Senate File 634 - Reprinted SENATE FILE 634 BY COMMITTEE ON WAYS AND MEANS (SUCCESSOR TO SSB 1260) (As Amended and Passed by the Senate April 24, 2019 ) A BILL FOR An Act relating to local government budgets and property 1 taxation by modifying provisions governing the establishment 2 and approval of county and city budgets, modifying 3 provisions relating to the state appraisal manual, and 4 including applicability provisions. 5 BE IT ENACTED BY THE GENERAL ASSEMBLY OF THE STATE OF IOWA: 6 SF 634 (3) 88 md/jh

S.F. 634 DIVISION I 1 COUNTY AND CITY PROPERTY TAX PUBLIC HEARING AND RESOLUTION 2 Section 1. Section 24.17, unnumbered paragraph 1, Code 3 2019, is amended to read as follows: 4 The local budgets of the various political subdivisions 5 shall be certified by the chairperson of the certifying board 6 or levying board, as the case may be, in duplicate to the 7 county auditor not later than March 15 of each year on forms, 8 and pursuant to instructions, prescribed by the department of 9 management. However, if the political subdivision is a county 10 or a city, its budget shall be certified not later than March 11 31 of each year, and if the political subdivision is a school 12 district, as defined in section 257.2 , its budget shall be 13 certified not later than April 15 of each year. 14 Sec. 2. Section 24.27, Code 2019, is amended to read as 15 follows: 16 24.27 Protest to budget. 17 Not later than March 25 , or April 10 for a county or a 18 city, or April 25 if the municipality is a school district, a 19 number of persons in any municipality equal to one-fourth of 20 one percent of those voting for the office of governor, at the 21 last general election in the municipality, but the number shall 22 not be less than ten, and the number need not be more than 23 one hundred persons, who are affected by any proposed budget, 24 expenditure or tax levy, or by any item thereof, may appeal 25 from any decision of the certifying board or the levying board 26 by filing with the county auditor of the county in which the 27 municipal corporation is located, a written protest setting 28 forth their objections to the budget, expenditure or tax levy, 29 or to one or more items thereof, and the grounds for their 30 objections. If a budget is certified after March 15 , or March 31 31 in the case of a county or a city, or April 15 in the case of 32 a school district, all appeal time limits shall be extended to 33 correspond to allowances for a timely filing. Upon the filing 34 of a protest, the county auditor shall immediately prepare 35 -1- SF 634 (3) 88 md/jh 1/ 13

S.F. 634 a true and complete copy of the written protest, together 1 with the budget, proposed tax levy or expenditure to which 2 objections are made, and shall transmit them forthwith to the 3 state board, and shall also send a copy of the protest to the 4 certifying board or to the levying board, as the case may be. 5 Sec. 3. Section 24.48, subsection 4, Code 2019, is amended 6 to read as follows: 7 4. a. The city finance committee shall have officially 8 notified any city of its approval, modification or rejection 9 of the city’s appeal of the decision of the director of the 10 department of management regarding a city’s request for a 11 suspension of the statutory property tax levy limitation prior 12 to thirty-five days before March 15 31 . 13 b. The state appeals board shall have officially notified 14 any county of its approval, modification or rejection of the 15 county’s request for a suspension of the statutory property tax 16 levy limitation prior to thirty-five days before March 15. 17 Sec. 4. Section 76.2, subsection 1, paragraph b, Code 2019, 18 is amended to read as follows: 19 b. If the resolution is filed prior to April 1 , or April 15, 20 if the political subdivision is a county or a city, or May 1, if 21 the political subdivision is a school district, the annual levy 22 shall begin with the tax levy for collection commencing July 23 1 of that year. If the resolution is filed on or after April 24 1 , or April 15, in the case of a county or a city, or May 1, in 25 the case of a school district, the annual levy shall begin with 26 the tax levy for collection in the next succeeding fiscal year. 27 However, the governing authority of a political subdivision may 28 adjust a levy of taxes made under this section for the purpose 29 of adjusting the annual levies and collections for property 30 severed from the political subdivision, subject to the approval 31 of the director of the department of management. 32 Sec. 5. NEW SECTION . 331.433A Resolution establishing 33 maximum property tax dollars —— notice —— hearing. 34 1. For purposes of this section, unless the context 35 -2- SF 634 (3) 88 md/jh 2/ 13

