Bill Text: IA SF496 | 2017-2018 | 87th General Assembly | Introduced
Bill Title: A bill for an act relating to state and local government revenue and finance by requiring the legislative services agency to conduct a biennial tax expenditure study and report to the general assembly and the legislative tax expenditure committee, making the availability of tax expenditures in future fiscal years subject to approval by the general assembly, and limiting appropriations for certain property tax credits in future fiscal years.
Sponsorship: Partisan Bill (Democrat 1)
Status: (Introduced - Dead) 2017-03-29 - Subcommittee: Feenstra, Quirmbach, and Smith. S.J. 814. [SF496 Detail]
Download: Iowa-2017-SF496-Introduced.html
Senate File 496 - Introduced SENATE FILE BY DANIELSON A BILL FOR 1 An Act relating to state and local government revenue and 2 finance by requiring the legislative services agency to 3 conduct a biennial tax expenditure study and report to 4 the general assembly and the legislative tax expenditure 5 committee, making the availability of tax expenditures in 6 future fiscal years subject to approval by the general 7 assembly, and limiting appropriations for certain property 8 tax credits in future fiscal years. 9 BE IT ENACTED BY THE GENERAL ASSEMBLY OF THE STATE OF IOWA: TLSB 2194SS (8) 87 mm/rn/sc PAG LIN 1 1 DIVISION I 1 2 TAX EXPENDITURE STUDY 1 3 Section 1. NEW SECTION. 2A.9 Tax expenditure study and 1 4 report. 1 5 1. For purposes of this section, "tax expenditure" means the 1 6 same as defined in section 2.48, subsection 1, paragraph "a". 1 7 2. Beginning in 2018, and every even=numbered year 1 8 thereafter, the legislative services agency shall conduct a 1 9 study and prepare a written report on the fiscal impact that 1 10 tax expenditures have on state and local government capacity 1 11 to raise revenue. The study shall examine tax expenditures 1 12 related to the following: 1 13 a. The individual income tax imposed in chapter 422, 1 14 division II. 1 15 b. The corporate income tax imposed in chapter 422, division 1 16 III. 1 17 c. Tax credits available against the franchise tax imposed 1 18 in chapter 422, division V, the insurance companies tax imposed 1 19 in chapter 432, and the moneys and credits tax imposed in 1 20 section 533.329. 1 21 d. The sales and use taxes imposed in chapter 423. 1 22 e. Property taxes levied by or on behalf of political 1 23 subdivisions. 1 24 3. a. The 2018 study shall examine the relevant tax 1 25 expenditures for the most recent year for which complete tax 1 26 expenditure data is available. 1 27 b. Each subsequent study shall examine the relevant tax 1 28 expenditure data for the year or years for which complete 1 29 tax expenditure data is available since the last complete 1 30 year that was the subject of a previous report. However, if 1 31 there is not a new year for which complete tax expenditure 1 32 data is available, the study shall examine the available tax 1 33 expenditure data for the year following the last year for which 1 34 complete tax expenditure data was included in the previous 1 35 report. 2 1 4. The legislative services agency shall submit the written 2 2 report to the general assembly and the chairpersons of the 2 3 legislative tax expenditure committee by January 31, 2019, and 2 4 by January 31 of each odd=numbered year thereafter, containing 2 5 the results of the study conducted during the previous year. 2 6 5. The department of revenue and any other state or local 2 7 agency shall cooperate with the legislative services agency in 2 8 providing the information necessary to complete each study. 2 9 DIVISION II 2 10 TAX EXPENDITURE LIMITATION 2 11 Sec. 2. NEW SECTION. 421C.1 Tax expenditure defined. 2 12 Any reference to "tax expenditure" in this chapter includes 2 13 all of the following: 2 14 1. Withholding tax credits. 2 15 a. The accelerated career education program job credit 2 16 allowed under section 260G.4A. 2 17 b. The new jobs credit from withholding allowed under 2 18 section 15A.7, or section 15E.197, Code 2014, or section 2 19 260E.5. 2 20 c. The targeted jobs withholding tax credit allowed under 2 21 chapter 403.19A. 2 22 2. Tax credits. 