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House File 544 - IntroducedA Bill ForAn Act 1relating to the state sales and use tax by funding
2the natural resources and outdoor recreation trust fund
3through the sales tax, using sales and use taxes to create
4a baby bond program and fund, and including effective date
5provisions.
6BE IT ENACTED BY THE GENERAL ASSEMBLY OF THE STATE OF IOWA:
1DIVISION I
2SALES AND USE TAXES
3 Section 1. Section 423.2, subsection 1, unnumbered
4paragraph 1, Code 2021, is amended to read as follows:
5There is imposed a tax of six percent at a rate specified
6in subsection 12 upon the sales price of all sales of tangible
7personal property, consisting of goods, wares, or merchandise,
8sold at retail in the state to consumers or users except as
9otherwise provided in this subchapter.
10 Sec. 2. Section 423.2, subsections 2 and 3, Code 2021, are
11amended to read as follows:
122. A tax of six percent at a rate specified in subsection
1312 is imposed upon the sales price of the sale or furnishing
14of gas, electricity, water, heat, pay television service, and
15communication service, including the sales price from such
16sales by any municipal corporation or joint water utility
17furnishing gas, electricity, water, heat, pay television
18service, and communication service to the public in its
19proprietary capacity, except as otherwise provided in this
20subchapter, when sold at retail in the state to consumers or
21users.
223. A tax of six percent at a rate specified in subsection
2312 is imposed upon the sales price of all sales of tickets
24or admissions to places of amusement, fairs, and athletic
25events except those of elementary and secondary educational
26institutions. A tax of six percent at a rate specified in
27subsection 12 is imposed on the sales price of an entry fee or
28like charge imposed solely for the privilege of participating
29in an activity at a place of amusement, fair, or athletic event
30unless the sales price of tickets or admissions charges for
31observing the same activity are taxable under this subchapter.
32A tax of six percent at a rate specified in subsection 12
33 is imposed upon that part of private club membership fees or
34charges paid for the privilege of participating in any athletic
35sports provided club members.
-1-1 Sec. 3. Section 423.2, subsection 4, paragraph a, Code 2021,
2is amended to read as follows:
3a. A tax of six percent at a rate specified in subsection
412 is imposed upon the sales price derived from the operation
5of all forms of amusement devices and games of skill, games of
6chance, raffles, and bingo games as defined in chapter 99B, and
7card game tournaments conducted under section 99B.27, that are
8operated or conducted within the state, the tax to be collected
9from the operator in the same manner as for the collection of
10taxes upon the sales price of tickets or admission as provided
11in this section. Nothing in this subsection shall legalize any
12games of skill or chance or slot-operated devices which are now
13prohibited by law.
14 Sec. 4. Section 423.2, subsection 5, Code 2021, is amended
15to read as follows:
165. There is imposed a tax of six percent at a rate specified
17in subsection 12 upon the sales price from the furnishing of
18services as defined in section 423.1.
19 Sec. 5. Section 423.2, subsection 7, paragraph a,
20unnumbered paragraph 1, Code 2021, is amended to read as
21follows:
22A tax of six percent at a rate specified in subsection 12
23 is imposed upon the sales price from the sales, furnishing, or
24service of solid waste collection and disposal service.
25 Sec. 6. Section 423.2, subsection 8, paragraph a, Code 2021,
26is amended to read as follows:
27a. A tax of six percent at a rate specified in subsection
2812 is imposed on the sales price from sales of bundled
29transactions. For the purposes of this subsection, a “bundled
30transaction” is the retail sale of two or more distinct and
31identifiable products, except real property and services to
32real property, which are sold for one nonitemized price. A
33“bundled transaction” does not include the sale of any products
34in which the sales price varies, or is negotiable, based on
35the selection by the purchaser of the products included in the
-2-1transaction.
2 Sec. 7. Section 423.2, subsection 9, Code 2021, is amended
3to read as follows:
49. A tax of six percent at a rate specified in subsection
512 is imposed upon the sales price from any mobile
6telecommunications service, including all paging services,
7that this state is allowed to tax pursuant to the provisions
8of the federal Mobile Telecommunications Sourcing Act, Pub.
9L. No.106-252, 4 U.S.C. §116 et seq. For purposes of this
10subsection, taxes on mobile telecommunications service, as
11defined under the federal Mobile Telecommunications Sourcing
12Act that are deemed to be provided by the customer’s home
13service provider, shall be paid to the taxing jurisdiction
14whose territorial limits encompass the customer’s place of
15primary use, regardless of where the mobile telecommunications
16service originates, terminates, or passes through and
17shall in all other respects be taxed in conformity with
18the federal Mobile Telecommunications Sourcing Act. All
19other provisions of the federal Mobile Telecommunications
20Sourcing Act are adopted by the state of Iowa and incorporated
21into this subsection by reference. With respect to mobile
22telecommunications service under the federal Mobile
23Telecommunications Sourcing Act, the director shall, if
24requested, enter into agreements consistent with the provisions
25of the federal Act.
