Iowa-2017-HSB684-Introduced

H.F. _____ Section 1. Section 8.22A, Code 2018, is amended by adding 1 the following new subsection: 2 NEW SUBSECTION . 6. a. Following each meeting of the 3 revenue estimating conference during which estimates for 4 the current fiscal year and the following fiscal year are 5 determined for the general fund of the state, the conference 6 shall submit a comprehensive estimating report to the governor 7 and the general assembly. The report shall be submitted within 8 fourteen calendar days of the March meeting date and within 9 thirty calendar days of any other meeting date. 10 b. The governor or the governor’s designee, in consultation 11 with the other two members of the conference, shall generate 12 the comprehensive estimating report. The report shall include 13 all data considered by the members in reaching the estimates, 14 an analysis of the data including projections of such data, and 15 a comprehensive discussion supporting and substantiating the 16 estimates of the conference. 17 Sec. 2. Section 8.54, subsection 1, paragraph b, Code 2018, 18 is amended to read as follows: 19 b. “New revenues” means moneys which are received by the 20 state due to increased tax rates and fees or newly created 21 taxes and fees over and above those moneys which are received 22 due to state taxes and fees which are in effect as of January 23 1 following the December state revenue estimating conference. 24 “New revenues” also means moneys which are received by the state 25 due to changes in federal tax law over and above those moneys 26 which are received due to state taxes and fees which are in 27 effect as of January 1 following the December state revenue 28 estimating conference. “New revenues” also includes moneys 29 received by the general fund of the state due to new transfers 30 over and above those moneys received by the general fund of 31 the state due to transfers which are in effect as of January 32 1 following the December state revenue estimating conference. 33 The department of management shall obtain concurrence from the 34 revenue estimating conference on the eligibility of transfers 35 -1- LSB 6220YC (7) 87 tm/rn 1/ 8

H.F. _____ to the general fund of the state which are to be considered as 1 new revenue in determining the state general fund expenditure 2 limitation. 3 Sec. 3. Section 8.54, subsection 3, Code 2018, is amended 4 by striking the subsection and inserting in lieu thereof the 5 following: 6 3. Except as otherwise provided in this section, the state 7 general fund expenditure limitation shall be determined as 8 follows: 9 a. For the fiscal year beginning July 1, 2018, the state 10 general fund expenditure limitation shall be ninety-nine 11 percent of the adjusted revenue estimate. 12 b. For the fiscal year beginning July 1, 2019, the state 13 general fund expenditure limitation shall be ninety-eight and 14 one-half percent of the adjusted revenue estimate. 15 c. For the fiscal year beginning July 1, 2020, and each 16 fiscal year thereafter, the state general fund expenditure 17 limitation shall be ninety-eight percent of the adjusted 18 revenue estimate. 19 Sec. 4. Section 8.57, Code 2018, is amended by adding the 20 following new subsection: 21 NEW SUBSECTION . 01. The surplus existing in the general 22 fund of the state at the conclusion of the fiscal year is 23 appropriated to the revenue estimating stabilization fund 24 created in section 8.57G. Moneys credited to the revenue 25 estimating stabilization fund from the appropriation made 26 in this subsection shall not exceed the amount necessary 27 for the revenue estimating stabilization fund to reach the 28 maximum balance for the succeeding fiscal year. To the extent 29 that moneys appropriated under this subsection exceed the 30 amounts necessary for the revenue estimating stabilization 31 fund to reach its maximum balance, the remaining moneys 32 are appropriated to the cash reserve fund. As used in this 33 subsection, “surplus” means the excess of revenues and other 34 financing sources over expenditures and other financing uses 35 -2- LSB 6220YC (7) 87 tm/rn 2/ 8

H.F. _____ for the general fund of the state in a fiscal year. 1 Sec. 5. Section 8.57, subsection 1, paragraph a, unnumbered 2 paragraph 1, Code 2018, is amended to read as follows: 3 The “cash reserve goal percentage” for fiscal years beginning 4 on or after July 1, 2004, is seven and one-half percent of the 5 adjusted revenue estimate. For each fiscal year in which the 6 appropriation of the surplus existing in the general fund of 7 the state at the conclusion of the prior fiscal year moneys 8 pursuant to paragraph “b” was not sufficient for the cash 9 reserve fund to reach the cash reserve goal percentage for the 10 current fiscal year, there is appropriated from the general 11 fund of the state an amount to be determined as follows: 12 Sec. 6. Section 8.57, subsection 1, paragraph b, Code 2018, 13 is amended to read as follows: 14 b. The surplus existing in the general fund of the state at 15 the conclusion of the fiscal year is Moneys appropriated to the 16 cash reserve fund pursuant to subsection 01 are appropriated 17 for distribution in the succeeding fiscal year as provided in 18 subsections 2 and 3 . Moneys credited to the cash reserve fund 19 from the appropriation made in this paragraph subsection 01 20 shall not exceed the amount necessary for the cash reserve fund 21 to reach the cash reserve goal percentage for the succeeding 22 fiscal year. As used in this paragraph, “surplus” means 23 the excess of revenues and other financing sources over 24 expenditures and other financing uses for the general fund of 25 the state in a fiscal year. 26 Sec. 7. Section 8.57, subsection 2, Code 2018, is amended 27 to read as follows: 28 2. Moneys appropriated under subsection 1 shall be first 29 credited to the cash reserve fund. To the extent that moneys 30 appropriated under subsection 1 would make the moneys in the 31 cash reserve fund exceed the cash reserve goal percentage of 32 the adjusted revenue estimate for the fiscal year, the moneys 33 are appropriated to the department of management to be spent 34 for the purpose of eliminating Iowa’s GAAP deficit, including 35 -3- LSB 6220YC (7) 87 tm/rn 3/ 8

