’s replacement claim is as follows:
   (1)  If the taxing authority is a qualified taxing authority:
   (a)  For the fiscal year beginning July 1, 2022, five-sixths of the amount received by the taxing authority under this section for the fiscal year beginning July 1, 2021.
   (b)  For the fiscal year beginning July 1, 2023, four-sixths of the amount received by the taxing authority under this section for the fiscal year beginning July 1, 2021.
   (c)  For the fiscal year beginning July 1, 2024, three-sixths of the amount received by the taxing authority under this section for the fiscal year beginning July 1, 2021.
   (d)  For the fiscal year beginning July 1, 2025, two-sixths of the amount received by the taxing authority under this section for the fiscal year beginning July 1, 2021.
   (e)  For the fiscal year beginning July 1, 2026, one-sixth of the amount received by the taxing authority under this section for the fiscal year beginning July 1, 2021.
   (2)  If the taxing authority is not a qualified taxing authority:
   (a)  For the fiscal year beginning July 1, 2022, three-fourths of the amount received by the taxing authority under this section for the fiscal year beginning July 1, 2021.
   (b)  For the fiscal year beginning July 1, 2023, two-fourths of the amount received by the taxing authority under this section for the fiscal year beginning July 1, 2021. 
   (c)  For the fiscal year beginning July 1, 2024, one-fourth of the amount received by the taxing authority under this section for the fiscal year beginning July 1, 2021.
   (d)  For the fiscal year beginning July 1, 2025, and each succeeding fiscal year beginning before July 1, 2027, zero.
   (3)  The department of revenue shall consult with the department of management to calculate the amount received by each taxing authority in this state as the result of commercial and industrial property tax replacement claims paid for the fiscal year beginning July 1, 2021. 
    Sec. 37.  Section 441.21A, subsection 5, Code 2021, is amended to read as follows:
   5.  For purposes of computing replacement amounts under this section for fiscal years beginning on or after July 1, 2014, but before July 1, 2022, that portion of an urban renewal area defined as the sum of the assessed valuations defined in section 403.19, subsections 1 and 2, shall be considered a taxing district.
    Sec. 38.  Section 441.21A, subsection 6, paragraph a, Code 2021, is amended to read as follows:
   a.  The For fiscal years beginning on or after July 1, 2014, but before July 1, 2022, the county auditor shall certify and forward one copy of the statement to the department of revenue not later than a date of each year established by the department of revenue by rule.
    Sec. 39.  Section 441.21A, subsection 6, Code 2021, is amended by adding the following new paragraph:
   NEW PARAGRAPH.  f.  This subsection shall apply to the apportionment of replacement claim amounts for fiscal years beginning on or after July 1, 2014, but before July 1, 2022.
    Sec. 40.  Section 441.21A, Code 2021, is amended by adding the following new subsections:
   NEW SUBSECTION.  7.  a.  For fiscal years beginning on or after July 1, 2022, but before July 1, 2027, each taxing authority’s replacement claim calculated under subsection 4A shall be paid to the taxing authority in equal installments in September and March of each year.
   b.  The taxing authority’s replacement claim shall be apportioned and credited by the governing body of the taxing authority among the taxing authority’s tax levies in the same proportion that each property tax levy bears to the total of all property tax levies imposed by the taxing authority for the fiscal year for which the payment is received.
   c.  Of the amounts allocated and credited to each property tax levy that is subject to division under section 403.19, the total amount paid into the fund for the taxing authority as taxes by or for the taxing authority into which all other property taxes are paid and the special fund of the applicable municipality under section 403.19, subsection 2, shall be an amount of the replacement claim that is proportionate to the amount of the total sum of the assessed value of the taxable commercial and industrial property in the urban renewal area as a share of total assessed value of all taxable property in the taxing authority and shall be apportioned as follows:
   (1)  To the fund for the taxing authority as taxes by or for the taxing authority into which all other property taxes are paid, an amount proportionate to the amount of actual value of the commercial and industrial property in the urban renewal area as determined in section 403.19, subsection 1, that was subtracted pursuant to section 403.20, as it bears to the total amount of actual value of the commercial and industrial property in the urban renewal area that was subtracted pursuant to section 403.20 for the assessment year for property taxes due and payable in the fiscal year for which the replacement claim is computed.
   (2)  (a)  To the special fund of the applicable municipality under section 403.19, subsection 2, the remaining amount, if any.
   (b)  The amount allocated under subparagraph division (a) shall not exceed the amount equal to the amount certified to the county auditor under section 403.19 for the fiscal year in which the claim is paid, after deduction of the amount of other revenues committed for payment on that amount for the fiscal year. The amount not allocated as a result of the operation of this subparagraph division (b) shall be allocated to and paid into the fund for the taxing authority as taxes by or for the taxing authority in the manner provided in subparagraph (1).
   NEW SUBSECTION.  8.  This section is repealed July 1, 2027. 
    Sec. 41.  EFFECTIVE DATE.  The following take effect July 1, 2027:
   1.  The section of this division of this Act amending section 331.512.
   2.  The section of this division of this Act amending section 331.559.
DIVISION III
SCHOOL FOUNDATION PERCENTAGE

    Sec. 42.  Section 257.1, subsection 2, paragraph b, Code 2021, is amended to read as follows:
   b.  For the budget year commencing July 1, 1999, and for each succeeding budget year beginning before July 1, 2022, the regular program foundation base per pupil is eighty-seven and five-tenths percent of the regular program state cost per pupil.  For the budget year commencing July 1, 2022, and for each succeeding budget year, the regular program foundation base per pupil is eighty-eight and four-tenths percent of the regular program state cost per pupil. For the budget year commencing July 1, 1991, and for each succeeding budget year the special education support services foundation base is seventy-nine percent of the special education support services state cost per pupil. The combined foundation base is the sum of the regular program foundation base, the special education support services foundation base, the total teacher salary supplement district cost, the total professional development supplement district cost, the total early intervention supplement district cost, the total teacher leadership supplement district cost, the total area education agency teacher salary supplement district cost, and the total area education agency professional development supplement district cost.
    Sec. 43.  Section 257.3, subsection 1, paragraph d, Code 2021, is amended by striking the paragraph.
    Sec. 44.  EFFECTIVE DATE.  The section of this division of this Act amending section 257.3, subsection 1, paragraph “d”, takes effect July 1, 2022.