26 Sec. 8. Section 423.2, subsection 10, paragraph a, Code
272021, is amended to read as follows:
28a. A tax of six percent at a rate specified in subsection
2912 is imposed on the sales price of specified digital products
30sold at retail in the state. The tax applies whether the
31purchaser obtains permanent use or less than permanent use of
32the specified digital product, whether the sale is conditioned
33or not conditioned upon continued payment from the purchaser,
34and whether the sale is on a subscription basis or is not on a
35subscription basis.
-3-1 Sec. 9. Section 423.2, subsection 12, Code 2021, is amended
2by striking the subsection and inserting in lieu thereof the
3following:
412. a. For the period beginning January 1, 2022, and ending
5December 31, 2050, the sales tax rate is seven percent.
6b. Beginning January 1, 2051, the sales tax rate is six
7percent.
8 Sec. 10. Section 423.2A, subsection 2, Code 2021, is amended
9by adding the following new paragraph:
10 NEW PARAGRAPH. 0b. Transfer one-seventh of the remaining
11revenues to the secure an advanced vision for education fund
12created in section 423F.2. This paragraph “0b” is repealed
13January 1, 2051.
14 Sec. 11. Section 423.2A, subsection 2, paragraph b, Code
152021, is amended to read as follows:
16b. Transfer from the remaining revenues the amounts required
17under Article VII, section 10, of the Constitution of the State
18of Iowa to the natural resources and outdoor recreation trust
19fund created in section 461.31, if applicable.
20 Sec. 12. Section 423.2A, subsection 2, paragraph c, Code
212021, is amended by striking the paragraph and inserting in
22lieu thereof the following:
23c. Each fiscal year transfer from the remaining revenues to
24the baby bond fund established in section 12.101 an equivalent
25amount of revenue necessary to fund active savings accounts as
26required pursuant to section 12.101, subsection 2, paragraph
27“b”.
28 Sec. 13. Section 423.2A, subsection 2, paragraph d, Code
292021, is amended to read as follows:
30d. Transfer to the baseball and softball complex sales tax
31rebate fund that portion of the sales tax receipts described
32in subsection 1, paragraph “b”, remaining after the transfers
33required under paragraphs “a”, “0b”, “b”, and “c” of this
34subsection 2. This paragraph is repealed thirty days following
35the date on which five million dollars in total rebates have
-4-1been provided under section 423.4, subsection 10.
2 Sec. 14. Section 423.5, subsection 1, unnumbered paragraph
31, Code 2021, is amended to read as follows:
4Except as provided in paragraph “b”, an excise tax at the
5rate of six percent specified in subsection 4 of the purchase
6price or installed purchase price is imposed on the following:
7 Sec. 15. Section 423.5, subsection 4, Code 2021, is amended
8by striking the subsection and inserting in lieu thereof the
9following:
104. a. For the period beginning January 1, 2022, and ending
11December 31, 2050, the use tax rate is seven percent.
12b. Beginning January 1, 2051, the use tax rate is six
13percent.
14 Sec. 16. Section 423.43, subsection 1, paragraph b, Code
152021, is amended to read as follows:
16b. (1) Subsequent to the deposit into the general fund of
17the state and after the transfer of such revenues collected
18under chapter 423B, the department shall transfer one-sixth
19 one-seventh of such remaining revenues to the secure an
20advanced vision for education fund created in section 423F.2.
21This paragraph subparagraph is repealed January 1, 2051.
22(2) Subsequent to the deposit into the general fund of the
23state and the transfers in subparagraph (1), each fiscal year
24the department shall transfer from the remaining revenues to
25the baby bond fund established in section 12.101 an equivalent
26amount of revenue necessary to fund active savings accounts as
27required pursuant to section 12.101, subsection 2, paragraph
28“b”.
29DIVISION II
30BABY BOND PROGRAM AND FUND
31 Sec. 17. NEW SECTION. 12.101 Baby bond program and fund.
321. As used in this section unless the context otherwise
33requires:
34a. “Active savings account” means an account associated with
35a child under eighteen years of age.
-5- 1b. “Child” means a person under eighteen years of age.
2c. “Enrollee” means a person eligible to receive funds who
3is eighteen years of age or older.
