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Senate File 496 - IntroducedA Bill ForAn Act 1relating to state and local government revenue and
2finance by requiring the legislative services agency to
3conduct a biennial tax expenditure study and report to
4the general assembly and the legislative tax expenditure
5committee, making the availability of tax expenditures in
6future fiscal years subject to approval by the general
7assembly, and limiting appropriations for certain property
8tax credits in future fiscal years.
9BE IT ENACTED BY THE GENERAL ASSEMBLY OF THE STATE OF IOWA:
1DIVISION I
2tax expenditure study
3 Section 1. NEW SECTION. 2A.9 Tax expenditure study and
4report.
51. For purposes of this section, “tax expenditure” means the
6same as defined in section 2.48, subsection 1, paragraph “a”.
72. Beginning in 2018, and every even-numbered year
8thereafter, the legislative services agency shall conduct a
9study and prepare a written report on the fiscal impact that
10tax expenditures have on state and local government capacity
11to raise revenue. The study shall examine tax expenditures
12related to the following:
13a. The individual income tax imposed in chapter 422,
14division II.
15b. The corporate income tax imposed in chapter 422, division
16III.
17c. Tax credits available against the franchise tax imposed
18in chapter 422, division V, the insurance companies tax imposed
19in chapter 432, and the moneys and credits tax imposed in
20section 533.329.
21d. The sales and use taxes imposed in chapter 423.
22e. Property taxes levied by or on behalf of political
23subdivisions.
243. a. The 2018 study shall examine the relevant tax
25expenditures for the most recent year for which complete tax
26expenditure data is available.
27b. Each subsequent study shall examine the relevant tax
28expenditure data for the year or years for which complete
29tax expenditure data is available since the last complete
30year that was the subject of a previous report. However, if
31there is not a new year for which complete tax expenditure
32data is available, the study shall examine the available tax
33expenditure data for the year following the last year for which
34complete tax expenditure data was included in the previous
35report.
-1- 14. The legislative services agency shall submit the written
2report to the general assembly and the chairpersons of the
3legislative tax expenditure committee by January 31, 2019, and
4by January 31 of each odd-numbered year thereafter, containing
5the results of the study conducted during the previous year.
65. The department of revenue and any other state or local
7agency shall cooperate with the legislative services agency in
8providing the information necessary to complete each study.
9DIVISION II
10TAX EXPENDITURE LIMITATION
11 Sec. 2. NEW SECTION. 421C.1 Tax expenditure defined.
12Any reference to “tax expenditure” in this chapter includes
13all of the following:
141. Withholding tax credits.
15a. The accelerated career education program job credit
16allowed under section 260G.4A.
17b. The new jobs credit from withholding allowed under
18section 15A.7, or section 15E.197, Code 2014, or section
19260E.5.
20c. The targeted jobs withholding tax credit allowed under
21chapter 403.19A.
222. Tax credits.
23a. The agricultural assets transfer tax credit allowed under
24sections 16.80 and 422.11M and section 422.33, subsection 21.
25b. The custom farming contract tax credit allowed under
26sections 16.81 and 422.11M and section 422.33, subsection 21.
27c. The farm to food donation tax credit allowed under
28chapter 190B, section 422.11R, and section 422.33, subsection
2930.
30d. The charitable conservation contribution tax credit
31allowed under section 422.11W and section 422.33, subsection
3225.
33e. The school tuition organization tax credit allowed under
34section 422.11S and section 422.33, subsection 28.
35f. The personal exemption credits allowed under section
-2-1422.12, subsection 2, paragraph “a”.
2g. The tuition and textbook tax credit allowed under section
3422.12, subsection 2, paragraph “b”.
4h. The volunteer fire fighter and emergency medical services
5personnel tax credit allowed under section 422.12, subsection
62, paragraph “c”.
7i. The reserve peace officer tax credit allowed under
8section 422.12, subsection 2, paragraph “d”.
9j. The adoption tax credit allowed under section 422.12A.
10k. The child and dependent care tax credit allowed under
11section 422.12C.
12l. The early childhood development tax credit allowed under
13section 422.12C.
14m. The earned income tax credit allowed under section
15422.12B.
16n. The geothermal heat pump tax credit allowed under section
17422.11I.
18o. The geothermal tax credit allowed under section 422.10A.
19p. The solar energy system tax credit allowed under section
20422.11L, section 422.33, subsection 29, section 422.60,
21subsection 12, and section 533.329, subsection 2, paragraph
22“l”.
23q. The wind energy production tax credit and the renewable
24energy production tax credit allowed under chapters 476B and
25476C, section 422.llJ, section 422.33, subsection 16, section
26422.60, subsection 7, section 432.12E, and section 437A.17B.
27r. The biodiesel blended fuel tax credit allowed under
28section 422.11P and section 422.33, subsection 11C.
29s. The E-15 plus gasoline promotion tax credit allowed under
30section 422.11Y and section 422.33, subsection 11D.
31t. The E-85 gasoline promotion tax credit allowed under
32section 422.11O and section 422.33, subsection 11B.
33u. The ethanol promotion tax credit allowed under section
34422.11N and section 422.33, subsection 11A.
35v. The fuel tax credit allowed under sections 422.110
-3-1through 422.112.
2w. The renewable chemical production tax credit allowed
3under sections 15.319 and 422.10B and section 422.33,
4subsection 22.
5x. The endow Iowa tax credit allowed under sections 15E.305
6and 422.11H, section 422.33, subsection 14, section 422.60,
7subsection 6, section 432.12D, and section 533.329, subsection
82, paragraph “h”.
9y. The investment tax credit allowed under section 15.333,
10section 422.11F, subsection 2, section 422.33, subsection 12,
11paragraph “b”, section 422.60, subsection 5, paragraph “b”, and
12section 533.329, subsection 2, paragraph “e”.
13z. The insurance premiums tax credit allowed under section
1415.333A and section 432.12C, subsection 2.
15aa. The new jobs tax credit allowed under section 422.11A
16and section 422.33, subsection 6.
17ab. The innovation fund investment tax credit allowed under
18sections 15E.52 and 422.11Z, section 422.33, subsection 13,
19section 422.60, subsection 11, section 432.12M, and section
20533.329 subsection 2, paragraph “j”.
21ac. The workforce housing investment tax credit allowed
22under section 15.355, subsection 3, section 422.11C, section
23422.33, subsection 15, section 422.60, subsection 13, section
24432.12G, and section 533.239, subsection 2, paragraph “k”.
25ad. The research activities credit and supplemental research
26activities credit allowed under sections 15.335 and 422.10 and
27section 422.33, subsection 5.
28ae. The assistive device tax credit allowed under section
29422.33, subsection 9.
30af. The corporate tax credit for certain sales taxes paid by
31third-party developers allowed under section 15.331C, section
32422.33, subsection 19, section 422.60, subsection 8, section
33432.12H, and section 533.329, subsection 2, paragraph “d”.
34ag. The historic preservation and cultural and entertainment
35district tax credit allowed under chapter 404A, section
-4-1422.11D, section 422.33, subsection 10, section 422.60,
2subsection 4, and section 432.12A.