DIVISION IV
PUBLIC EDUCATION AND RECREATION TAX LEVY

    Sec. 45.  Section 276.10, subsection 1, Code 2021, is amended to read as follows:
   1.  The board of directors of a local school district may establish a community education program for schools in the district and provide for the general supervision of the program. Financial support for the program shall may be provided from funds raised pursuant to chapter 300 received by the school district under chapter 423F and from any private funds and any federal funds made available for the purpose of implementing this chapter. The program which recognizes that the schools belong to the people and which shall be centered in the schools may include but shall not be limited to the use of the school facilities day and night, year round including weekends and regular school vacation periods for educational, recreational, cultural, and other community services and programs for all age, ethnic, and socioeconomic groups residing in the community.
    Sec. 46.  Section 278.1, subsection 1, paragraph e, Code 2021, is amended to read as follows:
   e.  Direct the transfer of any surplus in the debt service fund, physical plant and equipment levy fund, or other capital project funds, or public education and recreation levy fund to the general fund.
    Sec. 47.  Section 298A.6, Code 2021, is amended to read as follows:
   298A.6  Public education and recreation levy fund.
   The public education and recreation levy fund is a special revenue fund. A public education and recreation levy fund must be established in any school corporation which levies levied the tax authorized under section 300.2, Code 2021, or which receives received revenue from a chapter 28E agreement authorized under section 300.1, Code 2021.  Moneys available in the fund at the conclusion of the fiscal year beginning July 1, 2021, and ending June 30, 2022, shall be expended by the school corporation for the purposes authorized under chapter 300, Code 2021.
    Sec. 48.  Section 423F.3, subsection 1, paragraph c, Code 2021, is amended by striking the paragraph.
    Sec. 49.  Section 423F.5, subsection 1, Code 2021, is amended to read as follows:
   1.  A school district shall include as part of its financial audit for the budget year beginning July 1, 2007, and for each subsequent budget year the amount received during the year pursuant to chapter 423E or  this chapter, as applicable. In addition, the financial audit shall include the amount of bond levies, and physical plant and equipment levy, and public educational and recreational levy reduced as a result of the moneys received under chapter 423E or  this chapter, as applicable. The amount of the reductions shall be stated in terms of dollars and cents per one thousand dollars of valuation and in total amount of property tax dollars. Also included shall be an accounting of the amount of moneys received which were spent for infrastructure purposes pursuant to chapter 423E or  this chapter, as applicable.
    Sec. 50.  REPEAL.  Sections 276.11 and 276.12, Code 2021, are repealed.
    Sec. 51.  REPEAL.  Chapter 300, Code 2021, is repealed.
    Sec. 52.  EFFECTIVE DATE.  This division of this Act takes effect July 1, 2022.
    Sec. 53.  APPLICABILITY.  This division of this Act applies to fiscal years beginning on or after July 1, 2022.
DIVISION V
ELDERLY PROPERTY TAX CREDIT

    Sec. 54.  Section 25B.7, subsection 2, paragraph b, Code 2021, is amended to read as follows:
   b.  Low-income property tax credit and elderly and disabled property tax credit pursuant to sections 425.16 through 425.40, subject to the limitation of 425.39, subsection 2.
    Sec. 55.  Section 425.1, subsection 1, paragraph a, Code 2021, is amended to read as follows:
   a.  A homestead credit fund is created. There is appropriated annually from the general fund of the state to the department of revenue to be credited to the homestead credit fund, an amount sufficient to implement this chapter subchapter.
    Sec. 56.  Section 425.17, subsection 2, Code 2021, is amended to read as follows:
   2.  a.  “Claimant” means either any of the following:
   (1)  A person filing a claim for credit or reimbursement under this subchapter who has attained the age of sixty-five years but who has not attained the age of seventy years on or before December 31 of the base year or, a person filing a claim for credit or reimbursement under this subchapter who is totally disabled and was totally disabled on or before December 31 of the base year, or a person filing a claim for reimbursement under this subchapter who has attained the age of sixty-five years on or before December 31 of the base year and who is domiciled in this state at the time the claim is filed or at the time of the person’s death in the case of a claim filed by the executor or administrator of the claimant’s estate.
   (2)  A person filing a claim for credit or reimbursement under this subchapter who has attained the age of twenty-three years on or before December 31 of the base year or was a head of household on December 31 of the base year, as defined in the Internal Revenue Code, but has not attained the age or disability status described in this paragraph “a”, subparagraph (1) or the age status and eligibility criteria of subparagraph (3), and is domiciled in this state at the time the claim is filed or at the time of the person’s death in the case of a claim filed by the executor or administrator of the claimant’s estate, and was not claimed as a dependent on any other person’s tax return for the base year.
   (3)  A person filing a claim for credit under this subchapter who has attained the age of seventy years on or before December 31 of the base year, who has a household income of less than two hundred fifty percent of the federal poverty level, as defined by the most recently revised poverty income guidelines published by the United States department of health and human services, and is domiciled in this state at the time the claim is filed or at the time of the person’s death in the case of a claim filed by the executor or administrator of the claimant’s estate.
   b.  “Claimant” under paragraph “a”, subparagraph (1) or (2), includes a vendee in possession under a contract for deed and may include one or more joint tenants or tenants in common. In the case of a claim for rent constituting property taxes paid, the claimant shall have rented the property during any part of the base year. In the case of a claim for property taxes due, the claimant shall have occupied the property during any part of the fiscal year beginning July 1 of the base year. If a homestead is occupied by two or more persons, and more than one person is able to qualify as a claimant, the persons may each file a claim based upon each person’s income and rent constituting property taxes paid or property taxes due.
    Sec. 57.  Section 425.23, subsection 1, paragraph a, unnumbered paragraph 1, Code 2021, is amended to read as follows:
   The tentative credit or reimbursement for a claimant described in section 425.17, subsection 2, paragraph “a”, subparagraphs subparagraph (1) and (2), if no appropriation is made to the fund created in section 425.40 shall be determined in accordance with the following schedule:
    Sec. 58.  Section 425.23, subsection 1, Code 2021, is amended by adding the following new paragraph:
   NEW PARAGRAPH.  c.  The tentative credit for a claimant described in section 425.17, subsection 2, paragraph “a”, subparagraph (3), shall be the greater of the following:
   (1)  The amount of the credit under the schedule specified in paragraph “a” of this subsection as if the claimant was a claimant as defined in section 425.17, subsection 2, paragraph “a”, subparagraph (1), filing for a credit under paragraph “a” of this subsection.