4d. “First home” means the first-time purchase of a residence
5by an enrollee who is a resident of this state and who does
6not own, either individually or jointly, a single-family or
7multifamily residence, and who has not owned or purchased,
8either individually or jointly, a single-family or multifamily
9residence.
10e. “Fund” means the baby bond fund.
11f. “Program” means the baby bond program.
122. a. The program is created by establishing an
13interest-bearing savings account for children in this state.
14The treasurer of state shall act as custodian of the savings
15accounts and disburse moneys contained in the savings accounts.
16The purpose of the program is to offer a fairer chance at
17economic stability and mobility by funding a savings account
18for children in this state.
19b. (1) Commencing with the fiscal year beginning July 1,
202022, and every fiscal year thereafter, there is transferred
21pursuant to section 423.2A, subsection 2, paragraph “c”, and
22section 423.43, subsection 1, paragraph “b”, subparagraph (2),
23an amount necessary to fund each active savings account in
24existence on October 1 with five hundred dollars until the
25child attains eighteen years of age.
26(2) Each active savings account shall be funded with five
27hundred dollars on the enrollment date and five hundred dollars
28on each subsequent enrollment anniversary date until the child
29attains eighteen years of age.
30c. The moneys in the fund shall be accessible to the child
31upon turning eighteen years of age to fund educational expenses
32or for the purchase of a first home located in this state.
33The moneys in the account shall remain accessible for these
34purposes until the enrollee attains thirty-five years of age,
35and at such time any remaining moneys in the savings account
-6-1shall revert to the general fund of the state.
2d. Direct contributions shall not be made to the savings
3account established on behalf of the child, and the child or
4the parent or guardian of the child shall not be able to affect
5the account, except as provided in subsection 4.
6e. An enrollee who is not a resident of this state on or
7after the eighteenth birthday of the enrollee is not eligible
8to receive funds from the savings account on or after the
9enrollee’s eighteenth birthday.
10f. Beginning with births in this state on or after July 1,
112022, and on a form or in a manner prescribed by the treasurer
12of state, a parent or guardian of a child born in this state
13may notify the treasurer of state of the birth of the child to
14begin the enrollment process in the program. Upon receiving
15proper notification of the birth of the child in this state,
16the child shall be considered enrolled in the program.
17g. For a child born in this state prior to July 1, 2022,
18and who remains a resident of this state, or for a child who
19has been a resident of this state for at least two years prior
20to, on, or after July 1, 2022, a parent or guardian of such a
21child may notify the treasurer of state to begin the enrollment
22process in the program. The notification shall be on a form or
23in the manner prescribed by the treasurer of state, and upon
24receiving proper notification the child shall be considered
25enrolled in the program.
26h. The treasurer of state shall make account balances within
27the program available through a secured internet site to each
28parent or guardian of a child enrolled in the program, or to an
29enrollee.
303. a. The fund is established in the state treasury under
31the control of the treasurer of state consisting of funds
32transferred to the fund pursuant to subsection 2.
33b. Notwithstanding section 12C.7, subsection 2, interest or
34earnings on moneys deposited in the fund shall be credited to
35the fund. Notwithstanding section 8.33, moneys credited to the
-7-1fund shall not revert at the close of a fiscal year.
2c. The treasurer of state shall invest the moneys in the
3fund in accordance with the provisions of this section and
4in accordance with the public funds investment standards in
5section 12B.10.
6d. The treasurer of state shall use the moneys in the fund
7to provide moneys to an enrollee for the purpose of paying
8educational expenses or for the purchase of a first home
9located in this state and to pay for the costs associated with
10the plan.
114. To receive money under the program, an enrollee must
12apply for the moneys with the treasurer of state on a form or in
13a manner prescribed by the treasurer. Approved payments by the
14treasurer of state may be in the form of a one-time payment or
15in the form of multiple payments over a period of time.
165. a. No property rights in the fund shall exist in favor
17of the child or enrollee.
18b. A payment pursuant to this section is not guaranteed and
19is subject to future modifications and investment gain or loss.
206. The treasurer of state shall adopt rules pursuant to
21chapter 17A to administer this section, including establishing
22eligibility for the program based upon family income.
23DIVISION III
24EFFECTIVE DATE
25 Sec. 18. EFFECTIVE DATE. This Act takes effect January 1,
262022.
27EXPLANATION
28The inclusion of this explanation does not constitute agreement with
29the explanation’s substance by the members of the general assembly.
30This bill relates to the state sales and use tax by funding
31the natural resources and outdoor recreation trust fund through
32the sales tax, and using sales and use taxes to create a baby
33bond program and fund, and includes effective date provisions.