3ah. The redevelopment tax credit allowed under chapter
415, subchapter II, part 9, section 422.11V, section 422.33,
5subsection 26, section 422.60, subsection 10, section 432.12L,
6and section 533.329, subsection 2, paragraph “i”.
7ai. The investment tax credit allowed under section 15E.43,
8section 422.11F, subsection 1, section 422.33, subsection 12,
9section 422.60, subsection 5, paragraph “a”, section 432.12C,
10subsection 1, and section 533.329, subsection 2, paragraph “f”.
11aj. The Iowa taxpayers trust fund tax credit allowed under
12section 422.11E.
13ak. The minimum tax credit allowed under section 422.11B and
14section 422.33, subsection 7.
153. Sales and use tax refunds.
16a. The high quality jobs program sales and use tax refund
17allowed under section 15.331A.
18b. The workforce housing tax incentive program sales and use
19tax refund allowed under section 15.355, subsection 2.
20c. The wind energy production tax credit and the renewable
21energy production tax credit sales and use tax refunds allowed
22under chapters 476B and 476C and section 423.4, subsection 4.
23d. The sales and use tax refunds allowed under section
24423.4.
254. Exemptions from the sales and use tax, hotel and motel
26tax, equipment tax, real estate transfer tax, automobile rental
27excise tax, fee for new registration, and motor fuel and special
28fuel taxes.
29a. The exemptions from the sales tax provided in section
30423.3, except subsections 1 and 43.
31b. The exemptions from the use tax provided in section
32423.6, except subsections 1, 2, and 4.
33c. The exemptions from the state hotel and motel tax
34provided in section 423A.5, subsection 1.
35d. The exemptions from the automobile rental excise tax
-5-1provided in section 423C.3, subsection 1.
2e. The exemptions from the equipment tax provided in section
3423D.3.
4f. The exemptions from the real estate transfer tax provided
5in section 428A.2.
6g. The exemptions from the fee for new registration provided
7in section 321.105A, subsection 2, paragraphs “a” through “c”.
8h. The exemptions from the motor fuel and special fuel
9taxes provided in section 452A.17, subsection 1, paragraph “a”,
10except subparagraph (1).
115. Inheritance tax exemptions and deductions.
12a. The exemptions from the inheritance tax provided in
13sections 450.4 and 450.9.
14b. The deductions of liabilities from the gross value of an
15estate provided in section 450.12.
166. Adjustments to calculation of income taxes, franchise tax,
17and moneys and credits tax.
18a. The adjustments allowed in calculating net income for
19individual income tax purposes under section 422.7, subsections
205, 7, 8, 9, 10, 12, 12A, 13, 16, 20, 21, 22, 23, 24, 25, 27,
2128, 29, 30, 31, 31A, and 31B, subsection 32, paragraph “a”,
22subsection 33, subsection 34, paragraph “a”, and subsections
2334A, 35, 37, 38, 40, 42, 42A, 44, 45, 46, 46A, 47, 49, 50, 54,
2455, 56, 57, and 58.
25b. The subtractions allowed in section 422.7, subsection
262, and section 422.35, subsection 2, in calculating net income
27for purposes of the individual income tax and the corporate
28income tax and franchise tax of interest and dividends from
29certain Iowa bonds exempt from taxation as otherwise provided
30by law, including those listed in section 422.7, subsection 2,
31paragraphs “a” through “v”.
32c. The deductions from net income for individual income tax
33purposes allowed under section 422.9, subsections 1 and 2.
34d. The adjustments allowed in calculating net income for
35corporate income tax and franchise tax purposes under section
-6-1422.35, subsections 4, 5, 6, 6A, 7, 11, 12, 17, 22, and 25.
2e. The adjustments made in calculating net income for
3franchise tax purposes under section 422.61, subsection 3,
4paragraph “g”.
5f. The forty thousand dollar exemption from the moneys and
6credits tax allowed to a state credit union in section 533.329,
7subsection 2, paragraph “a”.
8 Sec. 3. NEW SECTION. 421C.2 Tax expenditures limited —
9general assembly annual review and approval.
101. Findings and purpose. The general assembly finds that
11the number and amount of credits, refunds, rebates, deductions,
12and exemptions provided against the taxes imposed by this state
13are substantial and warrant annual review and approval by the
14general assembly. The purpose of this chapter is to provide
15for a systematic review and approval by the general assembly
16of each tax expenditure on an annual basis in order to promote
17more sustainable and responsible tax revenue collection,
18budgeting, and appropriation processes in this state.
192. Tax expenditure review and approval — generally.
20a. Beginning with the 2018 regular session of the general
21assembly and during each regular session thereafter, the
22general assembly shall review each tax expenditure listed
23in section 421C.1, and shall, if desired, expressly approve
24through an Act of the general assembly the applicability of the
25tax expenditure for the forthcoming fiscal year as provided in
26and subject to the limitations of subsections 3 through 8.
27b. Notwithstanding any other provision of law to the
28contrary, the provisions of subsections 3 through 8 apply for
29each fiscal year beginning on or after July 1, 2018, and a tax
30expenditure not approved by the general assembly as provided in
31those subsections shall not be available under Iowa law for a
32fiscal year beginning on or after July 1, 2018.
333. Withholding tax credits. The withholding tax credits
34listed in section 421C.1, subsection 1, shall not be allowed
35against any amounts withheld by an employer from wages paid
-7-1during a fiscal year beginning on or after July 1, 2018, unless
2the applicability of the withholding tax credit to that fiscal
3year was expressly approved through an Act of the general
4assembly during the last regular session beginning prior to
5July 1 of the applicable fiscal year.
64. Tax credits. The tax credits listed in section 421C.1,
7subsection 2, shall not be allowed for any tax year beginning
8during a fiscal year beginning on or after July 1, 2018, unless
9the applicability of the tax credit to tax years beginning
10during that fiscal year was expressly approved through an
11Act of the general assembly during the last regular session
12beginning prior to July 1 of the applicable fiscal year.
135. Sales and use tax refunds. The sales and use tax
14refunds listed in section 421C.1, subsection 3, shall not be
15allowed for any sales and use tax liability incurred during
16a fiscal year beginning on or after July 1, 2018, unless the
17applicability of the sales and use tax refund to that fiscal
18year was expressly approved through an Act of the general
19assembly during the last regular session beginning prior to
20July 1 of the applicable fiscal year.
216. Exemptions from the sales and use tax, hotel and motel
22tax, equipment tax, real estate transfer tax, automobile rental
23excise tax, fee for new registration, and motor fuel and special
24fuel taxes. The exemptions listed in section 421C.1, subsection
254, shall not be allowed for any sales, purchases, transfers, or
26uses during a fiscal year beginning on or after July 1, 2018,
27unless the applicability of the exemption to that fiscal year
28was expressly approved through an Act of the general assembly
29during the last regular session beginning prior to July 1 of
30the applicable fiscal year.
317. Inheritance tax exemptions and deductions. The
32inheritance tax exemptions and deductions listed in section
33421C.1, subsection 5, shall not be allowed for any estate of a
34decedent dying during a fiscal year beginning on or after July
351, 2018, unless the applicability of the exemption or deduction
-8-1to that fiscal year was expressly approved through an Act of
2the general assembly during the last regular session beginning
3prior to July 1 of the applicable fiscal year.