S.F. 634 otherwise requires: 1 a. “Budget year” is the fiscal year beginning during the 2 calendar year in which a budget is certified. 3 b. “Current fiscal year” is the fiscal year ending during 4 the calendar year in which a budget for the budget year is 5 certified. 6 c. “Effective property tax rate” means the property tax rate 7 per one thousand dollars of assessed value and is equal to 8 one thousand multiplied by the quotient of the current fiscal 9 year’s actual property tax dollars certified for levy under 10 the levies specified in subsection 2, paragraph “a” or “b” , 11 as applicable, divided by the total assessed value used to 12 calculate taxes for the budget year. 13 2. For budget years beginning on or after July 1, 2020, 14 prior to filing the proposed budget with the auditor under 15 section 331.434, subsection 2, the board shall adopt a 16 resolution establishing the total maximum property tax dollars 17 that may be certified for levy for general county services and 18 the total maximum property tax dollars that may be certified 19 for levy for rural county services that includes the following, 20 as applicable: 21 a. For general county services, the sum of the property 22 tax dollars levied under section 331.423, subsection 1, 23 section 331.424, subsection 1, and those amounts for general 24 county services under section 331.426, but excluding additions 25 approved at election under section 331.425. 26 b. For rural county services, the sum of the property tax 27 dollars levied under section 331.423, subsection 2, section 28 331.424, subsection 2, and those amounts for rural county 29 services under section 331.426, but excluding additions 30 approved at election under section 331.425. 31 3. The maximum property tax dollars calculated and approved 32 by resolution under this section includes those amounts 33 received by the county as replacement taxes under chapter 437A 34 or 437B. 35 -3- SF 634 (3) 88 md/jh 3/ 13

S.F. 634 4. a. The board shall set a time and place for a public 1 hearing on the resolution before the date for adoption of the 2 resolution and shall publish notice of the hearing not less 3 than ten nor more than twenty days prior to the hearing in the 4 county newspapers selected under chapter 349. If the county 5 has an internet site, the notice shall also be posted and 6 clearly identified on the county’s internet site for public 7 viewing beginning on the date of the newspaper publication. 8 Additionally, if the county maintains a social media account 9 on one or more social media applications, the public hearing 10 notice or an electronic link to the public hearing notice 11 shall be posted on each such account on the same day as the 12 publication of the notice. All of the following shall be 13 included in the notice: 14 (1) The sum of the current fiscal year’s actual property 15 taxes certified for levy for general county services and the 16 sum of the current fiscal year’s actual property taxes for 17 rural county services under the levies specified in subsection 18 2, paragraphs “a” and “b” , and the current fiscal year’s 19 combined property tax levy rate for each such amount. 20 (2) The effective tax rate for general county services and 21 the effective tax rate for rural county services calculated 22 using the sum of the current fiscal year’s actual property 23 taxes certified for levy for general county services and 24 the sum of the current fiscal year’s actual property taxes 25 certified for levy for rural county services under the 26 levies specified in subsection 2, paragraphs “a” and “b” , as 27 applicable. 28 (3) The proposed maximum property tax dollars that may be 29 certified for levy for general county services and certified 30 for levy for rural county services under the levies specified 31 in subsection 2, paragraphs “a” and “b” , as applicable, for the 32 budget year and the proposed corresponding combined property 33 tax levy rate for each such amount. 34 (4) If the proposed maximum property tax dollars specified 35 -4- SF 634 (3) 88 md/jh 4/ 13