2 23 a. The agricultural assets transfer tax credit allowed under 2 24 sections 16.80 and 422.11M and section 422.33, subsection 21. 2 25 b. The custom farming contract tax credit allowed under 2 26 sections 16.81 and 422.11M and section 422.33, subsection 21. 2 27 c. The farm to food donation tax credit allowed under 2 28 chapter 190B, section 422.11R, and section 422.33, subsection 2 29 30. 2 30 d. The charitable conservation contribution tax credit 2 31 allowed under section 422.11W and section 422.33, subsection 2 32 25. 2 33 e. The school tuition organization tax credit allowed under 2 34 section 422.11S and section 422.33, subsection 28. 2 35 f. The personal exemption credits allowed under section 3 1 422.12, subsection 2, paragraph "a". 3 2 g. The tuition and textbook tax credit allowed under section 3 3 422.12, subsection 2, paragraph "b". 3 4 h. The volunteer fire fighter and emergency medical services 3 5 personnel tax credit allowed under section 422.12, subsection 3 6 2, paragraph "c". 3 7 i. The reserve peace officer tax credit allowed under 3 8 section 422.12, subsection 2, paragraph "d". 3 9 j. The adoption tax credit allowed under section 422.12A. 3 10 k. The child and dependent care tax credit allowed under 3 11 section 422.12C. 3 12 l. The early childhood development tax credit allowed under 3 13 section 422.12C. 3 14 m. The earned income tax credit allowed under section 3 15 422.12B. 3 16 n. The geothermal heat pump tax credit allowed under section 3 17 422.11I. 3 18 o. The geothermal tax credit allowed under section 422.10A. 3 19 p. The solar energy system tax credit allowed under section 3 20 422.11L, section 422.33, subsection 29, section 422.60, 3 21 subsection 12, and section 533.329, subsection 2, paragraph 3 22 "l". 3 23 q. The wind energy production tax credit and the renewable 3 24 energy production tax credit allowed under chapters 476B and 3 25 476C, section 422.llJ, section 422.33, subsection 16, section 3 26 422.60, subsection 7, section 432.12E, and section 437A.17B. 3 27 r. The biodiesel blended fuel tax credit allowed under 3 28 section 422.11P and section 422.33, subsection 11C. 3 29 s. The E=15 plus gasoline promotion tax credit allowed under 3 30 section 422.11Y and section 422.33, subsection 11D. 3 31 t. The E=85 gasoline promotion tax credit allowed under 3 32 section 422.11O and section 422.33, subsection 11B. 3 33 u. The ethanol promotion tax credit allowed under section 3 34 422.11N and section 422.33, subsection 11A. 3 35 v. The fuel tax credit allowed under sections 422.110 4 1 through 422.112. 4 2 w. The renewable chemical production tax credit allowed 4 3 under sections 15.319 and 422.10B and section 422.33, 4 4 subsection 22. 4 5 x. The endow Iowa tax credit allowed under sections 15E.305 4 6 and 422.11H, section 422.33, subsection 14, section 422.60, 4 7 subsection 6, section 432.12D, and section 533.329, subsection 4 8 2, paragraph "h". 4 9 y. The investment tax credit allowed under section 15.333, 4 10 section 422.11F, subsection 2, section 422.33, subsection 12, 4 11 paragraph "b", section 422.60, subsection 5, paragraph "b", and 4 12 section 533.329, subsection 2, paragraph "e". 4 13 z. The insurance premiums tax credit allowed under section 4 14 15.333A and section 432.12C, subsection 2. 4 15 aa. The new jobs tax credit allowed under section 422.11A 4 16 and section 422.33, subsection 6. 4 17 ab. The innovation fund investment tax credit allowed under 4 18 sections 15E.52 and 422.11Z, section 422.33, subsection 13, 4 19 section 422.60, subsection 11, section 432.12M, and section 4 20 533.329 subsection 2, paragraph "j". 4 21 ac. The workforce housing investment tax credit allowed 4 22 under section 15.355, subsection 3, section 422.11C, section 4 23 422.33, subsection 15, section 422.60, subsection 13, section 4 24 432.12G, and section 533.239, subsection 2, paragraph "k". 4 25 ad. The research activities credit and supplemental research 4 26 activities credit allowed under sections 15.335 and 422.10 and 4 27 section 422.33, subsection 5. 4 28 ae. The assistive device tax credit allowed under section 4 29 422.33, subsection 9. 4 30 af. The corporate tax credit for certain sales taxes paid by 4 31 third=party developers allowed under section 15.331C, section 4 32 422.33, subsection 19, section 422.60, subsection 8, section 4 33 432.12H, and section 533.329, subsection 2, paragraph "d". 