48. Adjustments to calculation of income taxes, franchise tax,
5and moneys and credits tax. The adjustments to the calculation
6of the income taxes, franchise tax, and moneys and credits tax
7listed in section 421C.1, subsection 6, shall not be allowed
8for any tax year beginning during a fiscal year beginning on or
9after July 1, 2018, unless the applicability of the adjustment
10to tax years beginning during that fiscal year was expressly
11approved through an Act of the general assembly during the last
12regular session beginning prior to July 1 of the applicable
13fiscal year.
14 Sec. 4. CORRESPONDING AMENDMENTS LEGISLATION. Additional
15legislation may be required to fully implement this division
16of this Act. The director of the department of revenue shall,
17in compliance with section 2.16, prepare draft legislation for
18submission to the legislative services agency, if necessary, to
19implement the annual review and approval of tax expenditures
20under this division of this Act and under other provisions of
21law.
22DIVISION III
23PROPERTY TAX CREDITS AND PAYMENTS LIMITATION
24 Sec. 5. Section 25B.7, subsection 2, Code 2017, is amended
25to read as follows:
262. The requirement for fully funding and the consequences
27of not fully funding credits and exemptions under subsection 1
28also apply to all of the following:
29a. Homestead tax credit pursuant to sections 425.1 through
30425.15.
31b. Low-income property tax credit and elderly and disabled
32property tax credit pursuant to sections 425.16 through 425.40.
33c. Family farm property tax credit pursuant to chapter 425A.
34d. Agricultural land property tax credit pursuant to chapter
35426.
-9- 1c. e. Military service property tax credit and exemption
2pursuant to chapter 426A, to the extent of six dollars and
3ninety-two cents per thousand dollars of assessed value of the
4exempt property.
5f. Business property tax credit pursuant to chapter 426C.
6g. Manufactured or mobile home tax credit pursuant to
7section 435.22.
8 Sec. 6. Section 425.1, subsections 1, 2, and 3, Code 2017,
9are amended to read as follows:
101. a. A homestead credit fund is created. There For fiscal
11years beginning before July 1, 2018, there is appropriated
12annually from the general fund of the state to the department
13of revenue to be credited to the homestead credit fund, an
14amount sufficient to implement this chapter.
15b. The Subject to the availability of funding, the director
16of the department of administrative services shall issue
17warrants on the homestead credit fund payable to the county
18treasurers of the several counties of the state under this
19chapter.
202. The Subject to the availability of funding, the homestead
21credit fund shall be apportioned each year so as to give a
22credit against the tax on each eligible homestead in the
23state in an amount equal to the actual levy on the first four
24thousand eight hundred fifty dollars of actual value for each
25homestead.
263. The Subject to the availability of funding, the amount
27due each county shall be paid in two payments on November 15
28and March 15 of each fiscal year, drawn upon warrants payable
29to the respective county treasurers. The two payments shall
30be as nearly equal as possible.
31 Sec. 7. Section 425.23, subsection 3, paragraph a, Code
322017, is amended to read as follows:
33a. A person who is eligible to file a claim for credit
34for property taxes due and who has a household income of
35eight thousand five hundred dollars or less and who has an
-10-1unpaid special assessment levied against the homestead may
2file a claim for a special assessment credit with the county
3treasurer. The department shall provide to the respective
4treasurers the forms necessary for the administration of
5this subsection. The claim shall be filed not later than
6September 30 of each year. Upon the filing of the claim,
7interest for late payment shall not accrue against the amount
8of the unpaid special assessment due and payable. The claim
9filed by the claimant constitutes a claim for credit of an
10amount equal to the actual amount due upon the unpaid special
11assessment, plus interest, payable during the fiscal year for
12which the claim is filed against the homestead of the claimant.
13However, where the claimant is an individual described in
14section 425.17, subsection 2, paragraph “a”, subparagraph
15(2), and the tentative credit is determined according to the
16schedule in subsection 1, paragraph “b”, subparagraph (2),
17of this section, the claim filed constitutes a claim for
18credit of an amount equal to one-half of the actual amount
19due and payable during the fiscal year. The treasurer shall
20certify to the director of revenue not later than October
2115 of each year the total amount of dollars due for claims
22allowed. The amount of reimbursement due each county shall
23be certified by the director of revenue and, subject to the
24availability of funding, paid by the director of the department
25of administrative services by November 15 of each year, drawn
26upon warrants payable to the respective treasurer. There
27 For fiscal years beginning before July 1, 2018, there is
28appropriated annually from the general fund of the state to the
29department of revenue an amount sufficient to carry out the
30provisions of this subsection. The treasurer shall credit any
31moneys received from the department against the amount of the
32unpaid special assessment due and payable on the homestead of
33the claimant.
34 Sec. 8. Section 425.39, Code 2017, is amended to read as
35follows:
-11- 1425.39 Fund created — appropriation — priority.
2The elderly and disabled property tax credit and
3reimbursement fund is created. There For fiscal years
4beginning before July 1, 2018, there is appropriated annually
5from the general fund of the state to the department of revenue
6to be credited to the elderly and disabled property tax credit
7and reimbursement fund, from funds not otherwise appropriated,
8an amount sufficient to implement this division for claimants
9described in section 425.17, subsection 2, paragraph “a”,
10subparagraph (1).
11 Sec. 9. Section 425A.1, Code 2017, is amended to read as
12follows:
13425A.1 Family farm tax credit fund.
14The family farm tax credit fund is created in the office
15of the treasurer of state. There For fiscal years beginning
16before July 1, 2018, there shall be transferred annually to
17the fund the first ten million dollars of the amount annually
18appropriated to the agricultural land credit fund, provided in
19section 426.1. Any balance in the fund on June 30 shall revert
20to the general fund.
21 Sec. 10. Section 426.1, Code 2017, is amended to read as
22follows:
23426.1 Agricultural land credit fund.
24There is created as a permanent fund in the office of the
25treasurer of state a fund to be known as the agricultural
26land credit fund, and for the purpose of establishing and
27maintaining this fund for each fiscal year beginning before
28July 1, 2018, there is appropriated thereto from funds in the
29general fund not otherwise appropriated the sum of thirty-nine
30million one hundred thousand dollars of which the first ten
31million dollars shall be transferred to and deposited into the
32family farm tax credit fund created in section 425A.1. Any
33balance in said fund on June 30 shall revert to the general
34fund.
35 Sec. 11. Section 426A.1A, Code 2017, is amended to read as
-12-1follows:
2426A.1A Appropriation.
3There For fiscal years beginning before July 1, 2018, there
4 is appropriated from the general fund of the state the amounts
5necessary to fund the credits provided under this chapter.
6 Sec. 12. Section 426A.2, Code 2017, is amended to read as
7follows:
8426A.2 Military service tax credit.
9The Subject to the availability of funding, moneys shall
10be apportioned each year so as to replace all or a portion of
11the tax which would be due on property eligible for military
12service tax exemption in the state, if the property were
13subject to taxation, the amount of the credit to be not more
14than six dollars and ninety-two cents per thousand dollars of
15assessed value of property which would be subject to the tax,
16except for the military service tax exemption.