S.F. 634 under subparagraph (3) for either general county services 1 or rural county services exceeds the current fiscal year’s 2 actual property tax dollars certified for levy for general 3 county services or for rural county services as specified in 4 subparagraph (1), a statement of the major reasons for the 5 increase. 6 b. Proof of publication shall be filed with and preserved 7 by the auditor. The department of management shall prescribe 8 the form for the public hearing notice for use by counties and 9 the form for the resolution to be adopted by the board under 10 subsection 5. 11 5. a. At the public hearing, the board shall receive oral 12 or written objections from any resident or property owner 13 of the county. After all objections have been received and 14 considered, the board may decrease, but not increase, the 15 proposed maximum property tax dollar amounts for inclusion in 16 the resolution and shall adopt the resolution and file the 17 resolution with the auditor as required under section 331.434, 18 subsection 3. 19 b. If the sum of the maximum property tax dollars for the 20 budget year specified in the resolution for either general 21 county services or for rural county services under the 22 levies specified in subsection 2, paragraphs “a” and “b” , as 23 applicable, exceeds one hundred two percent of the sum of the 24 current fiscal year’s actual property taxes certified for levy 25 for general county services or rural county services under the 26 levies specified in subsection 2, paragraphs “a” and “b” , as 27 applicable, the board shall be required to adopt the resolution 28 by a two-thirds majority of the membership of the board. 29 c. If the county has an internet site, in addition to 30 filing the resolution with the auditor under section 331.434, 31 subsection 3, the adopted resolution shall be posted and 32 clearly identified on the county’s internet site for public 33 viewing within ten days of approval by the board. The posted 34 resolution for a budget year shall continue to be accessible 35 -5- SF 634 (3) 88 md/jh 5/ 13

S.F. 634 for public viewing on the internet site along with resolutions 1 posted for all subsequent budget years. 2 Sec. 6. Section 331.434, unnumbered paragraph 1, Code 2019, 3 is amended to read as follows: 4 Annually, the board of each county, subject to section 5 331.403, subsection 4 , sections 331.423 through 331.426 , 6 section 331.433A, and other applicable state law, shall prepare 7 and adopt a budget, certify taxes, and provide appropriations 8 as follows: 9 Sec. 7. Section 331.434, subsection 3, Code 2019, is amended 10 to read as follows: 11 3. The Following, and not until adoption of the resolution 12 under section 331.433A, the board shall set a time and 13 place for a public hearing on the budget before the final 14 certification date and shall publish notice of the hearing not 15 less than ten nor more than twenty days prior to the hearing in 16 the county newspapers selected under chapter 349 . A summary 17 of the proposed budget and a description of the procedure for 18 protesting the county budget under section 331.436 , in the form 19 prescribed by the director of the department of management, 20 shall be included in the notice. Proof of publication of the 21 notice under this subsection 3 and a copy of the resolution 22 adopted under section 331.433A shall be filed with and 23 preserved by the auditor. A levy is not valid unless and until 24 the notice is published and the notice and resolution adopted 25 under section 331.433A are filed. The department of management 26 shall prescribe the form for the public hearing notice for use 27 by counties. 28 Sec. 8. Section 331.434, subsection 5, paragraph a, Code 29 2019, is amended to read as follows: 30 a. After the hearing, the board shall adopt by resolution 31 a budget and certificate of taxes for the next fiscal year 32 and shall direct the auditor to properly certify and file the 33 budget and certificate of taxes as adopted. The board shall 34 not adopt a tax in excess of the estimate published or the 35 -6- SF 634 (3) 88 md/jh 6/ 13