   (2)  The difference between the actual amount of property taxes due on the homestead during the fiscal year next following the base year minus the actual amount of property taxes due on the homestead during the first fiscal year for which the claimant filed a claim for a credit calculated under this paragraph “c” and for which the property taxes due on the homestead were calculated on an assessed valuation that was not a partial assessment and if the claimant has filed for the credit calculated under this paragraph “c” for each of the subsequent fiscal years after the first credit claimed.
    Sec. 59.  Section 425.23, subsection 4, paragraph a, Code 2021, is amended to read as follows:
   a.  For the base year beginning in the 1999 calendar year and for each subsequent base year, the dollar amounts set forth in subsections subsection 1, paragraphs “a” and “b”, and subsection 3 shall be multiplied by the cumulative adjustment factor for that base year. “Cumulative adjustment factor” means the product of the annual adjustment factor for the 1998 base year and all annual adjustment factors for subsequent base years. The cumulative adjustment factor applies to the base year beginning in the calendar year for which the latest annual adjustment factor has been determined.
    Sec. 60.  Section 425.24, Code 2021, is amended to read as follows:
   425.24  Maximum property tax for purpose of credit or reimbursement.
   In For claimants under section 425.17, subsection 2, paragraph “a”, subparagraphs (1) and (2), and for the calculation under section 425.23, subsection 1, paragraph “c”, subparagraph (1), in any case in which property taxes due or rent constituting property taxes paid for any household exceeds one thousand dollars, the amount of property taxes due or rent constituting property taxes paid shall be deemed to have been one thousand dollars for purposes of this subchapter.
    Sec. 61.  Section 425.39, Code 2021, is amended to read as follows:
   425.39  Fund created —— appropriation —— priority.
   1.  The elderly and disabled property tax credit and reimbursement fund is created. There is appropriated annually from the general fund of the state to the department of revenue to be credited to the elderly and disabled property tax credit and reimbursement fund, from funds not otherwise appropriated, an amount sufficient to implement this subchapter for claimants described in section 425.17, subsection 2, paragraph “a”, subparagraph subparagraphs (1) and (3), subject to subsection 2.
   2.  Regardless of the amount of the credit determined under section 425.23, subsection 1, paragraph “c”, the amount paid by the director of revenue to each county treasurer for credits for claimants described under section 425.17, subsection 2, paragraph “a”, subparagraph (3), shall not exceed the amount calculated for the claimant under section 425.23, subsection 1, paragraph “c”, subparagraph (1), and section 25B.7, subsection 1, shall not apply to the amount of the credit in excess of the amount paid by the director of revenue.
    Sec. 62.  APPLICABILITY.  This division of this Act applies to claims under chapter 425, subchapter II, filed on or after January 1, 2022.
DIVISION VI
FUTURE TAX CHANGES

    Sec. 63.  2018 Iowa Acts, chapter 1161, section 133, is amended by striking the section and inserting in lieu thereof the following:
   SEC. 133.  EFFECTIVE DATE.  This division of this Act takes effect January 1, 2023.
DIVISION VII
CHARITABLE CONSERVATION CONTRIBUTION TAX CREDIT

    Sec. 64.  Section 2.48, subsection 3, paragraph e, subparagraph (6), Code 2021, is amended by striking the subparagraph.
    Sec. 65.  Section 422.33, subsection 25, Code 2021, is amended by striking the subsection.
    Sec. 66.  REPEAL.  Section 422.11W, Code 2021, is repealed.
    Sec. 67.  APPLICABILITY.  This division of this Act applies to conveyances made on or after July 1, 2021.
DIVISION VIII
FOREST RESERVATIONS

    Sec. 68.  Section 427C.1, Code 2021, is amended to read as follows:
   427C.1  Tax exemption.
   1.  Any person who establishes a forest or The owner of a fruit-tree reservation as provided in this chapter shall be entitled to the tax exemption provided by law.
   2.  a.  The owner of a forest reservation as provided in this chapter shall be entitled to the tax exemption provided by law for assessment years beginning on or after January 1, 2022, if, subject to the schedule for reapplication adopted under subsection 3, the owner is actively engaged in the operation or management of the forest reservation.
   b.  The natural resource commission shall adopt rules pursuant to chapter 17A to interpret the requirement of paragraph “a” that the owner of a forest reservation be actively engaged in the operation or management of the forest reservation, including but not limited to standards for wildlife control practices, invasive species control measures, conservation measures, and forest practices. The minimum requirements for being considered actively engaged in the operation or management of the forest reservation established by the natural resource commission shall be based on the conservation goals for the property as stated by the owner in the exemption application, the use of the property by the owner, and the characteristics of the property, including the pervasiveness of wildlife populations and invasive species populations on the property and the impact of such populations on the forest reservation and surrounding properties.
   c.  (1)  For each forest reservation application filed after February 1, 2021, but on or before February 1, 2022, the owner must file by February 1, 2022, with the department of natural resources, evidence that the owner meets the requirement for active engagement in the operation or management of the forest reservation.
   (2)  The department of natural resources shall prepare and make available a form to assist owners in complying with the requirement of subparagraph (1).
   3.  The department of revenue, in consultation with the department of natural resources, shall by rule establish five regions within the state. Forest reservation exemptions for which the application was filed on or before February 1, 2021, shall terminate as provided in this subsection and the owners of such forest reservations must reapply for the exemption under this chapter. In order to efficiently process applications, the five regions shall be established to include approximately an equal number of acres of forest reservations in each region. For forest reservations subject to this subsection, the requirement for the owner to be actively engaged in the operation or management of the forest reservation shall not apply until the owner reapplies for the forest reservation exemption.
   a.  Exemptions for forest reservations in the first region shall end at the conclusion of the assessment year beginning January 1, 2021, and in order to continue receiving the exemption for the five-year period specified in section 427C.3, beginning with the assessment year beginning January 1, 2022, each owner must reapply on or before February 1, 2022.
   b.  Exemptions for forest reservations in the second region shall end at the conclusion of the assessment year beginning January 1, 2022, and in order to continue receiving the exemption for the five-year period specified in section 427C.3, beginning with the assessment year beginning January 1, 2023, each owner must reapply on or before February 1, 2023.