17 Sec. 13. Section 426C.2, subsection 1, Code 2017, is amended
18to read as follows:
191. A business property tax credit fund is created in the
20state treasury under the authority of the department. For the
21fiscal year beginning July 1, 2014, there is appropriated from
22the general fund of the state to the department to be credited
23to the fund, the sum of fifty million dollars to be used for
24business property tax credits authorized in this chapter. For
25the fiscal year beginning July 1, 2015, there is appropriated
26from the general fund of the state to the department to be
27credited to the fund, the sum of one hundred million dollars
28to be used for business property tax credits authorized in
29this chapter. For the each fiscal year in the fiscal period
30 beginning July 1, 2016, and each fiscal year thereafter, and
31ending June 30, 2018, there is appropriated from the general
32fund of the state to the department to be credited to the fund,
33the sum of one hundred twenty-five million dollars to be used
34for business property tax credits authorized in this chapter.
35 Sec. 14. Section 426C.5, subsections 2 and 3, Code 2017, are
-13-1amended to read as follows:
22. The Subject to the availability of funds, the director
3of revenue shall authorize the department of administrative
4services to draw warrants on the fund payable to the county
5treasurers of the several counties of the state in the amounts
6certified by the department.
73. The Subject to the availability of funds, the amount due
8each county shall be paid in two payments on November 15 and
9March 15 of each fiscal year, drawn upon warrants payable to
10the respective county treasurers. The two payments shall be as
11nearly equal as possible.
12 Sec. 15. Section 435.22, subsection 4, paragraphs e and f,
13Code 2017, are amended to read as follows:
14e. The Subject to the availability of funds, the amounts
15due each county shall be paid by the department of revenue on
16December 15 of each year, drawn upon warrants payable to the
17respective county treasurers. The county treasurer in each
18county shall apportion the payment in accordance with section
19435.25.
20f. There For fiscal years beginning before July 1, 2018,
21there is appropriated annually from the general fund of the
22state to the department of revenue an amount sufficient to
23carry out this subsection.
24 Sec. 16. Section 441.21A, subsection 1, paragraph a, Code
252017, is amended to read as follows:
26a. For each fiscal year beginning on or after July 1, 2014,
27but before July 1, 2018, there is appropriated from the general
28fund of the state to the department of revenue an amount
29necessary for the payment of all commercial and industrial
30property tax replacement claims under this section for the
31fiscal year. However, for a fiscal year beginning on or after
32July 1, 2017, the total amount of moneys appropriated from the
33general fund of the state to the department of revenue for the
34payment of commercial and industrial property tax replacement
35claims in that fiscal year shall not exceed the total amount of
-14-1money necessary to pay all commercial and industrial property
2tax replacement claims for the fiscal year beginning July 1,
32016.
4EXPLANATION
5The inclusion of this explanation does not constitute agreement with
6the explanation’s substance by the members of the general assembly.
7This bill relates to state and local government revenue and
8finance.
9DIVISION I — TAX EXPENDITURE STUDY. Division I requires
10the legislative services agency (LSA) to conduct a study on
11the fiscal impact that tax expenditures for certain taxes
12identified in the bill have on the revenue-raising capacity
13of the state. “Tax expenditure” is defined in the bill,
14but generally includes any exclusion from the operation or
15collection of a tax such as a credit, exemption, deduction,
16rebate, or refund. The first study is required to be
17completed in 2018, and subsequent studies are required every
18even-numbered year thereafter. The 2018 study is required to
19examine the relevant tax expenditures for the most recent year
20for which complete tax expenditure data is available. Each
21subsequent study shall examine the relevant tax expenditure
22data for the year or years for which complete data is available
23since the last complete year studied. However, if there is
24no new year with complete tax expenditure data available, LSA
25shall examine the available data for the year following the
26last complete year that was the subject of a previous report.
27Following each study, LSA is required to issue a report to the
28general assembly and the chairpersons of the legislative tax
29expenditure committee by January 31 of the following year,
30with the first report being required by January 31, 2019. The
31bill requires the department of revenue and any other state or
32local agency to cooperate with LSA in providing the information
33necessary to complete each study.
34DIVISION II — TAX EXPENDITURE LIMITATION. Division II
35requires the general assembly to review all tax expenditures
-15-1during each regular session beginning in the 2018 regular
2session. “Tax expenditure” is defined in the bill but
3generally includes credits, deductions, exemptions, refunds,
4and rebates available against the income taxes, franchise
5taxes, moneys and credits tax, inheritance tax, sale and use
6taxes, and various other special excise taxes imposed by the
7state.
8In order for any particular tax expenditure to be applicable
9for a fiscal year beginning on or after July 1, 2018, the bill
10requires the applicability of that tax expenditure during
11the fiscal year to be approved through an Act of the general
12assembly during the regular session preceding the beginning of
13the fiscal year. Any such tax expenditure not approved for
14a fiscal year as provided in the bill shall not be available
15under Iowa law.
16The bill provides rules for the applicability of different
17types of tax expenditures. A withholding tax credit approved
18for any particular fiscal year shall apply to amounts withheld
19by an employer from wages paid during that fiscal year. Tax
20credits approved for any particular fiscal year shall be
21available for tax years beginning during that fiscal year.
22Sales and use tax refunds approved for any particular fiscal
23year shall be available for sales and use tax liability
24incurred during that fiscal year. Sales and use tax and other
25specified excise tax exemptions approved for any particular
26fiscal year shall be available for sales, purchases, transfers,
27or uses during that fiscal year. Inheritance tax exemptions
28and deductions approved for any particular fiscal year shall
29be available for estates of decedents dying during that
30fiscal year. Exemptions and deductions provided against the
31calculation of the income taxes, the franchise tax, and the
32moneys and credits tax that are approved for any particular
33fiscal year shall be available for tax years beginning during
34that particular fiscal year.
35The bill provides that additional legislation may be
-16-1required to fully implement the review and approval of tax
2expenditures required under the bill and requires the director
3of the department of revenue to prepare draft legislation
4in compliance with Code section 2.16 for submission to the
5legislative services agency, if necessary, to implement the
6bill.
7DIVISION III — PROPERTY TAX CREDITS AND PAYMENTS
8LIMITATION. Division III strikes the standing limited or
9unlimited appropriations in Iowa Code for several property tax
10credits for fiscal years beginning on or after July 1, 2018.
11This includes the homestead and disabled veteran property
12tax credit in division I of Code chapter 425, the property
13tax credit or rent reimbursement for elderly and disabled in
14division II of Code chapter 425, the family farm tax credit in
15Code chapter 425A, the agricultural land tax credit in Code
16chapter 426, the military service tax credit in Code chapter
17426A, the business property tax credit in Code chapter 426C,
18and the manufactured and the mobile home tax credit in Code
19section 435.22. To the extent these credits were not already
20included under Code section 25B.7 (funding property tax credits
21and exemptions), the bill adds these tax credits to the list
22of tax credits which local governments are only required to
23provide to the extent such credit will be funded by a state
24appropriation.
25Finally, the bill strikes, for fiscal years beginning on or
26after July 1, 2018, the standing unlimited appropriation in
27Code section 441.21A for the repayment to local governments of
28commercial and industrial property tax replacement claims.