S.F. 634 applicable amounts specified in the resolution adopted under 1 section 331.433A , except a tax which is approved by a vote of 2 the people, and a greater tax than that adopted shall not be 3 levied or collected. A county budget and certificate of taxes 4 adopted for the following fiscal year becomes effective on the 5 first day of that year. 6 Sec. 9. Section 331.434, subsection 7, Code 2019, is amended 7 to read as follows: 8 7. Taxes levied by a county whose budget is certified after 9 March 15 31 shall be limited to the prior year’s budget amount. 10 However, this penalty may be waived by the director of the 11 department of management if the county demonstrates that the 12 March 15 31 deadline was missed because of circumstances beyond 13 the control of the county. 14 Sec. 10. Section 331.435, Code 2019, is amended to read as 15 follows: 16 331.435 Budget amendment. 17 1. The board may amend the adopted county budget, subject 18 to sections 331.423 through 331.426 and other applicable state 19 law, to permit increases in any class of proposed expenditures 20 contained in the budget summary published under section 21 331.434, subsection 3 . 22 2. The board shall prepare and adopt a budget amendment in 23 the same manner as the original budget , as provided in section 24 331.434 , but excluding the requirements for adoption of the 25 resolution under section 331.433A, and the amendment is subject 26 to protest as provided in section 331.436 , except that the 27 director of the department of management may by rule provide 28 that amendments of certain types or up to certain amounts may 29 be made without public hearing and without being subject to 30 protest. A county budget for the ensuing fiscal year shall be 31 amended by May 31 to allow time for a protest hearing to be 32 held and a decision rendered before June 30. An amendment of 33 a budget after May 31 which is properly appealed but without 34 adequate time for hearing and decision before June 30 is void. 35 -7- SF 634 (3) 88 md/jh 7/ 13

S.F. 634 Sec. 11. Section 331.436, Code 2019, is amended to read as 1 follows: 2 331.436 Protest. 3 Protests to the adopted budget must be made in accordance 4 with sections 24.27 through 24.32 as if the county were the 5 municipality under those sections except that the protest 6 must be filed no later than April 10 and the number of people 7 necessary to file a protest under this section shall not be 8 less than one hundred. 9 Sec. 12. Section 384.2, unnumbered paragraph 1, Code 2019, 10 is amended to read as follows: 11 Except as otherwise provided for special charter cities, 12 a city’s fiscal year shall be as provided in section 24.2, 13 subsection 3 . All city property taxes must be certified by a 14 city to the county auditor on or before the fifteenth day of 15 March 31 of each year, unless otherwise provided by state law. 16 However, municipal utilities, if not supported by taxation 17 or the proceeds of outstanding indebtedness payable from 18 taxes may, with the council’s consent, choose to operate on a 19 fiscal year which is the calendar year. The receipt by the 20 utility of payments from other governmental funds for public 21 fire protection, street lighting, or other public use of the 22 utility’s services shall not be deemed support by taxation. 23 After notice and hearing in the same manner as required for the 24 city’s regular budget under section 384.16 , the utility budget 25 must be approved by resolution of the council not later than 26 twenty days prior to the beginning of the calendar year for 27 which the budget applies. 28 Sec. 13. NEW SECTION . 384.15A Resolution establishing 29 maximum property tax dollars —— notice —— hearing. 30 1. For purposes of this section, unless the context 31 otherwise requires: 32 a. “Budget year” is the fiscal year beginning during the 33 calendar year in which a budget is certified. 34 b. “Current fiscal year” is the fiscal year ending during 35 -8- SF 634 (3) 88 md/jh 8/ 13