H.F. _____ the payment of items budgeted in a subsequent fiscal year 1 which under generally accepted accounting principles should be 2 budgeted in the current fiscal year. These moneys shall be 3 deposited into a GAAP deficit reduction account established 4 within the department of management. The department of 5 management shall annually file with both houses of the general 6 assembly at the time of the submission of the governor’s 7 budget, a schedule of the items for which moneys appropriated 8 under this subsection for the purpose of eliminating Iowa’s 9 GAAP deficit, including the payment of items budgeted in 10 a subsequent fiscal year which under generally accepted 11 accounting principles should be budgeted in the current 12 fiscal year, shall be spent. The schedule shall indicate 13 the fiscal year in which the spending for an item is to take 14 place and shall incorporate the items detailed in 1994 Iowa 15 Acts, ch. 1181, §17 . The schedule shall list each item of 16 expenditure and the estimated dollar amount of moneys to be 17 spent on that item for the fiscal year. The department of 18 management may submit during a regular legislative session an 19 amended schedule for legislative consideration. If moneys 20 appropriated under this subsection are not enough to pay for 21 all listed expenditures, the department of management shall 22 distribute the payments among the listed expenditure items. 23 Moneys appropriated to the department of management under 24 this subsection shall not be spent on items other than those 25 included in the filed schedule. On September 1 following the 26 close of a fiscal year, moneys in the GAAP deficit reduction 27 account which remain unexpended for items on the filed schedule 28 for the previous fiscal year shall be credited to the Iowa 29 economic emergency fund. 30 Sec. 8. NEW SECTION . 8.57G Revenue estimating stabilization 31 fund. 32 1. A revenue estimating stabilization fund is created in 33 the state treasury and shall include moneys credited to the 34 fund pursuant to section 8.57, subsection 01. The fund shall 35 -4- LSB 6220YC (7) 87 tm/rn 4/ 8

H.F. _____ be separate from the general fund of the state and the balance 1 of the fund shall not be considered part of the balance of 2 the general fund of the state. Moneys credited to the fund 3 are not subject to section 8.33 and shall not be transferred, 4 used, obligated, appropriated, or otherwise encumbered except 5 as provided in this section. Moneys in the revenue estimating 6 stabilization fund may be used for cash flow purposes during a 7 fiscal year provided that any moneys so allocated are returned 8 to the revenue estimating stabilization fund by the end of that 9 fiscal year. 10 2. The maximum balance of the fund is the amount equal to 11 two percent of the adjusted revenue estimate for the fiscal 12 year. 13 3. Moneys in the revenue estimating stabilization fund 14 shall only be used pursuant to an appropriation by the 15 general assembly for purposes of addressing projected revenue 16 shortfalls due to reduced revenue estimates for the current 17 fiscal year. An appropriation may be made from the revenue 18 estimating stabilization fund only if the following criteria 19 are met: 20 a. The appropriation shall be made only for the fiscal year 21 in which the appropriation is enacted. 22 b. The adjusted revenue estimate, as defined in section 23 8.54, for the fiscal year in which the appropriation is being 24 made is greater than the revenue estimate for the fiscal year 25 in which the appropriation is being made as determined by the 26 revenue estimating conference. 27 Sec. 9. Section 8.58, Code 2018, is amended to read as 28 follows: 29 8.58 Exemption from automatic application. 30 1. To the extent that moneys appropriated under section 31 8.57 do not result in moneys being credited to the general fund 32 under section 8.55, subsection 2 , moneys appropriated under 33 section 8.57 and moneys contained in the cash reserve fund, 34 rebuild Iowa infrastructure fund, environment first fund, Iowa 35 -5- LSB 6220YC (7) 87 tm/rn 5/ 8