-17-mm/rn/sc
2finance by requiring the legislative services agency to
3conduct a biennial tax expenditure study and report to
4the general assembly and the legislative tax expenditure
5committee, making the availability of tax expenditures in
6future fiscal years subject to approval by the general
7assembly, and limiting appropriations for certain property
8tax credits in future fiscal years.
9BE IT ENACTED BY THE GENERAL ASSEMBLY OF THE STATE OF IOWA:
1DIVISION I
2tax expenditure study
3 Section 1. NEW SECTION. 2A.9 Tax expenditure study and
4report.
51. For purposes of this section, “tax expenditure” means the
6same as defined in section 2.48, subsection 1, paragraph “a”.
72. Beginning in 2018, and every even-numbered year
8thereafter, the legislative services agency shall conduct a
9study and prepare a written report on the fiscal impact that
10tax expenditures have on state and local government capacity
11to raise revenue. The study shall examine tax expenditures
12related to the following:
13a. The individual income tax imposed in chapter 422,
14division II.
15b. The corporate income tax imposed in chapter 422, division
16III.
17c. Tax credits available against the franchise tax imposed
18in chapter 422, division V, the insurance companies tax imposed
19in chapter 432, and the moneys and credits tax imposed in
20section 533.329.
21d. The sales and use taxes imposed in chapter 423.
22e. Property taxes levied by or on behalf of political
23subdivisions.
243. a. The 2018 study shall examine the relevant tax
25expenditures for the most recent year for which complete tax
26expenditure data is available.
27b. Each subsequent study shall examine the relevant tax
28expenditure data for the year or years for which complete
29tax expenditure data is available since the last complete
30year that was the subject of a previous report. However, if
31there is not a new year for which complete tax expenditure
32data is available, the study shall examine the available tax
33expenditure data for the year following the last year for which
34complete tax expenditure data was included in the previous
35report.
-1- 14. The legislative services agency shall submit the written
2report to the general assembly and the chairpersons of the
3legislative tax expenditure committee by January 31, 2019, and
4by January 31 of each odd-numbered year thereafter, containing
5the results of the study conducted during the previous year.
65. The department of revenue and any other state or local
7agency shall cooperate with the legislative services agency in
8providing the information necessary to complete each study.
9DIVISION II
10TAX EXPENDITURE LIMITATION
11 Sec. 2. NEW SECTION. 421C.1 Tax expenditure defined.
12Any reference to “tax expenditure” in this chapter includes
13all of the following:
141. Withholding tax credits.
15a. The accelerated career education program job credit
16allowed under section 260G.4A.
17b. The new jobs credit from withholding allowed under
18section 15A.7, or section 15E.197, Code 2014, or section
19260E.5.
20c. The targeted jobs withholding tax credit allowed under
21chapter 403.19A.
222. Tax credits.
23a. The agricultural assets transfer tax credit allowed under
24sections 16.80 and 422.11M and section 422.33, subsection 21.
25b. The custom farming contract tax credit allowed under
26sections 16.81 and 422.11M and section 422.33, subsection 21.
27c. The farm to food donation tax credit allowed under
28chapter 190B, section 422.11R, and section 422.33, subsection
2930.
30d. The charitable conservation contribution tax credit
31allowed under section 422.11W and section 422.33, subsection
3225.
33e. The school tuition organization tax credit allowed under
34section 422.11S and section 422.33, subsection 28.
35f. The personal exemption credits allowed under section
-2-1422.12, subsection 2, paragraph “a”.
2g. The tuition and textbook tax credit allowed under section
3422.12, subsection 2, paragraph “b”.
4h. The volunteer fire fighter and emergency medical services
5personnel tax credit allowed under section 422.12, subsection
62, paragraph “c”.
7i. The reserve peace officer tax credit allowed under
8section 422.12, subsection 2, paragraph “d”.
9j. The adoption tax credit allowed under section 422.12A.
10k. The child and dependent care tax credit allowed under
11section 422.12C.
12l. The early childhood development tax credit allowed under
13section 422.12C.
14m. The earned income tax credit allowed under section
15422.12B.
16n. The geothermal heat pump tax credit allowed under section
17422.11I.
18o. The geothermal tax credit allowed under section 422.10A.
19p. The solar energy system tax credit allowed under section
20422.11L, section 422.33, subsection 29, section 422.60,
21subsection 12, and section 533.329, subsection 2, paragraph
22“l”.
23q. The wind energy production tax credit and the renewable
24energy production tax credit allowed under chapters 476B and
25476C, section 422.llJ, section 422.33, subsection 16, section
26422.60, subsection 7, section 432.12E, and section 437A.17B.
27r. The biodiesel blended fuel tax credit allowed under
28section 422.11P and section 422.33, subsection 11C.
29s. The E-15 plus gasoline promotion tax credit allowed under
30section 422.11Y and section 422.33, subsection 11D.
31t. The E-85 gasoline promotion tax credit allowed under
32section 422.11O and section 422.33, subsection 11B.
33u. The ethanol promotion tax credit allowed under section
34422.11N and section 422.33, subsection 11A.
35v. The fuel tax credit allowed under sections 422.110
-3-1through 422.112.
2w. The renewable chemical production tax credit allowed
3under sections 15.319 and 422.10B and section 422.33,
4subsection 22.
5x. The endow Iowa tax credit allowed under sections 15E.305
6and 422.11H, section 422.33, subsection 14, section 422.60,
7subsection 6, section 432.12D, and section 533.329, subsection
82, paragraph “h”.
9y. The investment tax credit allowed under section 15.333,
10section 422.11F, subsection 2, section 422.33, subsection 12,
11paragraph “b”, section 422.60, subsection 5, paragraph “b”, and
12section 533.329, subsection 2, paragraph “e”.
13z. The insurance premiums tax credit allowed under section
1415.333A and section 432.12C, subsection 2.
15aa. The new jobs tax credit allowed under section 422.11A
16and section 422.33, subsection 6.
17ab. The innovation fund investment tax credit allowed under
18sections 15E.52 and 422.11Z, section 422.33, subsection 13,
19section 422.60, subsection 11, section 432.12M, and section
20533.329 subsection 2, paragraph “j”.
21ac. The workforce housing investment tax credit allowed
22under section 15.355, subsection 3, section 422.11C, section
23422.33, subsection 15, section 422.60, subsection 13, section
24432.12G, and section 533.239, subsection 2, paragraph “k”.
25ad. The research activities credit and supplemental research
26activities credit allowed under sections 15.335 and 422.10 and
27section 422.33, subsection 5.
28ae. The assistive device tax credit allowed under section
29422.33, subsection 9.
30af. The corporate tax credit for certain sales taxes paid by
31third-party developers allowed under section 15.331C, section
32422.33, subsection 19, section 422.60, subsection 8, section
33432.12H, and section 533.329, subsection 2, paragraph “d”.
34ag. The historic preservation and cultural and entertainment
35district tax credit allowed under chapter 404A, section
-4-1422.11D, section 422.33, subsection 10, section 422.60,
2subsection 4, and section 432.12A.