S.F. 634 the calendar year in which a budget for the budget year is 1 certified. 2 c. “Effective property tax rate” means the property tax rate 3 per one thousand dollars of assessed value and is equal to 4 one thousand multiplied by the quotient of the current fiscal 5 year’s actual property tax dollars certified for levy under the 6 levies specified in subsection 2 divided by the total assessed 7 value used to calculate taxes for the budget year. 8 2. For budget years beginning on or after July 1, 2020, 9 prior to the period of time for distribution of the budget 10 under section 384.16, subsection 2, the council shall adopt a 11 resolution establishing the total maximum property tax dollars 12 that may be certified for levy that includes taxes for city 13 government purposes under section 384.1, for the city’s trust 14 and agency fund under section 384.6, subsection 1, for the 15 city’s emergency fund under section 384.8, and for the levies 16 authorized under section 384.12, subsections 8, 10, 11, 12, 13, 17 17, and 21, but excluding additions approved at election under 18 section 384.12, subsection 19. 19 3. The maximum property tax dollars calculated and approved 20 by resolution under this section includes those amounts 21 received by the city as replacement taxes under chapter 437A 22 or 437B. 23 4. a. The council shall set a time and place for a public 24 hearing on the resolution before the date for adoption of the 25 resolution and shall publish notice of the hearing not less 26 than ten nor more than twenty days prior to the hearing in a 27 newspaper published at least once weekly and having general 28 circulation in the city. However, if the city has a population 29 of two hundred or less, publication may be made by posting in 30 three public places in the city. If the city has an internet 31 site, the notice shall also be posted and clearly identified 32 on the city’s internet site for public viewing beginning on 33 the date of the newspaper publication or public posting, as 34 applicable. Additionally, if the city maintains a social media 35 -9- SF 634 (3) 88 md/jh 9/ 13

S.F. 634 account on one or more social media applications, the public 1 hearing notice or an electronic link to the public hearing 2 notice shall be posted on each such account on the same day as 3 the publication of the notice. All of the following shall be 4 included in the notice: 5 (1) The sum of the current fiscal year’s actual property 6 taxes certified for levy under the levies specified in 7 subsection 2 and the current fiscal year’s combined property 8 tax levy rate for such amount that is applicable to taxable 9 property in the city other than property used and assessed for 10 agricultural or horticultural purposes. 11 (2) The effective tax rate calculated using the sum of 12 the current fiscal year’s actual property taxes certified for 13 levy under the levies specified in subsection 2, applicable 14 to taxable property in the city other than property used and 15 assessed for agricultural or horticultural purposes. 16 (3) The sum of the proposed maximum property tax dollars 17 that may be certified for levy for the budget year under the 18 levies specified in subsection 2 and the proposed combined 19 property tax levy rate for such amount applicable to taxable 20 property in the city other than property used and assessed for 21 agricultural or horticultural purposes. 22 (4) If the proposed maximum property tax dollars specified 23 under subparagraph (3) exceeds the current fiscal year’s 24 actual property tax dollars certified for levy specified in 25 subparagraph (1), a statement of the major reasons for the 26 increase. 27 b. Proof of publication shall be filed with and preserved 28 by the county auditor. The department of management shall 29 prescribe the form for the public hearing notice for use by 30 cities and the form for the resolution to be adopted by the 31 council under subsection 5. 32 5. a. At the public hearing, the council shall receive 33 oral or written objections from any resident or property owner 34 of the city. After all objections have been received and 35 -10- SF 634 (3) 88 md/jh 10/ 13

S.F. 634 considered, the council may decrease, but not increase, the 1 proposed maximum property tax dollar amount for inclusion in 2 the resolution and shall adopt the resolution and file the 3 resolution with the county auditor as required under section 4 384.16, subsection 3. 5 b. If the sum of the maximum property tax dollars for 6 the budget year specified in the resolution under the levies 7 specified in subsection 2 exceeds one hundred two percent of 8 the sum of the current fiscal year’s actual property taxes 9 certified for levy under the levies specified in subsection 10 2, the council shall be required to adopt the resolution by a 11 two-thirds majority of the membership of the council. 12 c. If the city has an internet site, in addition to 13 filing the resolution with the auditor under section 384.16, 14 subsection 3, the adopted resolution shall be posted and 15 clearly identified on the city’s internet site for public 16 viewing within ten days of approval by the council. The posted 17 resolution for a budget year shall continue to be accessible 18 for public viewing on the internet site along with resolutions 19 posted for all subsequent budget years. 20 Sec. 14. Section 384.16, unnumbered paragraph 1, Code 2019, 21 is amended to read as follows: 22 Annually, a city that has satisfied the requirements of 23 section 384.15A and section 384.22, subsection 3 , shall prepare 24 and adopt a budget, and shall certify taxes as follows: 25 Sec. 15. Section 384.16, subsections 3, 5, and 6, Code 2019, 26 are amended to read as follows: 27 3. The Following, and not until adoption of the resolution 28 under section 384.15A, the council shall set a time and place 29 for public hearing on the budget before the final certification 30 date and shall publish notice of the hearing not less than ten 31 nor more than twenty days before the hearing in a newspaper 32 published at least once weekly and having general circulation 33 in the city. However, if the city has a population of two 34 hundred or less, publication may be made by posting in three 35 -11- SF 634 (3) 88 md/jh 11/ 13