34DIVISION I — SALES AND USE TAX. An amendment to the Iowa
35Constitution was ratified on November 2, 2010, which created
-8-1a natural resources and outdoor recreation trust fund (fund)
2and dedicated a portion of state revenues to the fund for
3the purposes of protecting and enhancing water quality and
4natural areas in the state including parks, trails, and fish
5and wildlife habitat, and conserving agricultural soils in
6the state (article VII, section 10). The fund is codified in
7Code section 461.31. Pursuant to the amendment, the amount
8credited to the fund will be equal to the amount generated
9by an increase in the state sales tax rate occurring after
10the effective date of the constitutional amendment, but shall
11not exceed the amount that a state sales tax rate of 0.375
12percent would generate. The state sales tax rate has not
13been increased since the effective date of the constitutional
14amendment, so no amounts have been credited to the fund. The
15bill increases the sales tax rate and the use tax rate from 6
16percent to 7 percent January 1, 2022. As a result, moneys will
17be credited to the fund. The bill also amends the transfer of
18sales and use tax revenues to the secure an advanced vision for
19education fund (SAVE) in Code sections 423.2A(2) and 423.43 to
20ensure that SAVE receives the same amount of sales and use tax
21revenues as it did prior to the sales and use tax increases
22provided in the bill.
23DIVISION II — BABY BONDS PROGRAM AND FUND. The bill
24creates a baby bond program (program) by establishing an
25interest-bearing savings account for children in this state.
26The treasurer of state shall act as custodian of the savings
27accounts and disburse moneys contained in the savings accounts.
28The purpose of the program is to offer children in this state a
29fairer chance at economic stability and mobility.
30Commencing with the fiscal year beginning July 1, 2022, and
31every fiscal year thereafter, the bill transfers from sales and
32use tax revenues an amount equal to fund each active savings
33account in existence in the program on October 1 with $500
34until the child attains 18 years of age. The bill defines
35“active savings account” to mean an account associated with a
-9-1child under 18 years of age.
2The bill requires each active savings account to be funded
3with $500 on the enrollment date and $500 on each subsequent
4enrollment anniversary date until the child attains 18 years
5of age.
6The bill specifies the moneys in the fund shall be accessible
7to the child upon turning 18 years of age to fund educational
8expenses or for the purchase of a first home located in this
9state. The bill further specifies that moneys in the account
10remain accessible for these purposes until 35 years of age,
11and at such time any remaining moneys in the account revert
12to the general fund of the state. The bill defines “first
13home” to mean the first-time purchase of a residence by a
14resident, and who does not own, either individually or jointly,
15a single-family or multifamily residence, and who has not owned
16or purchased, either individually or jointly, a single-family
17or multifamily residence.
18The bill prohibits direct contributions to the account by
19the child or the child’s family.
20The bill requires the savings account of the child to be
21funded on the enrollment date and subsequently funded on the
22enrollment anniversary date until the child attains 18 years
23of age.
24The bill prohibits a child who is not a resident of this
25state on or after their 18th birthday from receiving funds from
26the savings account.
27Beginning with births in this state on or after July 1, 2022,
28and on a form or in a manner prescribed by the treasurer of
29state, the parent or guardian of the child born in this state
30may notify the treasurer of state of the birth of the child to
31begin the enrollment process in the program. Upon receiving
32proper notification of the birth of the child in this state,
33the bill specifies the child shall be considered enrolled in
34the program.
35For a child born in this state prior to July 1, 2022, and who
-10-1remains a resident of this state, or for a child who has been a
2resident of this state for at least two years prior to, on, or
3after July 1, 2022, a parent or guardian of a child may notify
4the treasurer of state to begin the enrollment process in the
5program. The bill requires the notification to be on a form or
6in the manner prescribed by the treasurer of state, and upon
7receiving proper notification the child shall be considered
8enrolled in the program.
9The bill requires the treasurer of state to make account
10balances within the program available through a secured
11internet site to each parent or guardian of a child enrolled in
12the program, or to a child who has attained 18 years of age.
13The bill establishes a baby bond fund (fund) in the state
14treasury under the control of the treasurer of state consisting
15of sales and use tax revenues transferred to the fund for
16purposes of establishing the program.
17In order to receive moneys under the program established in
18the bill, a child who has attained 18 years of age must apply
19for the moneys with the treasurer of state on a form or in a
20manner prescribed by the treasurer. Approved payments by the
21treasurer of state may be in the form of a one-time payment or
22in the form of multiple payments over a period of time.
23The bill specifies no property rights exist in the fund in
24favor of the child after the child has attained 18 years of
25age.
26The bill requires the treasurer of state to adopt rules to
27administer the program, including establishing eligibility for
28the program based upon family income.
29DIVISION II — EFFECTIVE DATE. The bill takes effect January
301, 2022.