3ah. The redevelopment tax credit allowed under chapter
415, subchapter II, part 9, section 422.11V, section 422.33,
5subsection 26, section 422.60, subsection 10, section 432.12L,
6and section 533.329, subsection 2, paragraph “i”.
7ai. The investment tax credit allowed under section 15E.43,
8section 422.11F, subsection 1, section 422.33, subsection 12,
9section 422.60, subsection 5, paragraph “a”, section 432.12C,
10subsection 1, and section 533.329, subsection 2, paragraph “f”.
11aj. The Iowa taxpayers trust fund tax credit allowed under
12section 422.11E.
13ak. The minimum tax credit allowed under section 422.11B and
14section 422.33, subsection 7.
153. Sales and use tax refunds.
16a. The high quality jobs program sales and use tax refund
17allowed under section 15.331A.
18b. The workforce housing tax incentive program sales and use
19tax refund allowed under section 15.355, subsection 2.
20c. The wind energy production tax credit and the renewable
21energy production tax credit sales and use tax refunds allowed
22under chapters 476B and 476C and section 423.4, subsection 4.
23d. The sales and use tax refunds allowed under section
24423.4.
254. Exemptions from the sales and use tax, hotel and motel
26tax, equipment tax, real estate transfer tax, automobile rental
27excise tax, fee for new registration, and motor fuel and special
28fuel taxes.
29a. The exemptions from the sales tax provided in section
30423.3, except subsections 1 and 43.
31b. The exemptions from the use tax provided in section
32423.6, except subsections 1, 2, and 4.
33c. The exemptions from the state hotel and motel tax
34provided in section 423A.5, subsection 1.
35d. The exemptions from the automobile rental excise tax
-5-1provided in section 423C.3, subsection 1.
2e. The exemptions from the equipment tax provided in section
3423D.3.
4f. The exemptions from the real estate transfer tax provided
5in section 428A.2.
6g. The exemptions from the fee for new registration provided
7in section 321.105A, subsection 2, paragraphs “a” through “c”.
8h. The exemptions from the motor fuel and special fuel
9taxes provided in section 452A.17, subsection 1, paragraph “a”,
10except subparagraph (1).
115. Inheritance tax exemptions and deductions.
12a. The exemptions from the inheritance tax provided in
13sections 450.4 and 450.9.
14b. The deductions of liabilities from the gross value of an
15estate provided in section 450.12.
166. Adjustments to calculation of income taxes, franchise tax,
17and moneys and credits tax.
18a. The adjustments allowed in calculating net income for
19individual income tax purposes under section 422.7, subsections
205, 7, 8, 9, 10, 12, 12A, 13, 16, 20, 21, 22, 23, 24, 25, 27,
2128, 29, 30, 31, 31A, and 31B, subsection 32, paragraph “a”,
22subsection 33, subsection 34, paragraph “a”, and subsections
2334A, 35, 37, 38, 40, 42, 42A, 44, 45, 46, 46A, 47, 49, 50, 54,
2455, 56, 57, and 58.
25b. The subtractions allowed in section 422.7, subsection
262, and section 422.35, subsection 2, in calculating net income
27for purposes of the individual income tax and the corporate
28income tax and franchise tax of interest and dividends from
29certain Iowa bonds exempt from taxation as otherwise provided
30by law, including those listed in section 422.7, subsection 2,
31paragraphs “a” through “v”.
32c. The deductions from net income for individual income tax
33purposes allowed under section 422.9, subsections 1 and 2.
34d. The adjustments allowed in calculating net income for
35corporate income tax and franchise tax purposes under section
-6-1422.35, subsections 4, 5, 6, 6A, 7, 11, 12, 17, 22, and 25.
2e. The adjustments made in calculating net income for
3franchise tax purposes under section 422.61, subsection 3,
4paragraph “g”.
5f. The forty thousand dollar exemption from the moneys and
6credits tax allowed to a state credit union in section 533.329,
7subsection 2, paragraph “a”.
8 Sec. 3. NEW SECTION. 421C.2 Tax expenditures limited —
9general assembly annual review and approval.
101. Findings and purpose. The general assembly finds that
11the number and amount of credits, refunds, rebates, deductions,
12and exemptions provided against the taxes imposed by this state
13are substantial and warrant annual review and approval by the
14general assembly. The purpose of this chapter is to provide
15for a systematic review and approval by the general assembly
16of each tax expenditure on an annual basis in order to promote
17more sustainable and responsible tax revenue collection,
18budgeting, and appropriation processes in this state.
192. Tax expenditure review and approval — generally.
20a. Beginning with the 2018 regular session of the general
21assembly and during each regular session thereafter, the
22general assembly shall review each tax expenditure listed
23in section 421C.1, and shall, if desired, expressly approve
24through an Act of the general assembly the applicability of the
25tax expenditure for the forthcoming fiscal year as provided in
26and subject to the limitations of subsections 3 through 8.
27b. Notwithstanding any other provision of law to the
28contrary, the provisions of subsections 3 through 8 apply for
29each fiscal year beginning on or after July 1, 2018, and a tax
30expenditure not approved by the general assembly as provided in
31those subsections shall not be available under Iowa law for a
32fiscal year beginning on or after July 1, 2018.
333. Withholding tax credits. The withholding tax credits
34listed in section 421C.1, subsection 1, shall not be allowed
35against any amounts withheld by an employer from wages paid
-7-1during a fiscal year beginning on or after July 1, 2018, unless
2the applicability of the withholding tax credit to that fiscal
3year was expressly approved through an Act of the general
4assembly during the last regular session beginning prior to
5July 1 of the applicable fiscal year.
64. Tax credits. The tax credits listed in section 421C.1,
7subsection 2, shall not be allowed for any tax year beginning
8during a fiscal year beginning on or after July 1, 2018, unless
9the applicability of the tax credit to tax years beginning
10during that fiscal year was expressly approved through an
11Act of the general assembly during the last regular session
12beginning prior to July 1 of the applicable fiscal year.
135. Sales and use tax refunds. The sales and use tax
14refunds listed in section 421C.1, subsection 3, shall not be
15allowed for any sales and use tax liability incurred during
16a fiscal year beginning on or after July 1, 2018, unless the
17applicability of the sales and use tax refund to that fiscal
18year was expressly approved through an Act of the general
19assembly during the last regular session beginning prior to
20July 1 of the applicable fiscal year.
216. Exemptions from the sales and use tax, hotel and motel
22tax, equipment tax, real estate transfer tax, automobile rental
23excise tax, fee for new registration, and motor fuel and special
24fuel taxes. The exemptions listed in section 421C.1, subsection
254, shall not be allowed for any sales, purchases, transfers, or
26uses during a fiscal year beginning on or after July 1, 2018,
27unless the applicability of the exemption to that fiscal year
28was expressly approved through an Act of the general assembly
29during the last regular session beginning prior to July 1 of
30the applicable fiscal year.
317. Inheritance tax exemptions and deductions. The
32inheritance tax exemptions and deductions listed in section
33421C.1, subsection 5, shall not be allowed for any estate of a
34decedent dying during a fiscal year beginning on or after July
351, 2018, unless the applicability of the exemption or deduction
-8-1to that fiscal year was expressly approved through an Act of
2the general assembly during the last regular session beginning
3prior to July 1 of the applicable fiscal year.