   c.  Exemptions for forest reservations in the third region shall end at the conclusion of the assessment year beginning January 1, 2023, and in order to continue receiving the exemption for the five-year period specified in section 427C.3, beginning with the assessment year beginning January 1, 2024, each owner must reapply on or before February 1, 2024.
   d.  Exemptions for forest reservations in the fourth region shall end at the conclusion of the assessment year beginning January 1, 2024, and in order to continue receiving the exemption for the five-year period specified in section 427C.3, beginning with the assessment year beginning January 1, 2025, each owner must reapply on or before February 1, 2025.
   e.  Exemptions for forest reservations in the fifth region shall end at the conclusion of the assessment year beginning January 1, 2025, and in order to continue receiving the exemption for the five-year period specified in section 427C.3, beginning with the assessment year beginning January 1, 2026, each owner must reapply on or before February 1, 2026.
    Sec. 69.  Section 427C.3, Code 2021, is amended to read as follows:
   427C.3  Forest reservation —— duration of exemption.
   1.  A forest reservation shall contain not less than two hundred growing forest trees on each acre. If the area selected is a forest containing the required number of growing forest trees, it shall be accepted as a forest reservation under this chapter for a period of five years provided application is made or on file on or before February 1 of the exemption year. If any buildings are standing on an area selected as a forest reservation under this section or a fruit-tree reservation under section 427C.7, one acre of that area shall be excluded from the tax exemption. However, the exclusion of that acre shall not affect the area’s meeting the acreage requirement of section 427C.2.
   2.  For forest reservation exemption applications filed on or after February 2, 2021, but on or before February 1, 2022, the five-year period provided under subsection 1 begins with the assessment year beginning January 1, 2022, unless the owner fails to satisfy the requirement of section 427C.1, subsection 2, paragraph “c”.
    Sec. 70.  Section 427C.7, Code 2021, is amended to read as follows:
   427C.7  Fruit-tree reservation —— duration of exemption.
   A fruit-tree reservation shall contain on each acre, at least forty apple trees, or seventy other fruit trees, growing under proper care and annually pruned and sprayed. A reservation may be claimed as a fruit-tree reservation, under this chapter, for a period of eight years after planting provided application is made or on file on or before February 1 of the exemption year.  If any buildings are standing on an area selected as a fruit-tree reservation under this section, one acre of that area shall be excluded from the tax exemption. However, the exclusion of that acre shall not affect the area’s meeting the acreage requirement of section 427C.2.
    Sec. 71.  Section 427C.10, Code 2021, is amended to read as follows:
   427C.10  Restraint of livestock and limitation on use.
   1.  Cattle, horses, mules, sheep, goats, ostriches, rheas, emus, and swine shall not be permitted upon a fruit-tree or forest forest or fruit-tree reservation.
   2.  a.  Fruit-tree and forest Forest and fruit-tree reservations shall not be used for economic gain other than the gain from raising fruit or forest trees.
   b.  The prohibition under paragraph “a” includes but is not limited to leases or charges for persons who enter or go on the reservation for the recreational use thereof or for hunting.
    Sec. 72.  Section 427C.12, Code 2021, is amended to read as follows:
   427C.12  Application —— inspection —— continuation of exemption —— recapture of tax.
   1.  It shall be the duty of the assessor to secure the facts relative to fruit-tree and forest reservations by taking the sworn statement, or affirmation, of the owner or owners making application under this chapter; and to make special report to the county auditor of all reservations made in the county under the provisions of this chapter.
   2.  a.  The board of supervisors shall designate the county conservation board or the assessor who shall inspect the area for which an application is filed for a fruit-tree or forest reservation tax exemption before the application is accepted.
   b.  The department of natural resources shall review the application for a forest reservation tax exemption before the application is accepted.
   c.  Use of The department of natural resources shall use aerial photographs may be substituted for on-site inspection when appropriate provided by the county assessor to determine if the application meets the criteria established by the natural resource commission to be a forest reservation.
   3.  The application can only be accepted if it meets the criteria established by the natural resource commission to be a fruit-tree or forest reservation department of natural resources may conduct an on-site review if necessary to verify the eligibility of a forest reservation application.
   4.  Once the application has been accepted, the area shall continue to receive the tax exemption during each year of the applicable exemption period under section 427C.3 or 427C.7 in which the area is maintained as a fruit-tree or forest or fruit-tree reservation without the owner having to refile. If the property is sold or transferred, the seller shall notify the buyer that all, or part of, the property is in fruit-tree or forest reservation and subject to the recapture tax provisions of this section. The tax exemption shall continue to be granted for the remainder of the eight-year exemption period for fruit-tree reservation and for the following years for forest reservation under section 427C.3 or 427C.7, or until the property no longer qualifies as a fruit-tree or forest or fruit-tree reservation.
   5.  a.  The An area that is a fruit-tree reservation may be inspected each year by the county conservation board or the assessor to determine if the area is maintained as a fruit-tree or forest reservation.  An area that is a forest reservation may be inspected each year by the department of natural resources to determine if the area is maintained as forest reservation. If the area is not maintained or is used for economic gain other than as a fruit-tree reservation during any year of the eight-year exemption period and any year of the following five years following the exemption period, if the property is no longer receiving an exemption under this chapter, or as a forest reservation during any year for which of the exemption is granted period and any of the five years following those exemption years the exemption period, if the property is no longer receiving an exemption under this chapter, the assessor shall assess the property for taxation at its fair market value as of January 1 of that year and in addition the area shall be subject to a recapture tax. However, the area shall not be subject to the recapture tax if the owner, including one possessing under a contract of sale, and the owner’s direct antecedents or descendants have owned the area for more than ten years.
   b.  The recapture tax shall be computed by multiplying the consolidated levy for each of those years, if any, of the five preceding years for which the area received the exemption for fruit-tree or forest reservation times the assessed value of the area that would have been taxed but for the tax exemption. This tax shall be entered against the property on the tax list for the current year and shall constitute a lien against the property in the same manner as a lien for property taxes. The tax when collected shall be apportioned in the manner provided for the apportionment of the property taxes for the applicable tax year.
   6.  Upon expiration of the applicable exemption period, the owner of a forest or fruit-tree reservation may reapply for an exemption under this chapter if the property meets all the criteria for the exemption under this chapter.
