House File 114 - IntroducedA Bill ForAn Act 1relating to water quality by increasing the sales and
2use tax rates and conditioning the use of moneys from the
3natural resources and outdoor recreation trust fund, and
4including effective date provisions.
5BE IT ENACTED BY THE GENERAL ASSEMBLY OF THE STATE OF IOWA:
1DIVISION I
2SALES AND USE TAXES AND THE NATURAL RESOURCES AND OUTDOOR
3RECREATION TRUST FUND
4   Section 1.  Section 423.2, subsection 1, unnumbered
5paragraph 1, Code 2019, is amended to read as follows:
   6There is imposed a tax of six percent at the rate specified
7in subsection 12
upon the sales price of all sales of tangible
8personal property, consisting of goods, wares, or merchandise,
9sold at retail in the state to consumers or users except as
10otherwise provided in this subchapter.
11   Sec. 2.  Section 423.2, subsections 2 and 3, Code 2019, are
12amended to read as follows:
   132.  A tax of six percent at the rate specified in subsection
1412
is imposed upon the sales price of the sale or furnishing
15of gas, electricity, water, heat, pay television service, and
16communication service, including the sales price from such
17sales by any municipal corporation or joint water utility
18furnishing gas, electricity, water, heat, pay television
19service, and communication service to the public in its
20proprietary capacity, except as otherwise provided in this
21subchapter, when sold at retail in the state to consumers or
22users.
   233.  A tax of six percent at the rate specified in subsection
2412
is imposed upon the sales price of all sales of tickets
25or admissions to places of amusement, fairs, and athletic
26events except those of elementary and secondary educational
27institutions. A tax of six percent at the rate specified in
28subsection 12
is imposed on the sales price of an entry fee or
29like charge imposed solely for the privilege of participating
30in an activity at a place of amusement, fair, or athletic event
31unless the sales price of tickets or admissions charges for
32observing the same activity are taxable under this subchapter.
33A tax of six percent at the rate specified in subsection 12
34 is imposed upon that part of private club membership fees or
35charges paid for the privilege of participating in any athletic
-1-1sports provided club members.
2   Sec. 3.  Section 423.2, subsection 4, paragraph a, Code 2019,
3is amended to read as follows:
   4a.  A tax of six percent at the rate specified in subsection
512
is imposed upon the sales price derived from the operation
6of all forms of amusement devices and games of skill, games of
7chance, raffles, and bingo games as defined in chapter 99B, and
8card game tournaments conducted under section 99B.27, that are
9operated or conducted within the state, the tax to be collected
10from the operator in the same manner as for the collection of
11taxes upon the sales price of tickets or admission as provided
12in this section. Nothing in this subsection shall legalize any
13games of skill or chance or slot-operated devices which are now
14prohibited by law.
15   Sec. 4.  Section 423.2, subsection 5, Code 2019, is amended
16to read as follows:
   175.  There is imposed a tax of six percent at the rate
18specified in subsection 12
upon the sales price from the
19furnishing of services as defined in section 423.1.
20   Sec. 5.  Section 423.2, subsection 7, paragraph a,
21unnumbered paragraph 1, Code 2019, is amended to read as
22follows:
   23A tax of six percent at the rate specified in subsection 12
24 is imposed upon the sales price from the sales, furnishing, or
25service of solid waste collection and disposal service.
26   Sec. 6.  Section 423.2, subsection 8, paragraph a, Code 2019,
27is amended to read as follows:
   28a.  A tax of six percent at the rate specified in subsection
2912
is imposed on the sales price from sales of bundled
30transactions. For the purposes of this subsection, a “bundled
31transaction”
is the retail sale of two or more distinct and
32identifiable products, except real property and services to
33real property, which are sold for one nonitemized price. A
34“bundled transaction” does not include the sale of any products
35in which the sales price varies, or is negotiable, based on
-2-1the selection by the purchaser of the products included in the
2transaction.
3   Sec. 7.  Section 423.2, subsection 9, Code 2019, is amended
4to read as follows:
   59.  A tax of six percent at the rate specified in
6subsection 12
is imposed upon the sales price from any mobile
7telecommunications service, including all paging services,
8that this state is allowed to tax pursuant to the provisions
9of the federal Mobile Telecommunications Sourcing Act, Pub.
10L. No.106-252, 4 U.S.C. §116 et seq. For purposes of this
11subsection, taxes on mobile telecommunications service, as
12defined under the federal Mobile Telecommunications Sourcing
13Act that are deemed to be provided by the customer’s home
14service provider, shall be paid to the taxing jurisdiction
15whose territorial limits encompass the customer’s place of
16primary use, regardless of where the mobile telecommunications
17service originates, terminates, or passes through and
18shall in all other respects be taxed in conformity with
19the federal Mobile Telecommunications Sourcing Act. All
20other provisions of the federal Mobile Telecommunications
21Sourcing Act are adopted by the state of Iowa and incorporated
22into this subsection by reference. With respect to mobile
23telecommunications service under the federal Mobile
24Telecommunications Sourcing Act, the director shall, if
25requested, enter into agreements consistent with the provisions
26of the federal Act.