48. Adjustments to calculation of income taxes, franchise tax,
5and moneys and credits tax. The adjustments to the calculation
6of the income taxes, franchise tax, and moneys and credits tax
7listed in section 421C.1, subsection 6, shall not be allowed
8for any tax year beginning during a fiscal year beginning on or
9after July 1, 2018, unless the applicability of the adjustment
10to tax years beginning during that fiscal year was expressly
11approved through an Act of the general assembly during the last
12regular session beginning prior to July 1 of the applicable
13fiscal year.
14 Sec. 4. CORRESPONDING AMENDMENTS LEGISLATION. Additional
15legislation may be required to fully implement this division
16of this Act. The director of the department of revenue shall,
17in compliance with section 2.16, prepare draft legislation for
18submission to the legislative services agency, if necessary, to
19implement the annual review and approval of tax expenditures
20under this division of this Act and under other provisions of
21law.
22DIVISION III
23PROPERTY TAX CREDITS AND PAYMENTS LIMITATION
24 Sec. 5. Section 25B.7, subsection 2, Code 2017, is amended
25to read as follows:
262. The requirement for fully funding and the consequences
27of not fully funding credits and exemptions under subsection 1
28also apply to all of the following:
29a. Homestead tax credit pursuant to sections 425.1 through
30425.15.
31b. Low-income property tax credit and elderly and disabled
32property tax credit pursuant to sections 425.16 through 425.40.
33c. Family farm property tax credit pursuant to chapter 425A.
34d. Agricultural land property tax credit pursuant to chapter
35426.
-9- 1c. e. Military service property tax credit and exemption
2pursuant to chapter 426A, to the extent of six dollars and
3ninety-two cents per thousand dollars of assessed value of the
4exempt property.
5f. Business property tax credit pursuant to chapter 426C.
6g. Manufactured or mobile home tax credit pursuant to
7section 435.22.
8 Sec. 6. Section 425.1, subsections 1, 2, and 3, Code 2017,
9are amended to read as follows:
101. a. A homestead credit fund is created. There For fiscal
11years beginning before July 1, 2018, there is appropriated
12annually from the general fund of the state to the department
13of revenue to be credited to the homestead credit fund, an
14amount sufficient to implement this chapter.
15b. The Subject to the availability of funding, the director
16of the department of administrative services shall issue
17warrants on the homestead credit fund payable to the county
18treasurers of the several counties of the state under this
19chapter.
202. The Subject to the availability of funding, the homestead
21credit fund shall be apportioned each year so as to give a
22credit against the tax on each eligible homestead in the
23state in an amount equal to the actual levy on the first four
24thousand eight hundred fifty dollars of actual value for each
25homestead.
263. The Subject to the availability of funding, the amount
27due each county shall be paid in two payments on November 15
28and March 15 of each fiscal year, drawn upon warrants payable
29to the respective county treasurers. The two payments shall
30be as nearly equal as possible.
31 Sec. 7. Section 425.23, subsection 3, paragraph a, Code
322017, is amended to read as follows:
33a. A person who is eligible to file a claim for credit
34for property taxes due and who has a household income of
35eight thousand five hundred dollars or less and who has an
-10-1unpaid special assessment levied against the homestead may
2file a claim for a special assessment credit with the county
3treasurer. The department shall provide to the respective
4treasurers the forms necessary for the administration of
5this subsection. The claim shall be filed not later than
6September 30 of each year. Upon the filing of the claim,
7interest for late payment shall not accrue against the amount
8of the unpaid special assessment due and payable. The claim
9filed by the claimant constitutes a claim for credit of an
10amount equal to the actual amount due upon the unpaid special
11assessment, plus interest, payable during the fiscal year for
12which the claim is filed against the homestead of the claimant.
13However, where the claimant is an individual described in
14section 425.17, subsection 2, paragraph “a”, subparagraph
15(2), and the tentative credit is determined according to the
16schedule in subsection 1, paragraph “b”, subparagraph (2),
17of this section, the claim filed constitutes a claim for
18credit of an amount equal to one-half of the actual amount
19due and payable during the fiscal year. The treasurer shall
20certify to the director of revenue not later than October
2115 of each year the total amount of dollars due for claims
22allowed. The amount of reimbursement due each county shall
23be certified by the director of revenue and, subject to the
24availability of funding, paid by the director of the department
25of administrative services by November 15 of each year, drawn
26upon warrants payable to the respective treasurer. There
27 For fiscal years beginning before July 1, 2018, there is
28appropriated annually from the general fund of the state to the
29department of revenue an amount sufficient to carry out the
30provisions of this subsection. The treasurer shall credit any
31moneys received from the department against the amount of the
32unpaid special assessment due and payable on the homestead of
33the claimant.
34 Sec. 8. Section 425.39, Code 2017, is amended to read as
35follows:
-11- 1425.39 Fund created — appropriation — priority.
2The elderly and disabled property tax credit and
3reimbursement fund is created. There For fiscal years
4beginning before July 1, 2018, there is appropriated annually
5from the general fund of the state to the department of revenue
6to be credited to the elderly and disabled property tax credit
7and reimbursement fund, from funds not otherwise appropriated,
8an amount sufficient to implement this division for claimants
9described in section 425.17, subsection 2, paragraph “a”,
10subparagraph (1).
11 Sec. 9. Section 425A.1, Code 2017, is amended to read as
12follows:
13425A.1 Family farm tax credit fund.
14The family farm tax credit fund is created in the office
15of the treasurer of state. There For fiscal years beginning
16before July 1, 2018, there shall be transferred annually to
17the fund the first ten million dollars of the amount annually
18appropriated to the agricultural land credit fund, provided in
19section 426.1. Any balance in the fund on June 30 shall revert
20to the general fund.
21 Sec. 10. Section 426.1, Code 2017, is amended to read as
22follows:
23426.1 Agricultural land credit fund.
24There is created as a permanent fund in the office of the
25treasurer of state a fund to be known as the agricultural
26land credit fund, and for the purpose of establishing and
27maintaining this fund for each fiscal year beginning before
28July 1, 2018, there is appropriated thereto from funds in the
29general fund not otherwise appropriated the sum of thirty-nine
30million one hundred thousand dollars of which the first ten
31million dollars shall be transferred to and deposited into the
32family farm tax credit fund created in section 425A.1. Any
33balance in said fund on June 30 shall revert to the general
34fund.
35 Sec. 11. Section 426A.1A, Code 2017, is amended to read as
-12-1follows:
2426A.1A Appropriation.
3There For fiscal years beginning before July 1, 2018, there
4 is appropriated from the general fund of the state the amounts
5necessary to fund the credits provided under this chapter.
6 Sec. 12. Section 426A.2, Code 2017, is amended to read as
7follows:
8426A.2 Military service tax credit.
9The Subject to the availability of funding, moneys shall
10be apportioned each year so as to replace all or a portion of
11the tax which would be due on property eligible for military
12service tax exemption in the state, if the property were
13subject to taxation, the amount of the credit to be not more
14than six dollars and ninety-two cents per thousand dollars of
15assessed value of property which would be subject to the tax,
16except for the military service tax exemption.