    Sec. 73.  Section 441.22, Code 2021, is amended to read as follows:
   441.22  Forest and fruit-tree reservations.
   Forest and fruit-tree reservations fulfilling the conditions of sections 427C.1 to 427C.13 chapter 427C shall be exempt from taxation to the extent authorized in that chapter. In all other cases where trees are planted upon any tract of land, without regard to area, for forest, fruit, shade, or ornamental purposes, or for windbreaks, the assessor shall not increase the valuation of the property because of such improvements.
    Sec. 74.  SAVINGS PROVISION.  This division of this Act, pursuant to section 4.13, does not affect the operation of, or prohibit the application of, prior provisions of chapter 427C or section 441.22, or rules adopted under chapter 17A to administer prior provisions of chapter 427C or section 441.22, for assessment years beginning before January 1, 2022, and for duties, powers, protests, appeals, proceedings, actions, or remedies attributable to an assessment year beginning before January 1, 2022.
    Sec. 75.  EFFECTIVE DATE.  This division of this Act, being deemed of immediate importance, takes effect upon enactment.
    Sec. 76.  APPLICABILITY.  This division of this Act applies to assessment years beginning on or after January 1, 2022.
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 government financing, programs, and operations by modifying provisions relating to school district funding, mental health and disability services funding, commercial and industrial property tax replacement payments, and other specified tax provisions.
   DIVISION I —— MENTAL HEALTH FUNDING. Division I of the bill relates to mental health and disability services funding.
   The bill creates a mental health and disability services regional supplement fund under the authority of the department of human services. For each fiscal year beginning on or after July 1, 2021, the bill appropriates from the general fund of the state to the mental health and disability services regional supplement fund an amount necessary to make all regional supplement payments for that fiscal year. 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 for distribution to each mental health and disability services region on a per capita basis calculated using each region’s population for that fiscal year. The amount of each region’s regional supplement payment is as follows: (1) for the fiscal year beginning July 1, 2021, an amount equal to the product of $15.86 multiplied by the sum of the region’s population for the fiscal year; (2) for the fiscal year beginning July 1, 2022, an amount equal to the product of $38 multiplied by the sum of the region’s population for the fiscal year; (3) for the fiscal year beginning July 1, 2023, an amount equal to the product of $40 multiplied by the sum of the region’s population for the fiscal year; (4) for the fiscal year beginning July 1, 2024, an amount equal to the product of $42 multiplied by the sum of the region’s population for the fiscal year; and (5) for each fiscal year beginning on or after July 1, 2025, an amount equal to the product of the sum of the region’s population for the fiscal year multiplied by the sum of the dollar amount used to calculate the regional supplement payments for the immediately preceding fiscal year plus the regional supplement growth factor for the fiscal year. The bill defines “regional supplement growth factor” for a fiscal year to be an amount equal to the product of the dollar amount used to calculate the regional supplement payments for the immediately preceding fiscal year multiplied by the percent increase, if any, in the amount of sales tax revenue deposited into the general fund of the state between the fiscal year beginning three years prior to the applicable fiscal year and the fiscal year beginning two years prior to the applicable year, but not to exceed 1.5 percent.
   Regional supplement payments received by a region are paid in quarterly installments and shall be deposited in the region’s combined account under Code section 331.391 and used solely for providing mental health and disability services under the regional service system management plan.
   Under the bill, for the fiscal years beginning July 1, 2021, and July 1, 2022, each mental health and disability services region for which the region’s cash flow amount certified during the fiscal year exceeds a specified percentage of the proposed gross expenditures of the region for the fiscal year, the remaining quarterly payments of the region’s regional supplement payment are reduced by an amount equal to the amount by which the region’s cash flow amount certified exceeds the specified percentage of the proposed gross expenditures of the region for the fiscal year, but the reduction amount shall not exceed the total amount of the region’s regional supplement payment for the fiscal year. If the region’s remaining quarterly payments are insufficient to effectuate the required reductions, the region is required to pay to the department of human services any amount for which the reduction in quarterly payments could not be made.
   For the fiscal year beginning July 1, 2023, and each succeeding fiscal year, each mental health and disability services region for which a cash flow amount is certified during the fiscal year, the remaining quarterly payments of the region’s regional supplement payment shall be reduced by an amount equal to the amount certified, but the reduction amount shall not exceed the total amount of the region’s regional supplement payment for the fiscal year. If the region’s remaining quarterly payments are insufficient to effectuate the required reductions, the region is required to pay to the department of human services any amount for which the reduction in quarterly payments could not be made.
   The amount of reductions to quarterly payments and amounts paid to the department of human services as the result of a region’s certified cash flow amounts shall be transferred and credited to the risk pool created in the bill under new Code section 426B.6.
   The bill also establishes a risk pool in the property tax relief fund under Code section 426B.1 to provide additional funding to mental health and disability services regions meeting certain eligibility criteria. The risk pool consists of moneys appropriated or credited to the risk pool by law. The bill appropriates $9,960,590 from the general fund of the state to the risk pool for the fiscal year beginning July 1, 2021. The bill appropriates $5,107,340 from the general fund of the state to the risk pool for the fiscal year beginning July 1, 2022. For each fiscal year beginning on or after July 1, 2025, the bill appropriates an amount equal to the risk pool growth factor multiplied by the ending balance of the risk pool at the conclusion of a specified fiscal year. The “risk pool growth factor” for each fiscal year is the percent increase, if any, in the amount of sales tax revenue deposited into the general fund of the state between the fiscal year beginning three years prior to the applicable fiscal year and the fiscal year beginning two years prior to the applicable year, minus 1.5 percent. The risk pool growth factor for any fiscal year may not exceed 3.5 percent.
   The bill establishes the composition of the risk pool board created in the bill. Members shall serve for three-year terms. Staff assistance to the board shall be provided by the department of human services. 
   A regional administrator must apply to the risk pool board for assistance from the risk pool on or before October 31. The purpose of the assistance shall be to provide financial support for services provided by the regional administrator’s mental health and disability services region. The board is required to determine application requirements to ensure prudent use of risk pool assistance. The board may accept or reject an application for assistance in whole or in part. The decision of the board is final. The total amount of risk pool assistance shall be limited to the amount available in the risk pool for a fiscal year. Any unobligated balance in the risk pool at the close of a fiscal year shall remain in the risk pool for distribution in the succeeding fiscal year.