S.F. 634 public places in the city. A summary of the proposed budget 1 and a description of the procedure for protesting the city 2 budget under section 384.19, in the form prescribed by the 3 director of the department of management, shall be included 4 in the notice. Proof of publication of the notice under this 5 subsection 3 and a copy of the resolution adopted under section 6 384.15A must be filed with the county auditor. The department 7 of management shall prescribe the form for the public hearing 8 notice for use by cities. 9 5. After the hearing, the council shall adopt by resolution 10 a budget for at least the next fiscal year, and the clerk 11 shall certify the necessary tax levy for the next fiscal year 12 to the county auditor and the county board of supervisors. 13 The tax levy certified may be less than but not more than 14 the amount estimated in the proposed budget submitted at 15 the final hearing or the applicable amount specified in the 16 resolution adopted under section 384.15A , unless an additional 17 tax levy is approved at a city election. Two copies each of 18 the detailed budget as adopted and of the tax certificate must 19 be transmitted to the county auditor, who shall complete the 20 certificates and transmit a copy of each to the department of 21 management. 22 6. Taxes levied by a city whose budget is certified after 23 March 15 31 shall be limited to the prior year’s budget amount. 24 However, this penalty may be waived by the director of the 25 department of management if the city demonstrates that the 26 March 15 31 deadline was missed because of circumstances beyond 27 the control of the city. 28 Sec. 16. Section 384.17, Code 2019, is amended to read as 29 follows: 30 384.17 Levy by county. 31 At the time required by law, the county board of supervisors 32 shall levy the taxes necessary for each city fund for the 33 following fiscal year. The levy must be as shown in the 34 adopted city budget and as certified by the clerk, subject to 35 -12- SF 634 (3) 88 md/jh 12/ 13

S.F. 634 any changes made after a protest hearing, and any additional 1 tax rates approved at a city election. A city levy is not valid 2 until proof of publication or posting of notice of a budget 3 hearing is under section 384.16, subsection 3, and the notice 4 and resolution adopted under section 384.15A are filed with the 5 county auditor. 6 Sec. 17. APPLICABILITY. This division of this Act applies 7 to city and county budgets and taxes for fiscal years beginning 8 on or after July 1, 2020. 9 DIVISION II 10 STATE APPRAISAL MANUAL 11 Sec. 18. Section 421.17, subsection 17, Code 2019, is 12 amended to read as follows: 13 17. To prepare and issue a state appraisal manual which each 14 county and city assessor shall use in assessing and valuing all 15 classes of property in the state. The appraisal manual shall 16 be continuously revised and the manual and revisions shall be 17 issued to the county and city assessors in such form and manner 18 as prescribed by the director. Each county and city assessor 19 shall use the most recently issued manual in assessing and 20 valuing all classes of property in the state within two years 21 of the publication date of the most recently issued manual. 22 The department may grant an extension of up to two years to 23 a county or city assessor upon request and demonstration of 24 substantial hardship by an assessor. 25 -13- SF 634 (3) 88 md/jh 13/ 13