4 34 ag. The historic preservation and cultural and entertainment 4 35 district tax credit allowed under chapter 404A, section 5 1 422.11D, section 422.33, subsection 10, section 422.60, 5 2 subsection 4, and section 432.12A. 5 3 ah. The redevelopment tax credit allowed under chapter 5 4 15, subchapter II, part 9, section 422.11V, section 422.33, 5 5 subsection 26, section 422.60, subsection 10, section 432.12L, 5 6 and section 533.329, subsection 2, paragraph "i". 5 7 ai. The investment tax credit allowed under section 15E.43, 5 8 section 422.11F, subsection 1, section 422.33, subsection 12, 5 9 section 422.60, subsection 5, paragraph "a", section 432.12C, 5 10 subsection 1, and section 533.329, subsection 2, paragraph "f". 5 11 aj. The Iowa taxpayers trust fund tax credit allowed under 5 12 section 422.11E. 5 13 ak. The minimum tax credit allowed under section 422.11B and 5 14 section 422.33, subsection 7. 5 15 3. Sales and use tax refunds. 5 16 a. The high quality jobs program sales and use tax refund 5 17 allowed under section 15.331A. 5 18 b. The workforce housing tax incentive program sales and use 5 19 tax refund allowed under section 15.355, subsection 2. 5 20 c. The wind energy production tax credit and the renewable 5 21 energy production tax credit sales and use tax refunds allowed 5 22 under chapters 476B and 476C and section 423.4, subsection 4. 5 23 d. The sales and use tax refunds allowed under section 5 24 423.4. 5 25 4. Exemptions from the sales and use tax, hotel and motel 5 26 tax, equipment tax, real estate transfer tax, automobile rental 5 27 excise tax, fee for new registration, and motor fuel and special 5 28 fuel taxes. 5 29 a. The exemptions from the sales tax provided in section 5 30 423.3, except subsections 1 and 43. 5 31 b. The exemptions from the use tax provided in section 5 32 423.6, except subsections 1, 2, and 4. 5 33 c. The exemptions from the state hotel and motel tax 5 34 provided in section 423A.5, subsection 1. 5 35 d. The exemptions from the automobile rental excise tax 6 1 provided in section 423C.3, subsection 1. 6 2 e. The exemptions from the equipment tax provided in section 6 3 423D.3. 6 4 f. The exemptions from the real estate transfer tax provided 6 5 in section 428A.2. 6 6 g. The exemptions from the fee for new registration provided 6 7 in section 321.105A, subsection 2, paragraphs "a" through "c". 6 8 h. The exemptions from the motor fuel and special fuel 6 9 taxes provided in section 452A.17, subsection 1, paragraph "a", 6 10 except subparagraph (1). 6 11 5. Inheritance tax exemptions and deductions. 6 12 a. The exemptions from the inheritance tax provided in 6 13 sections 450.4 and 450.9. 6 14 b. The deductions of liabilities from the gross value of an 6 15 estate provided in section 450.12. 6 16 6. Adjustments to calculation of income taxes, franchise tax, 6 17 and moneys and credits tax. 6 18 a. The adjustments allowed in calculating net income for 6 19 individual income tax purposes under section 422.7, subsections 6 20 5, 7, 8, 9, 10, 12, 12A, 13, 16, 20, 21, 22, 23, 24, 25, 27, 6 21 28, 29, 30, 31, 31A, and 31B, subsection 32, paragraph "a", 6 22 subsection 33, subsection 34, paragraph "a", and subsections 6 23 34A, 35, 37, 38, 40, 42, 42A, 44, 45, 46, 46A, 47, 49, 50, 54, 6 24 55, 56, 57, and 58. 6 25 b. The subtractions allowed in section 422.7, subsection 6 26 2, and section 422.35, subsection 2, in calculating net income 6 27 for purposes of the individual income tax and the corporate 6 28 income tax and franchise tax of interest and dividends from 6 29 certain Iowa bonds exempt from taxation as otherwise provided 6 30 by law, including those listed in section 422.7, subsection 2, 6 31 paragraphs "a" through "v". 6 32 c. The deductions from net income for individual income tax 6 33 purposes allowed under section 422.9, subsections 1 and 2. 6 34 d. The adjustments allowed in calculating net income for 6 35 corporate income tax and franchise tax purposes under section 7 1 422.35, subsections 4, 5, 6, 6A, 7, 11, 12, 17, 22, and 25. 7 2 e. The adjustments made in calculating net income for 7 3 franchise tax purposes under section 422.61, subsection 3, 7 4 paragraph "g". 