   Risk pool assistance shall only be made available to address one or more of the following circumstances: (1) continuing support for mandated services; (2) avoiding the need for reduction or elimination of critical services when the reduction or elimination places consumers’ health or safety at risk; (3) avoiding the need for reduction or elimination of a mobile crisis team or other critical emergency services when the reduction or elimination places the public’s health or safety at risk; (4) avoiding the need for reduction or elimination of the services or other support provided to entire populations of consumers with disabilities; and (5) avoiding the need for reduction or elimination of services or other support that maintain consumers in a community setting or that would create a risk that the consumers would be placed in more restrictive, higher cost settings.
   The risk pool board shall make its final decisions on or before December 15 regarding acceptance or rejection of the applications for assistance and the total amount accepted shall be considered obligated. The bill establishes basic eligibility for risk pool assistance, including requirements that the mental health and disability services region is in compliance with the regional service system management plan requirements and that the region meets specified ending balance thresholds for certain fiscal years. The ending balance thresholds are a specified percentage of the actual gross expenditures of the mental health and disability services region for a specific fiscal year. The percentage for the fiscal year beginning July 1, 2021, is 40 percent. The percentage for the fiscal year beginning July 1, 2022, is 20 percent.
   Current Code section 331.424A authorizes each county to certify a property tax levy for payment of mental health and disability services within the mental health and disability services regional system. To coincide with the appropriation and payment of mental health and disability services regional supplement payments directly to the regions or to exempted counties, the bill ends the authority for such a property tax levy starting with the fiscal year beginning July 1, 2022. Additionally, upon conclusion of the fiscal year beginning July 1, 2021, the county treasurer shall transfer the remaining balance of the county’s county services fund to the county’s region to which the county belongs in the fiscal year beginning July 1, 2022, for deposit in the region’s combined account under Code section 331.391. Effective July 1, 2022, the bill prohibits a county from transferring any funds of the county to the combined account of a mental health and disability services region. 
   If the bill takes effect after March 31, 2021, for each county for which the amount of taxes certified for levy for the purposes of Code section 331.424A for the fiscal year beginning July 1, 2021, exceeds the product of the population of the county multiplied by $21.14, the department of management shall reduce the amount of such taxes certified for levy to an amount not to exceed the product of the population of the county multiplied by $21.14 and shall revise the rate of taxation as necessary to raise the reduced amount. The department of management is required to report the reduction in the certified taxes and the revised rate of taxation to the county auditors by June 15, 2021.
   In order to timely implement the provisions of the bill establishing the risk pool for mental health and disability services regions for the fiscal year beginning July 1, 2021, and the fiscal year beginning July 1, 2022, the director of human services is required, subject to the membership requirements in the bill, to appoint temporary members of the risk pool board to review and approve risk pool assistance applications and establish alternative application deadlines and expedited application review and approval timelines.
   The bill provides that the department of human services may adopt emergency rules to implement the provisions of division I of the bill.
   Except as provided in division I of the bill, division I of the bill takes effect upon enactment.
   DIVISION II —— PROPERTY TAX REPLACEMENT PAYMENTS. Current Code section 441.21A establishes and appropriates amounts from the general fund of the state for commercial and industrial property tax replacement claims. Such claims are calculated by the department of revenue based on the difference between the actual value and assessed value of all commercial and industrial property in each taxing district in the state. Current law appropriates an amount necessary for the payment of all commercial and industrial property tax replacement claims for each fiscal year beginning on or after July 1, 2014, subject to a maximum total appropriation for fiscal years beginning on or after July 1, 2017, of the total amount necessary for the payment of replacement claims in the fiscal year beginning July 1, 2016. The bill eliminates the appropriation for fiscal years beginning on or after July 1, 2027, and specifies that the maximum total appropriation for the fiscal years beginning on or after July 1, 2022, but before July 1, 2027, shall not exceed the total amount necessary for the payment of replacement claims in the fiscal year. 
   The bill modifies the methodology for calculating and apportioning commercial and industrial property tax replacement claims for fiscal years beginning on or after July 1, 2022, but before July 1, 2027. The bill requires such claims to be calculated based on and paid to taxing authorities, as defined in the bill, instead of taxing districts as is required under current law. The amount of each taxing authority’s replacement claim is determined based on specified fractions of the amount received by the taxing authority under Code section 441.21A for the fiscal year beginning July 1, 2021, as calculated by the department of revenue in consultation with the department of management, and whether the taxing authority is a qualified taxing authority. The specified fractions are reduced over the period of fiscal years beginning July 1, 2022, and ending June 30, 2027, in the case of a qualified taxing authority, and ending June 30, 2025, in the case of a taxing authority that is not a qualified taxing authority. Under the bill, a taxing authority that is eligible to continue to receive commercial and industrial property tax replacement payments includes a city, county, community college, or other governmental entity or political subdivision in this state authorized to certify a levy on property located within such authority, but does not include a school district. A qualified taxing authority is either a taxing authority that is not a city or a county or a taxing authority that is a city or a county in which the total assessed value as of January 1, 2019, of specified taxable property located in the taxing authority is less than 131.14 percent of the total assessed value as of January 1, 2012, of specified taxable property located in the taxing authority.
   The bill requires each taxing authority’s property tax replacement claim payment for fiscal years beginning on or after July 1, 2022, but before July 1, 2027, to be apportioned and credited by the governing body of the taxing authority among the taxing authority’s tax levies in the same proportion that each property tax levy bears to the total of all property tax levies imposed by the taxing authority for the fiscal year for which the payment is received. The bill also establishes requirements for the apportionment of amounts allocated to property tax levies that are subject to a division of taxes under Code section 403.19 (tax increment financing).
   Under current law, the legislative tax expenditure committee established under Code section 2.48 is required to review the commercial and industrial property tax replacement claim expenditures. The bill eliminates that required periodic review.
   DIVISION III —— SCHOOL FOUNDATION PERCENTAGE. For purposes of calculating state foundation aid received by school districts under Code chapter 257, the regular program foundation base per pupil is 87.5 percent of the regular program state cost per pupil. The bill increases that percentage to 88.4 percent for school budget years beginning on or after July 1, 2022.
   The section of division III amending Code section 257.3(1)(d) takes effect July 1, 2022.