H.F. _____ economic emergency fund, taxpayers trust fund, and state bond 1 repayment fund , and the revenue estimating stabilization fund 2 shall not be considered in the application of any formula, 3 index, or other statutory triggering mechanism which would 4 affect appropriations, payments, or taxation rates, contrary 5 provisions of the Code notwithstanding. 6 2. To the extent that moneys appropriated under section 7 8.57 do not result in moneys being credited to the general fund 8 under section 8.55, subsection 2 , moneys appropriated under 9 section 8.57 and moneys contained in the cash reserve fund, 10 rebuild Iowa infrastructure fund, environment first fund, Iowa 11 economic emergency fund, taxpayers trust fund, and state bond 12 repayment fund , and the revenue estimating stabilization fund 13 shall not be considered by an arbitrator or in negotiations 14 under chapter 20 . 15 EXPLANATION 16 The inclusion of this explanation does not constitute agreement with 17 the explanation’s substance by the members of the general assembly. 18 This bill relates to the state general fund expenditure 19 limitation and creates a revenue estimating stabilization fund. 20 The bill includes a reporting requirement for the revenue 21 estimating conference. The bill provides that following 22 each meeting of the revenue estimating conference during 23 which estimates for the current fiscal year and the following 24 fiscal year are determined, the conference shall submit a 25 comprehensive estimating report to the governor and the general 26 assembly. The report shall be submitted within 14 calendar 27 days of the March meeting date and within 30 calendar days of 28 any other meeting date. The bill requires the governor or 29 the governor’s designee, in consultation with the other two 30 members of the conference, to generate the report. The report 31 must include all data considered by the members in reaching 32 the estimates, an analysis of the data including projections 33 of such data, and a comprehensive discussion supporting and 34 substantiating the estimates of the conference. 35 -6- LSB 6220YC (7) 87 tm/rn 6/ 8

H.F. _____ Currently, the state general fund expenditure limitation for 1 a fiscal year is 99 percent of the adjusted revenue estimate. 2 In addition, the state general fund expenditure limitation must 3 be readjusted to include 95 percent of any new revenues. 4 The bill includes in the definition of “new revenues” moneys 5 which are received by the state due to changes in federal tax 6 law over and above those moneys which are received due to state 7 taxes and fees which are in effect as of January 1 following 8 the December state revenue estimating conference. 9 The bill lowers the state general fund expenditure 10 limitation to 98.5 percent for FY 2019-2020, and 98 percent for 11 FY 2020-2021 and each fiscal year thereafter. 12 The bill creates a revenue estimating stabilization fund. 13 The fund is separate from the general fund of the state and 14 the balance of the fund is not be considered part of the 15 balance of the general fund of the state. Moneys credited to 16 the fund are not subject to Code section 8.33 and shall not 17 be transferred, used, obligated, appropriated, or otherwise 18 encumbered except as provided in this Code section. Moneys in 19 the revenue estimating stabilization fund may be used for cash 20 flow purposes during a fiscal year provided that any moneys so 21 allocated are returned to the revenue estimating stabilization 22 fund by the end of that fiscal year. The maximum balance of the 23 fund is the amount equal to 2 percent of the adjusted revenue 24 estimate for the fiscal year. 25 Moneys in the revenue estimating stabilization fund can 26 only be used pursuant to an appropriation by the general 27 assembly for purposes of addressing projected revenue 28 shortfalls due to reduced revenue estimates for the current 29 fiscal year. The bill provides two criteria that must be 30 met before an appropriation may be made from the fund. The 31 appropriation must be made only for the fiscal year in which 32 the appropriation is enacted and the adjusted revenue estimate 33 for the fiscal year in which the appropriation is being made is 34 greater than the revenue estimate for the fiscal year in which 35 -7- LSB 6220YC (7) 87 tm/rn 7/ 8

H.F. _____ the appropriation is being made as determined by the revenue 1 estimating conference. 2 The bill amends the order that the reserve funds are 3 credited in years in which a budget surplus occurs by having 4 the revenue estimating stabilization fund credited first. 5 The bill provides that a general fund surplus is initially 6 appropriated to the revenue estimating stabilization fund. To 7 the extent that moneys appropriated to the revenue estimating 8 stabilization fund exceed the amount necessary to reach the 9 maximum balance, the remaining moneys are appropriated to the 10 cash reserve fund. Moneys in excess of the amount necessary 11 to reach the maximum balance of the cash reserve fund are 12 appropriated to the economic emergency fund. 13 The bill adds the revenue estimating stabilization fund 14 to the list of funds that are not to be considered in the 15 application of any formula, index, or other statutory 16 triggering mechanism which would affect appropriations, 17 payments, or taxation rates. The bill also adds the fund to 18 the list of funds that are not considered by an arbitrator or 19 in negotiations under Code chapter 20. 20 -8- LSB 6220YC (7) 87 tm/rn 8/ 8