-11-jm/jh
2the natural resources and outdoor recreation trust fund
3through the sales tax, using sales and use taxes to create
4a baby bond program and fund, and including effective date
5provisions.
6BE IT ENACTED BY THE GENERAL ASSEMBLY OF THE STATE OF IOWA:
1DIVISION I
2SALES AND USE TAXES
3 Section 1. Section 423.2, subsection 1, unnumbered
4paragraph 1, Code 2021, is amended to read as follows:
5There is imposed a tax of six percent at a rate specified
6in subsection 12 upon the sales price of all sales of tangible
7personal property, consisting of goods, wares, or merchandise,
8sold at retail in the state to consumers or users except as
9otherwise provided in this subchapter.
10 Sec. 2. Section 423.2, subsections 2 and 3, Code 2021, are
11amended to read as follows:
122. A tax of six percent at a rate specified in subsection
1312 is imposed upon the sales price of the sale or furnishing
14of gas, electricity, water, heat, pay television service, and
15communication service, including the sales price from such
16sales by any municipal corporation or joint water utility
17furnishing gas, electricity, water, heat, pay television
18service, and communication service to the public in its
19proprietary capacity, except as otherwise provided in this
20subchapter, when sold at retail in the state to consumers or
21users.
223. A tax of six percent at a rate specified in subsection
2312 is imposed upon the sales price of all sales of tickets
24or admissions to places of amusement, fairs, and athletic
25events except those of elementary and secondary educational
26institutions. A tax of six percent at a rate specified in
27subsection 12 is imposed on the sales price of an entry fee or
28like charge imposed solely for the privilege of participating
29in an activity at a place of amusement, fair, or athletic event
30unless the sales price of tickets or admissions charges for
31observing the same activity are taxable under this subchapter.
32A tax of six percent at a rate specified in subsection 12
33 is imposed upon that part of private club membership fees or
34charges paid for the privilege of participating in any athletic
35sports provided club members.
-1-1 Sec. 3. Section 423.2, subsection 4, paragraph a, Code 2021,
2is amended to read as follows:
3a. A tax of six percent at a rate specified in subsection
412 is imposed upon the sales price derived from the operation
5of all forms of amusement devices and games of skill, games of
6chance, raffles, and bingo games as defined in chapter 99B, and
7card game tournaments conducted under section 99B.27, that are
8operated or conducted within the state, the tax to be collected
9from the operator in the same manner as for the collection of
10taxes upon the sales price of tickets or admission as provided
11in this section. Nothing in this subsection shall legalize any
12games of skill or chance or slot-operated devices which are now
13prohibited by law.
14 Sec. 4. Section 423.2, subsection 5, Code 2021, is amended
15to read as follows:
165. There is imposed a tax of six percent at a rate specified
17in subsection 12 upon the sales price from the furnishing of
18services as defined in section 423.1.
19 Sec. 5. Section 423.2, subsection 7, paragraph a,
20unnumbered paragraph 1, Code 2021, is amended to read as
21follows:
22A tax of six percent at a rate specified in subsection 12
23 is imposed upon the sales price from the sales, furnishing, or
24service of solid waste collection and disposal service.
25 Sec. 6. Section 423.2, subsection 8, paragraph a, Code 2021,
26is amended to read as follows:
27a. A tax of six percent at a rate specified in subsection
2812 is imposed on the sales price from sales of bundled
29transactions. For the purposes of this subsection, a “bundled
30transaction” is the retail sale of two or more distinct and
31identifiable products, except real property and services to
32real property, which are sold for one nonitemized price. A
33“bundled transaction” does not include the sale of any products
34in which the sales price varies, or is negotiable, based on
35the selection by the purchaser of the products included in the
-2-1transaction.
2 Sec. 7. Section 423.2, subsection 9, Code 2021, is amended
3to read as follows:
49. A tax of six percent at a rate specified in subsection
512 is imposed upon the sales price from any mobile
6telecommunications service, including all paging services,
7that this state is allowed to tax pursuant to the provisions
8of the federal Mobile Telecommunications Sourcing Act, Pub.
9L. No.106-252, 4 U.S.C. §116 et seq. For purposes of this
10subsection, taxes on mobile telecommunications service, as
11defined under the federal Mobile Telecommunications Sourcing
12Act that are deemed to be provided by the customer’s home
13service provider, shall be paid to the taxing jurisdiction
14whose territorial limits encompass the customer’s place of
15primary use, regardless of where the mobile telecommunications
16service originates, terminates, or passes through and
17shall in all other respects be taxed in conformity with
18the federal Mobile Telecommunications Sourcing Act. All
19other provisions of the federal Mobile Telecommunications
20Sourcing Act are adopted by the state of Iowa and incorporated
21into this subsection by reference. With respect to mobile
22telecommunications service under the federal Mobile
23Telecommunications Sourcing Act, the director shall, if
24requested, enter into agreements consistent with the provisions
25of the federal Act.