   DIVISION IV —— PUBLIC EDUCATION AND RECREATIONAL TAX LEVY.  Code chapter 300 authorizes the imposition of a voter-approved property tax levy for the establishment and maintenance of public recreation places and playgrounds, and necessary accommodations for the recreation places and playgrounds, in the public school buildings and grounds of the district. Code chapter 300 also authorizes each school board to cooperate with public or private agencies having custody and management of public parks or buildings or grounds open to the public for the supervision and instruction necessary to carry on public educational and recreational activities in the parks, buildings, and grounds located within the district. Such activities may be supported by imposition of a voter-approved property tax levy not to exceed $0.13 and one-half cents per $1,000 of assessed value. The property tax levy under Code chapter 300 also provides financial support to community education programs established under Code chapter 276, which provide educational, recreational, cultural, and other community services and programs.
   Division IV of the bill repeals Code chapter 300 and makes corresponding amendments to other provisions of law effective July 1, 2022, and applies to fiscal years beginning on or after July 1, 2022. The bill provides that financial support for a community education program under Code chapter 276 may be provided from funds received by the school district under Code chapter 423F. By operation of the definition of “school infrastructure” under Code section 423F.3(6)(a)(1), moneys received by a school district from the secure an advanced vision for education fund may continue to be utilized for activities previously provided for under Code chapter 300 and Code chapter 276.
   Division IV also provides that moneys available in the public education and recreation levy fund at the conclusion of the fiscal year beginning July 1, 2021, and ending June 30, 2022, shall be expended by the school corporation for the purposes authorized under chapter 300, Code 2021.
   DIVISION V —— ELDERLY PROPERTY TAX CREDIT. Division V of the bill modifies the eligibility for and the calculation of the amount of the property tax credit for persons ages 70 and older under Code chapter 425, subchapter II.
   Under the bill, a person filing a claim for the property tax credit who is at least 70 years of age and who has a household income of less than 250 percent of the federal poverty level is eligible to receive a credit against property taxes due on the claimant’s homestead. For such a claimant, the tentative credit amount is equal to the greater of the following: (1) the amount of the credit as calculated under the schedule of credit amounts specified in Code section 425.23(1)(a) as if the claimant was an eligible claimant for a credit under that provision; and (2) the difference between the actual amount of property taxes due on the homestead during the applicable fiscal year minus the actual amount of property taxes due on the homestead based on a full assessment during the first fiscal year for which the claimant filed for a credit calculated under the bill and if the claimant has filed for the credit for each of the subsequent fiscal years after the first credit claimed.
   The bill also modifies the appropriation to the elderly and disabled property tax credit and reimbursement fund under Code section 425.39, by limiting the amount of the credit to be paid by the director of revenue to each county treasurer for claimants who have reached 70 years of age and specifies that Code section 25B.7(1), which requires the state to fund the cost of providing new property tax credits, shall not apply to the amount of the credit in excess of the amount paid by the director of revenue as determined in the bill.
   Division V of the bill applies to claims under Code chapter 425, subchapter II, filed on or after January 1, 2022.
   DIVISION VI —— FUTURE TAX CHANGES. The bill amends 2018 Iowa Acts, chapter 1161, section 133 (trigger), by striking the two conditions necessary for the trigger to occur, and specifies the provisions in 2018 Iowa Acts, chapter 1161, sections 99-132, take effect January 1, 2023. 
   Currently, the two conditions are necessary for the trigger to occur include net general fund revenues for the fiscal year ending June 30, 2022, equaling or exceeding $8.3146 billion, and also equaling or exceeding 104 percent of the net general fund revenues for the fiscal year ending June 30, 2021. If these two conditions are not satisfied, current law institutes the changes for tax years beginning on or after the January 1 following the first fiscal year for which the two conditions do occur. By striking the “trigger”, the bill sets in motion numerous tax changes for tax years beginning on or after January 1, 2023, described below. 
   INDIVIDUAL INCOME TAX. The tax changes include reducing the number of individual income tax brackets from nine to four, and modifying the taxable income amounts and tax rates as follows: 
       Income over:            But not over:                    Tax Rate:
   1)    $0            $6,000                    4.40%
   2)    $6,000            $30,000                    4.82%
   3)    $30,000            $75,000                    5.70%
   4)    $75,000                    6.50%
   For a married couple filing a joint return, the taxable income amounts in each bracket above are doubled. Also, the taxable income amounts in each bracket above will be indexed to inflation and increased in future tax years, beginning in the tax year following the 2023 tax year. 
   INDIVIDUAL INCOME TAX CALCULATION. Under current law, the starting point for computing the Iowa individual income tax is federal adjusted gross income before the net operating loss deduction, which is generally a taxpayer’s gross income minus several deductions. From that point, Iowa requires several adjustments and then provides taxpayers with a deduction for federal income taxes paid, and the option to deduct a standard deduction or itemized deductions. The bill changes the starting point for computing the individual income tax to federal taxable income, which includes all deductions and adjustments taken at the federal level in computing tax, including a standard deduction or itemized deductions, and the qualified business income deduction allowed for certain income earned from a pass-through entity. Because the starting point changes to federal taxable income, and federal law does not provide for the filing status of married filing separately on a combined return, the bill repeals that filing status option for Iowa tax purposes. Because net operating loss is no longer calculated at the state level, the bill requires a taxpayer to add back any federal net operating loss deduction carried over from a taxable year beginning prior to the 2023 tax year, but allows taxpayers to deduct any remaining Iowa net operating loss from a prior taxable year. The bill repeals the individual alternative minimum tax (AMT), allows an individual to claim any remaining AMT credit against the individual’s regular tax liability for the 2023 tax year, and then repeals the AMT credit in the tax year following the 2023 tax year. The bill repeals most Iowa-specific deductions, exemptions, and adjustments currently available when computing net income and taxable income under Iowa law, including the Iowa optional standard deduction and all itemized deductions, and the ability to deduct federal income taxes, except for a one-year phase out in the 2023 tax year for taxes paid, or refunds received, that relate to a prior year. The bill maintains the add-back for income from securities that are federally exempt but not state-exempt, and for bonus depreciation amounts. The bill maintains the general pension exclusion and the deduction for income from federal securities. The bill maintains the deduction for contributions to the Iowa 529 plan, the Iowa ABLE plan, a first-time homebuyer savings account, and an individual development account. The bill also maintains the deductions for military pension income, military active duty pay, social security retirement benefits, certain payments received for providing unskilled in-home health care, certain amounts received from the veterans trust fund, victim compensation awards, biodiesel production refunds, certain wages paid to individuals with disabilities or individuals previously convicted of a felony, certain organ donations, and Segal AmeriCorps education award payments. The bill modifies the existing deduction for health insurance payments in Code section 422.7(29) to make the deduction only applicable to taxpayers who are at least 65 years old and who have net income below $100,000. The bill also modifies the existing capital gain deduction in Code section 422.7(21) to restrict the deduction to the sale of real property used in farming businesses by permitting the taxpayer to take the deduction if either of the following apply: the taxpayer materially participated in the farming business for at least 10 years and held the real property for at least 10 years; or the taxpayer sold the real property to a relative. The bill expands the definition of “relative” to include an entity in which a relative of the taxpayer has a legal or equitable interest in the entity as an owner, member, partner, or beneficiary. The bill provides a new deduction for any income of an employee resulting from the payment by an employer, whether paid to the employee or a lender, of principal or interest on the employee’s qualified education loan. The bill also modifies the calculation of net income for purposes of the alternate tax calculation in Code section 422.5(3) and (3B), and the tax return filing thresholds in Code section 422.13, to require that any amount of itemized deduction, standard deduction, personal exemption deduction, or qualified business income deduction that was allowed in computing federal taxable income shall be added back. 