27   Sec. 8.  Section 423.2, subsection 12, Code 2019, is amended
28by striking the subsection and inserting in lieu thereof the
29following:
   3012.  a.  For the period beginning January 1, 2020, and ending
31December 31, 2020, the sales tax rate is six and one-eighth
32percent.
   33b.  For the period beginning January 1, 2021, and ending
34December 31, 2021, the sales tax rate is six and one-fourth
35percent.
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   1c.  For the period beginning January 1, 2022, and ending
2December 31, 2029, the sales tax rate is six and three-eighths
3percent.
   4d.  Beginning January 1, 2030, the sales tax rate is five and
5three-eighths percent.
6   Sec. 9.  Section 423.2A, subsection 2, paragraph b, Code
72019, is amended to read as follows:
   8b.  Transfer from the remaining revenues the amounts required
9under Article VII, section 10, of the Constitution of the State
10of Iowa to the natural resources and outdoor recreation trust
11fund created in section 461.31, if applicable.
12   Sec. 10.  Section 423.5, subsection 1, unnumbered paragraph
131, Code 2019, is amended to read as follows:
   14Except as provided in paragraph “c”, an excise tax at the
15rate of six percent specified in subsection 4 of the purchase
16price or installed purchase price is imposed on the following:
17   Sec. 11.  Section 423.5, subsection 4, Code 2019, is amended
18by striking the subsection and inserting in lieu thereof the
19following:
   204.  a.  For the period beginning January 1, 2020, and ending
21December 31, 2020, the use tax rate is six and one-eighth
22percent.
   23b.  For the period beginning January 1, 2021, and ending
24December 31, 2021, the use tax rate is six and one-fourth
25percent.
   26c.  For the period beginning January 1, 2022, and ending
27December 31, 2029, the use tax rate is six and three-eighths
28percent.
   29d.  Beginning January 1, 2030, the use tax rate is five and
30three-eighths percent.
31   Sec. 12.  Section 423.43, subsection 1, paragraph b, Code
322019, is amended to read as follows:
   33b.  Subsequent to the deposit into the general fund of the
34state and after the transfer of such pursuant to paragraph “a”,
35the department shall do the following in the order prescribed:

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   1(1)   Transfer therevenues collected under chapter 423B, the
2department shall transfer one-sixth
.
   3(2)   (a)   Transfer the applicable percentage as specified
4in subparagraph division (b)
of such remaining revenues to the
5secure an advanced vision for education fund created in section
6423F.2.
   7(b)   (i)  For the period beginning January 1, 2020, and
8ending December 31, 2020, the applicable percentage is sixteen
9and three thousand two hundred sixty-five ten-thousandths
10percent.
   11(ii)  For the period beginning January 1, 2021, and ending
12December 31, 2021, the applicable percentage is sixteen
13percent.
   14(iii)  For the period beginning January 1, 2022, and ending
15December 31, 2029, the applicable percentage is fifteen and six
16thousand eight hundred sixty-three ten-thousandths percent.
  17(c)  This paragraph subparagraph (2) is repealed December
1831, 2029.
19   Sec. 13.  PURPOSE.  The purpose of this division of this Act
20is to provide for the implementation of Article VII, section
2110, of the Constitution of the State of Iowa by fully funding
22the natural resources and outdoor recreation trust fund as
23created in section 461.31, pursuant to Article VII, section 10,
24of the Constitution of the State of Iowa.
25   Sec. 14.  EFFECTIVE DATE.  This division of this Act takes
26effect January 1, 2020.
27DIVISION II
28NATURAL RESOURCES AND OUTDOOR RECREATION
29   Sec. 15.  Section 461.2, Code 2019, is amended by adding the
30following new subsection:
31   NEW SUBSECTION.  3A.  “Iowa nutrient reduction strategy”
32means the latest version of the Iowa nutrient reduction
33strategy initially presented in November 2012 by the department
34of agriculture and land stewardship, the department of natural
35resources, and Iowa state university of science and technology.
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1   Sec. 16.  NEW SECTION.  461.12  Conditions on appropriations.
   2Appropriations of trust fund moneys from the trust fund
3to the department of natural resources, the department of
4agriculture and land stewardship, the Iowa finance authority,
5the economic development authority, or any other public or
6private entity or person, for any initiative related to the
7Iowa nutrient reduction strategy or for any other water quality
8or flood mitigation initiative, shall be made subject to
9satisfaction of all of the following conditions:
   101.  The Iowa nutrient reduction strategy is updated to
11include the interim goals and timelines of the gulf hypoxia
12Mississippi river task force that call for a twenty percent
13reduction in nitrates and phosphorus by calendar year 2025.