26 Sec. 8. Section 423.2, subsection 10, paragraph a, Code
272021, is amended to read as follows:
28a. A tax of six percent at a rate specified in subsection
2912 is imposed on the sales price of specified digital products
30sold at retail in the state. The tax applies whether the
31purchaser obtains permanent use or less than permanent use of
32the specified digital product, whether the sale is conditioned
33or not conditioned upon continued payment from the purchaser,
34and whether the sale is on a subscription basis or is not on a
35subscription basis.
-3-1 Sec. 9. Section 423.2, subsection 12, Code 2021, is amended
2by striking the subsection and inserting in lieu thereof the
3following:
412. a. For the period beginning January 1, 2022, and ending
5December 31, 2050, the sales tax rate is seven percent.
6b. Beginning January 1, 2051, the sales tax rate is six
7percent.
8 Sec. 10. Section 423.2A, subsection 2, Code 2021, is amended
9by adding the following new paragraph:
10 NEW PARAGRAPH. 0b. Transfer one-seventh of the remaining
11revenues to the secure an advanced vision for education fund
12created in section 423F.2. This paragraph “0b” is repealed
13January 1, 2051.
14 Sec. 11. Section 423.2A, subsection 2, paragraph b, Code
152021, is amended to read as follows:
16b. Transfer from the remaining revenues the amounts required
17under Article VII, section 10, of the Constitution of the State
18of Iowa to the natural resources and outdoor recreation trust
19fund created in section 461.31, if applicable.
20 Sec. 12. Section 423.2A, subsection 2, paragraph c, Code
212021, is amended by striking the paragraph and inserting in
22lieu thereof the following:
23c. Each fiscal year transfer from the remaining revenues to
24the baby bond fund established in section 12.101 an equivalent
25amount of revenue necessary to fund active savings accounts as
26required pursuant to section 12.101, subsection 2, paragraph
27“b”.
28 Sec. 13. Section 423.2A, subsection 2, paragraph d, Code
292021, is amended to read as follows:
30d. Transfer to the baseball and softball complex sales tax
31rebate fund that portion of the sales tax receipts described
32in subsection 1, paragraph “b”, remaining after the transfers
33required under paragraphs “a”, “0b”, “b”, and “c” of this
34subsection 2. This paragraph is repealed thirty days following
35the date on which five million dollars in total rebates have
-4-1been provided under section 423.4, subsection 10.
2 Sec. 14. Section 423.5, subsection 1, unnumbered paragraph
31, Code 2021, is amended to read as follows:
4Except as provided in paragraph “b”, an excise tax at the
5rate of six percent specified in subsection 4 of the purchase
6price or installed purchase price is imposed on the following:
7 Sec. 15. Section 423.5, subsection 4, Code 2021, is amended
8by striking the subsection and inserting in lieu thereof the
9following:
104. a. For the period beginning January 1, 2022, and ending
11December 31, 2050, the use tax rate is seven percent.
12b. Beginning January 1, 2051, the use tax rate is six
13percent.
14 Sec. 16. Section 423.43, subsection 1, paragraph b, Code
152021, is amended to read as follows:
16b. (1) Subsequent to the deposit into the general fund of
17the state and after the transfer of such revenues collected
18under chapter 423B, the department shall transfer one-sixth
19 one-seventh of such remaining revenues to the secure an
20advanced vision for education fund created in section 423F.2.
21This paragraph subparagraph is repealed January 1, 2051.
22(2) Subsequent to the deposit into the general fund of the
23state and the transfers in subparagraph (1), each fiscal year
24the department shall transfer from the remaining revenues to
25the baby bond fund established in section 12.101 an equivalent
26amount of revenue necessary to fund active savings accounts as
27required pursuant to section 12.101, subsection 2, paragraph
28“b”.
29DIVISION II
30BABY BOND PROGRAM AND FUND
31 Sec. 17. NEW SECTION. 12.101 Baby bond program and fund.
321. As used in this section unless the context otherwise
33requires:
34a. “Active savings account” means an account associated with
35a child under eighteen years of age.
-5- 1b. “Child” means a person under eighteen years of age.
2c. “Enrollee” means a person eligible to receive funds who
3is eighteen years of age or older.
4d. “First home” means the first-time purchase of a residence
5by an enrollee who is a resident of this state and who does
6not own, either individually or jointly, a single-family or
7multifamily residence, and who has not owned or purchased,
8either individually or jointly, a single-family or multifamily
9residence.