17 Sec. 13. Section 426C.2, subsection 1, Code 2017, is amended
18to read as follows:
191. A business property tax credit fund is created in the
20state treasury under the authority of the department. For the
21fiscal year beginning July 1, 2014, there is appropriated from
22the general fund of the state to the department to be credited
23to the fund, the sum of fifty million dollars to be used for
24business property tax credits authorized in this chapter. For
25the fiscal year beginning July 1, 2015, there is appropriated
26from the general fund of the state to the department to be
27credited to the fund, the sum of one hundred million dollars
28to be used for business property tax credits authorized in
29this chapter. For the each fiscal year in the fiscal period
30 beginning July 1, 2016, and each fiscal year thereafter, and
31ending June 30, 2018, there is appropriated from the general
32fund of the state to the department to be credited to the fund,
33the sum of one hundred twenty-five million dollars to be used
34for business property tax credits authorized in this chapter.
35 Sec. 14. Section 426C.5, subsections 2 and 3, Code 2017, are
-13-1amended to read as follows:
22. The Subject to the availability of funds, the director
3of revenue shall authorize the department of administrative
4services to draw warrants on the fund payable to the county
5treasurers of the several counties of the state in the amounts
6certified by the department.
73. The Subject to the availability of funds, the amount due
8each county shall be paid in two payments on November 15 and
9March 15 of each fiscal year, drawn upon warrants payable to
10the respective county treasurers. The two payments shall be as
11nearly equal as possible.
12 Sec. 15. Section 435.22, subsection 4, paragraphs e and f,
13Code 2017, are amended to read as follows:
14e. The Subject to the availability of funds, the amounts
15due each county shall be paid by the department of revenue on
16December 15 of each year, drawn upon warrants payable to the
17respective county treasurers. The county treasurer in each
18county shall apportion the payment in accordance with section
19435.25.
20f. There For fiscal years beginning before July 1, 2018,
21there is appropriated annually from the general fund of the
22state to the department of revenue an amount sufficient to
23carry out this subsection.
24 Sec. 16. Section 441.21A, subsection 1, paragraph a, Code
252017, is amended to read as follows:
26a. For each fiscal year beginning on or after July 1, 2014,
27but before July 1, 2018, there is appropriated from the general
28fund of the state to the department of revenue an amount
29necessary for the payment of all commercial and industrial
30property tax replacement claims under this section for the
31fiscal year. However, for a fiscal year beginning on or after
32July 1, 2017, the total amount of moneys appropriated from the
33general fund of the state to the department of revenue for the
34payment of commercial and industrial property tax replacement
35claims in that fiscal year shall not exceed the total amount of
-14-1money necessary to pay all commercial and industrial property
2tax replacement claims for the fiscal year beginning July 1,
32016.
4EXPLANATION
5The inclusion of this explanation does not constitute agreement with
6the explanation’s substance by the members of the general assembly.
7This bill relates to state and local government revenue and
8finance.
9DIVISION I — TAX EXPENDITURE STUDY. Division I requires
10the legislative services agency (LSA) to conduct a study on
11the fiscal impact that tax expenditures for certain taxes
12identified in the bill have on the revenue-raising capacity
13of the state. “Tax expenditure” is defined in the bill,
14but generally includes any exclusion from the operation or
15collection of a tax such as a credit, exemption, deduction,
16rebate, or refund. The first study is required to be
17completed in 2018, and subsequent studies are required every
18even-numbered year thereafter. The 2018 study is required to
19examine the relevant tax expenditures for the most recent year
20for which complete tax expenditure data is available. Each
21subsequent study shall examine the relevant tax expenditure
22data for the year or years for which complete data is available
23since the last complete year studied. However, if there is
24no new year with complete tax expenditure data available, LSA
25shall examine the available data for the year following the
26last complete year that was the subject of a previous report.
27Following each study, LSA is required to issue a report to the
28general assembly and the chairpersons of the legislative tax
29expenditure committee by January 31 of the following year,
30with the first report being required by January 31, 2019. The
31bill requires the department of revenue and any other state or
32local agency to cooperate with LSA in providing the information
33necessary to complete each study.
34DIVISION II — TAX EXPENDITURE LIMITATION. Division II
35requires the general assembly to review all tax expenditures
-15-1during each regular session beginning in the 2018 regular
2session. “Tax expenditure” is defined in the bill but
3generally includes credits, deductions, exemptions, refunds,
4and rebates available against the income taxes, franchise
5taxes, moneys and credits tax, inheritance tax, sale and use
6taxes, and various other special excise taxes imposed by the
7state.
8In order for any particular tax expenditure to be applicable
9for a fiscal year beginning on or after July 1, 2018, the bill
10requires the applicability of that tax expenditure during
11the fiscal year to be approved through an Act of the general
12assembly during the regular session preceding the beginning of
13the fiscal year. Any such tax expenditure not approved for
14a fiscal year as provided in the bill shall not be available
15under Iowa law.
16The bill provides rules for the applicability of different
17types of tax expenditures. A withholding tax credit approved
18for any particular fiscal year shall apply to amounts withheld
19by an employer from wages paid during that fiscal year. Tax
20credits approved for any particular fiscal year shall be
21available for tax years beginning during that fiscal year.
22Sales and use tax refunds approved for any particular fiscal
23year shall be available for sales and use tax liability
24incurred during that fiscal year. Sales and use tax and other
25specified excise tax exemptions approved for any particular
26fiscal year shall be available for sales, purchases, transfers,
27or uses during that fiscal year. Inheritance tax exemptions
28and deductions approved for any particular fiscal year shall
29be available for estates of decedents dying during that
30fiscal year. Exemptions and deductions provided against the
31calculation of the income taxes, the franchise tax, and the
32moneys and credits tax that are approved for any particular
33fiscal year shall be available for tax years beginning during
34that particular fiscal year.
35The bill provides that additional legislation may be
-16-1required to fully implement the review and approval of tax
2expenditures required under the bill and requires the director
3of the department of revenue to prepare draft legislation
4in compliance with Code section 2.16 for submission to the
5legislative services agency, if necessary, to implement the
6bill.
7DIVISION III — PROPERTY TAX CREDITS AND PAYMENTS
8LIMITATION. Division III strikes the standing limited or
9unlimited appropriations in Iowa Code for several property tax
10credits for fiscal years beginning on or after July 1, 2018.
11This includes the homestead and disabled veteran property
12tax credit in division I of Code chapter 425, the property
13tax credit or rent reimbursement for elderly and disabled in
14division II of Code chapter 425, the family farm tax credit in
15Code chapter 425A, the agricultural land tax credit in Code
16chapter 426, the military service tax credit in Code chapter
17426A, the business property tax credit in Code chapter 426C,
18and the manufactured and the mobile home tax credit in Code
19section 435.22. To the extent these credits were not already
20included under Code section 25B.7 (funding property tax credits
21and exemptions), the bill adds these tax credits to the list
22of tax credits which local governments are only required to
23provide to the extent such credit will be funded by a state
24appropriation.
25Finally, the bill strikes, for fiscal years beginning on or
26after July 1, 2018, the standing unlimited appropriation in
27Code section 441.21A for the repayment to local governments of
28commercial and industrial property tax replacement claims.
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