   142.  Each initiative shall require a comprehensive
15watershed-based assessment and planning process open to all
16landowners and other stakeholders, with an absolute preference
17for initiatives recommended or conducted by, or included in
18the plans of, a watershed management authority, with financial
19participation by local participants based on principles adopted
20according to the Iowa smart planning principles in chapter 18B.
   213.  Funding preference shall be given for initiatives that
22achieve one or more benefits in addition to nutrient reduction,
23including but not limited to soil health, erosion prevention,
24flood mitigation, reductions in other pollutants, wildlife
25habitat creation or preservation, and public recreational
26access. Trust funds shall not be used for initiatives that are
27solely demonstration projects or initiatives under the Iowa
28nutrient reduction strategy.
   294.  The initiative establishes specific benchmarks,
30priorities, goals, timelines, and milestones, including
31regular ambient water quality measurements for the initiative,
32which are consistent with the goals and timelines of the Iowa
33nutrient reduction strategy, including but not limited to the
34changes required in subsection 1.
   355.  The initiative has its performance evaluated by a
-6-1competent and independent third-party entity at least once
2every two years starting from the beginning of the initiative
3and again at the conclusion of the initiative.
   46.  The initiative publicly reports participation, progress,
5and results at least once every two years, which reports shall
6include, at a minimum, measured changes in water quality.
   77.  The initiative shall require, at a minimum, at least
8a fifty percent cost share from landowners or other private
9entities or persons for improvements to private property,
10including both installation and maintenance, and including
11regular maintenance in accordance with public easements for a
12minimum of twenty years. Any public moneys appropriated for
13improvements that are not maintained or that are removed shall
14be returned to the trust fund.
15EXPLANATION
16The inclusion of this explanation does not constitute agreement with
17the explanation’s substance by the members of the general assembly.
   18This bill relates to water quality by increasing the sales
19and use tax rates and conditioning the use of moneys from the
20natural resources and outdoor recreation trust fund.
   21DIVISION I — SALES AND USE TAXES. Division I of the bill
22relates to state sales and use taxes and to an amendment to
23the Iowa Constitution ratified on November 2, 2010, which
24created a natural resources and outdoor recreation trust fund
25(fund) and dedicated a portion of state revenues to the fund
26for the purposes of protecting and enhancing water quality and
27natural areas in the state including parks, trails, and fish
28and wildlife habitat, and conserving agricultural soils in
29the state (Article VII, section 10). The fund is codified in
30Code section 461.31. Pursuant to the amendment, the amount
31credited to the fund will be equal to the amount generated
32by an increase in the state sales tax rate occurring after
33the effective date of the constitutional amendment, but shall
34not exceed the amount that a state sales tax rate of 0.375
35percent would generate. The state sales tax rate has not
-7-1been increased since the effective date of the constitutional
2amendment, so no amounts have been credited to the fund. The
3division increases the sales tax rate and the use tax rate
4from 6 percent to 6.125 percent on January 1, 2020, from 6.125
5percent to 6.25 percent on January 1, 2021, and from 6.25
6percent to 6.375 percent on January 1, 2022. The division
7also amends the transfer of use tax revenues to the secure
8an advanced vision for education fund (SAVE) in Code section
9423F.2 to ensure that SAVE receives approximately the same
10proportion of the total use tax revenue as it did prior to the
11use tax rate increases provided in the division.
   12The division takes effect January 1, 2020.
   13DIVISION II — NATURAL RESOURCES AND OUTDOOR RECREATION.
14Division II relates to the natural resources and outdoor
15recreation trust fund codified in Code chapter 461. The
16division defines “Iowa nutrient reduction strategy” for
17purposes of Code chapter 461. The division also prescribes
18numerous conditions that must be satisfied in order for
19an appropriation of trust fund moneys to be made from the
20trust fund to any public or private entity or person for an
21initiative related to the Iowa nutrient reduction strategy,
22or for another similar water quality or flood mitigation
23initiative. The conditions require that the Iowa nutrient
24reduction strategy be updated to include certain goals and
25timelines of the gulf hypoxia Mississippi river task force, and
26in general require initiatives to engage in or include certain
27assessments, goals, measurements, evaluations, or reports as
28described in the division, and establishes certain funding
29preferences and cost-share requirements as described in the
30division. The conditions also prohibit trust fund moneys
31from being used for initiatives that are solely demonstration
32projects, and requires the repayment of certain public moneys
33appropriated for improvements to private property if the
34improvements are not maintained or are removed.
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