10e. “Fund” means the baby bond fund.
11f. “Program” means the baby bond program.
122. a. The program is created by establishing an
13interest-bearing savings account for children in this state.
14The treasurer of state shall act as custodian of the savings
15accounts and disburse moneys contained in the savings accounts.
16The purpose of the program is to offer a fairer chance at
17economic stability and mobility by funding a savings account
18for children in this state.
19b. (1) Commencing with the fiscal year beginning July 1,
202022, and every fiscal year thereafter, there is transferred
21pursuant to section 423.2A, subsection 2, paragraph “c”, and
22section 423.43, subsection 1, paragraph “b”, subparagraph (2),
23an amount necessary to fund each active savings account in
24existence on October 1 with five hundred dollars until the
25child attains eighteen years of age.
26(2) Each active savings account shall be funded with five
27hundred dollars on the enrollment date and five hundred dollars
28on each subsequent enrollment anniversary date until the child
29attains eighteen years of age.
30c. The moneys in the fund shall be accessible to the child
31upon turning eighteen years of age to fund educational expenses
32or for the purchase of a first home located in this state.
33The moneys in the account shall remain accessible for these
34purposes until the enrollee attains thirty-five years of age,
35and at such time any remaining moneys in the savings account
-6-1shall revert to the general fund of the state.
2d. Direct contributions shall not be made to the savings
3account established on behalf of the child, and the child or
4the parent or guardian of the child shall not be able to affect
5the account, except as provided in subsection 4.
6e. An enrollee who is not a resident of this state on or
7after the eighteenth birthday of the enrollee is not eligible
8to receive funds from the savings account on or after the
9enrollee’s eighteenth birthday.
10f. Beginning with births in this state on or after July 1,
112022, and on a form or in a manner prescribed by the treasurer
12of state, a parent or guardian of a child born in this state
13may notify the treasurer of state of the birth of the child to
14begin the enrollment process in the program. Upon receiving
15proper notification of the birth of the child in this state,
16the child shall be considered enrolled in the program.
17g. For a child born in this state prior to July 1, 2022,
18and who remains a resident of this state, or for a child who
19has been a resident of this state for at least two years prior
20to, on, or after July 1, 2022, a parent or guardian of such a
21child may notify the treasurer of state to begin the enrollment
22process in the program. The notification shall be on a form or
23in the manner prescribed by the treasurer of state, and upon
24receiving proper notification the child shall be considered
25enrolled in the program.
26h. The treasurer of state shall make account balances within
27the program available through a secured internet site to each
28parent or guardian of a child enrolled in the program, or to an
29enrollee.
303. a. The fund is established in the state treasury under
31the control of the treasurer of state consisting of funds
32transferred to the fund pursuant to subsection 2.
33b. Notwithstanding section 12C.7, subsection 2, interest or
34earnings on moneys deposited in the fund shall be credited to
35the fund. Notwithstanding section 8.33, moneys credited to the
-7-1fund shall not revert at the close of a fiscal year.
2c. The treasurer of state shall invest the moneys in the
3fund in accordance with the provisions of this section and
4in accordance with the public funds investment standards in
5section 12B.10.
6d. The treasurer of state shall use the moneys in the fund
7to provide moneys to an enrollee for the purpose of paying
8educational expenses or for the purchase of a first home
9located in this state and to pay for the costs associated with
10the plan.
114. To receive money under the program, an enrollee must
12apply for the moneys with the treasurer of state on a form or in
13a manner prescribed by the treasurer. Approved payments by the
14treasurer of state may be in the form of a one-time payment or
15in the form of multiple payments over a period of time.
165. a. No property rights in the fund shall exist in favor
17of the child or enrollee.
18b. A payment pursuant to this section is not guaranteed and
19is subject to future modifications and investment gain or loss.
206. The treasurer of state shall adopt rules pursuant to
21chapter 17A to administer this section, including establishing
22eligibility for the program based upon family income.
23DIVISION III
24EFFECTIVE DATE
25 Sec. 18. EFFECTIVE DATE. This Act takes effect January 1,
262022.
27EXPLANATION
28The inclusion of this explanation does not constitute agreement with
29the explanation’s substance by the members of the general assembly.
30This bill relates to the state sales and use tax by funding
31the natural resources and outdoor recreation trust fund through
32the sales tax, and using sales and use taxes to create a baby
33bond program and fund, and includes effective date provisions.