   CORPORATE INCOME TAX AND FRANCHISE TAX CALCULATION. Under current law, the starting point for calculating the corporate income tax and franchise tax is federal taxable income before the net operating loss deduction, because net operating loss is calculated at the state level. The bill repeals the separate calculation of net operating loss at the state level. As a result, the bill requires taxpayers to add back any federal net operating loss deduction carried over from a taxable year beginning prior to the trigger year, but allows taxpayers to deduct any remaining Iowa net operating loss from a prior taxable year. The bill also repeals most Iowa-specific deductions, exemptions, and adjustments currently available when computing net income and taxable income under Iowa law. The bill maintains the add-back for income from securities that are federally exempt but not state exempt, and for bonus depreciation amounts. The bill maintains the deductions for income from federal securities, for foreign dividend and subpart F income, for certain wages paid to individuals with disabilities or individuals previously convicted of a felony, and for biodiesel production refunds.
   DIVISION VII —— CHARITABLE CONSERVATION CONTRIBUTION TAX CREDIT. Division VII of the bill repeals the charitable conservation contribution tax credit available against the individual and corporate income taxes. Currently, individual and corporate income taxes are reduced by an amount equal to 50 percent of the fair market value of real property located in this state that is conveyed unconditionally in perpetuity by the taxpayer for conservation purposes. Division VII of the bill applies to such conveyances occurring on or after July 1, 2021.
   DIVISION VIII —— FOREST RESERVATIONS. Current Code chapter 427C authorizes a property tax exemption for certain forest reservations and fruit-tree reservations.
   Except as otherwise provided in the bill, the bill provides that for assessment years beginning on or after January 1, 2022, a forest reservation is only allowed the exemption authorized under Code chapter 427C if the owner is actively engaged in the operation or management of the forest reservation. 
   Division VIII of the bill grants the natural resource commission the authority to adopt rules to interpret the provisions of the bill relating to the requirement that the owner be actively engaged in the operation or management of the forest reservation, including but not limited to standards for wildlife control practices, invasive species control measures, conservation measures, and forest practices. If interpretive rulemaking authority is clearly vested in the discretion of an agency by statute, the applicable judicial standard of review is whether the rules constitute an irrational, illogical, or wholly unjustifiable interpretation of law by the agency (Code section 17A.19(10)(l)). If interpretive rulemaking authority is not clearly vested in the discretion of an agency, the applicable judicial standard of review is whether the rules constitute an erroneous interpretation of law (Code section 17A.19(10)(c)).
   For each forest reservation application filed after February 1, 2021, but on or before February 1, 2022, the owner must file by February 1, 2022, with the department of natural resources, evidence that the owner meets the requirement for active engagement in the operation or management of the forest reservation.
   Under the bill, the department of revenue, in consultation with the department of natural resources, is required to establish by rule five regions within the state. Forest reservation exemptions for which the application was filed on or before February 1, 2021, shall terminate according to the schedule provided in the bill for each of the five regions and the owners of such forest reservations must reapply for the exemption. For forest reservations subject to the termination and reapplication schedule, the requirement for the owner to be actively engaged in the operation or management of the forest reservation shall not apply until the owner reapplies for the forest reservation exemption.
   Except for the forest reservation exemptions subject to the region-based reapplication process provided for in the bill, the bill limits the period of the exemption for forest reservations to five years and provides that the five-year exemption period for applications filed on or after February 2, 2021, but on or before February 1, 2022, begins with the assessment year beginning January 1, 2022, unless, the owner fails to satisfy the requirement in the bill to provide evidence of being actively engaged in the operation or management of the forest reservation.
   The bill also specifies that upon expiration of the applicable exemption period for forest reservations or fruit-tree reservations under Code chapter 427C, the owner may reapply for an exemption if the property meets all the criteria for the exemption under the Code chapter.
   The bill requires the department of natural resources to review each application for a forest reservation tax exemption before the application is accepted. The bill requires the department of natural resources to use aerial photographs to determine forest reservation eligibility and authorizes an on-site review, if necessary. Additionally, an area that is a forest reservation may be inspected each year by the department of natural resources to determine if the area is maintained as forest reservation. 
   The bill specifies that the prohibition on using forest or fruit-tree reservations for economic gain other than the gain from raising fruit or forest trees includes but is not limited to leases or charges for persons who enter or go on the reservation for the recreational use thereof or for hunting.
   Division VIII of the bill does not affect the operation of, or prohibit the application of, prior provisions of Code chapter 427C or Code section 441.22, or rules adopted to administer prior provisions of Code chapter 427C or Code section 441.22, for assessment years beginning before January 1, 2022, and for duties, powers, protests, appeals, proceedings, actions, or remedies attributable to an assessment year beginning before January 1, 2022.
   Division VIII of the bill takes effect upon enactment and applies to assessment years beginning on or after January 1, 2022.