34DIVISION I — SALES AND USE TAX. An amendment to the Iowa
35Constitution was ratified on November 2, 2010, which created
-8-1a natural resources and outdoor recreation trust fund (fund)
2and dedicated a portion of state revenues to the fund for
3the purposes of protecting and enhancing water quality and
4natural areas in the state including parks, trails, and fish
5and wildlife habitat, and conserving agricultural soils in
6the state (article VII, section 10). The fund is codified in
7Code section 461.31. Pursuant to the amendment, the amount
8credited to the fund will be equal to the amount generated
9by an increase in the state sales tax rate occurring after
10the effective date of the constitutional amendment, but shall
11not exceed the amount that a state sales tax rate of 0.375
12percent would generate. The state sales tax rate has not
13been increased since the effective date of the constitutional
14amendment, so no amounts have been credited to the fund. The
15bill increases the sales tax rate and the use tax rate from 6
16percent to 7 percent January 1, 2022. As a result, moneys will
17be credited to the fund. The bill also amends the transfer of
18sales and use tax revenues to the secure an advanced vision for
19education fund (SAVE) in Code sections 423.2A(2) and 423.43 to
20ensure that SAVE receives the same amount of sales and use tax
21revenues as it did prior to the sales and use tax increases
22provided in the bill.
23DIVISION II — BABY BONDS PROGRAM AND FUND. The bill
24creates a baby bond program (program) by establishing an
25interest-bearing savings account for children in this state.
26The treasurer of state shall act as custodian of the savings
27accounts and disburse moneys contained in the savings accounts.
28The purpose of the program is to offer children in this state a
29fairer chance at economic stability and mobility.
30Commencing with the fiscal year beginning July 1, 2022, and
31every fiscal year thereafter, the bill transfers from sales and
32use tax revenues an amount equal to fund each active savings
33account in existence in the program on October 1 with $500
34until the child attains 18 years of age. The bill defines
35“active savings account” to mean an account associated with a
-9-1child under 18 years of age.
2The bill requires each active savings account to be funded
3with $500 on the enrollment date and $500 on each subsequent
4enrollment anniversary date until the child attains 18 years
5of age.
6The bill specifies the moneys in the fund shall be accessible
7to the child upon turning 18 years of age to fund educational
8expenses or for the purchase of a first home located in this
9state. The bill further specifies that moneys in the account
10remain accessible for these purposes until 35 years of age,
11and at such time any remaining moneys in the account revert
12to the general fund of the state. The bill defines “first
13home” to mean the first-time purchase of a residence by a
14resident, and who does not own, either individually or jointly,
15a single-family or multifamily residence, and who has not owned
16or purchased, either individually or jointly, a single-family
17or multifamily residence.
18The bill prohibits direct contributions to the account by
19the child or the child’s family.
20The bill requires the savings account of the child to be
21funded on the enrollment date and subsequently funded on the
22enrollment anniversary date until the child attains 18 years
23of age.
24The bill prohibits a child who is not a resident of this
25state on or after their 18th birthday from receiving funds from
26the savings account.
27Beginning with births in this state on or after July 1, 2022,
28and on a form or in a manner prescribed by the treasurer of
29state, the parent or guardian of the child born in this state
30may notify the treasurer of state of the birth of the child to
31begin the enrollment process in the program. Upon receiving
32proper notification of the birth of the child in this state,
33the bill specifies the child shall be considered enrolled in
34the program.
35For a child born in this state prior to July 1, 2022, and who
-10-1remains a resident of this state, or for a child who has been a
2resident of this state for at least two years prior to, on, or
3after July 1, 2022, a parent or guardian of a child may notify
4the treasurer of state to begin the enrollment process in the
5program. The bill requires the notification to be on a form or
6in the manner prescribed by the treasurer of state, and upon
7receiving proper notification the child shall be considered
8enrolled in the program.
9The bill requires the treasurer of state to make account
10balances within the program available through a secured
11internet site to each parent or guardian of a child enrolled in
12the program, or to a child who has attained 18 years of age.
13The bill establishes a baby bond fund (fund) in the state
14treasury under the control of the treasurer of state consisting
15of sales and use tax revenues transferred to the fund for
16purposes of establishing the program.
17In order to receive moneys under the program established in
18the bill, a child who has attained 18 years of age must apply
19for the moneys with the treasurer of state on a form or in a
20manner prescribed by the treasurer. Approved payments by the
21treasurer of state may be in the form of a one-time payment or
22in the form of multiple payments over a period of time.
23The bill specifies no property rights exist in the fund in
24favor of the child after the child has attained 18 years of
25age.
26The bill requires the treasurer of state to adopt rules to
27administer the program, including establishing eligibility for
28the program based upon family income.
29DIVISION II — EFFECTIVE DATE. The bill takes effect January
301, 2022.
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