7 5 f. The forty thousand dollar exemption from the moneys and 7 6 credits tax allowed to a state credit union in section 533.329, 7 7 subsection 2, paragraph "a". 7 8 Sec. 3. NEW SECTION. 421C.2 Tax expenditures limited == 7 9 general assembly annual review and approval. 7 10 1. Findings and purpose. The general assembly finds that 7 11 the number and amount of credits, refunds, rebates, deductions, 7 12 and exemptions provided against the taxes imposed by this state 7 13 are substantial and warrant annual review and approval by the 7 14 general assembly. The purpose of this chapter is to provide 7 15 for a systematic review and approval by the general assembly 7 16 of each tax expenditure on an annual basis in order to promote 7 17 more sustainable and responsible tax revenue collection, 7 18 budgeting, and appropriation processes in this state. 7 19 2. Tax expenditure review and approval == generally. 7 20 a. Beginning with the 2018 regular session of the general 7 21 assembly and during each regular session thereafter, the 7 22 general assembly shall review each tax expenditure listed 7 23 in section 421C.1, and shall, if desired, expressly approve 7 24 through an Act of the general assembly the applicability of the 7 25 tax expenditure for the forthcoming fiscal year as provided in 7 26 and subject to the limitations of subsections 3 through 8. 7 27 b. Notwithstanding any other provision of law to the 7 28 contrary, the provisions of subsections 3 through 8 apply for 7 29 each fiscal year beginning on or after July 1, 2018, and a tax 7 30 expenditure not approved by the general assembly as provided in 7 31 those subsections shall not be available under Iowa law for a 7 32 fiscal year beginning on or after July 1, 2018. 7 33 3. Withholding tax credits. The withholding tax credits 7 34 listed in section 421C.1, subsection 1, shall not be allowed 7 35 against any amounts withheld by an employer from wages paid 8 1 during a fiscal year beginning on or after July 1, 2018, unless 8 2 the applicability of the withholding tax credit to that fiscal 8 3 year was expressly approved through an Act of the general 8 4 assembly during the last regular session beginning prior to 8 5 July 1 of the applicable fiscal year. 8 6 4. Tax credits. The tax credits listed in section 421C.1, 8 7 subsection 2, shall not be allowed for any tax year beginning 8 8 during a fiscal year beginning on or after July 1, 2018, unless 8 9 the applicability of the tax credit to tax years beginning 8 10 during that fiscal year was expressly approved through an 8 11 Act of the general assembly during the last regular session 8 12 beginning prior to July 1 of the applicable fiscal year. 8 13 5. Sales and use tax refunds. The sales and use tax 8 14 refunds listed in section 421C.1, subsection 3, shall not be 8 15 allowed for any sales and use tax liability incurred during 8 16 a fiscal year beginning on or after July 1, 2018, unless the 8 17 applicability of the sales and use tax refund to that fiscal 8 18 year was expressly approved through an Act of the general 8 19 assembly during the last regular session beginning prior to 8 20 July 1 of the applicable fiscal year. 8 21 6. Exemptions from the sales and use tax, hotel and motel 8 22 tax, equipment tax, real estate transfer tax, automobile rental 8 23 excise tax, fee for new registration, and motor fuel and special 8 24 fuel taxes. The exemptions listed in section 421C.1, subsection 8 25 4, shall not be allowed for any sales, purchases, transfers, or 8 26 uses during a fiscal year beginning on or after July 1, 2018, 8 27 unless the applicability of the exemption to that fiscal year 8 28 was expressly approved through an Act of the general assembly 8 29 during the last regular session beginning prior to July 1 of 8 30 the applicable fiscal year. 8 31 7. Inheritance tax exemptions and deductions. The 8 32 inheritance tax exemptions and deductions listed in section 8 33 421C.1, subsection 5, shall not be allowed for any estate of a 8 34 decedent dying during a fiscal year beginning on or after July 8 35 1, 2018, unless the applicability of the exemption or deduction 9 1 to that fiscal year was expressly approved through an Act of 9 2 the general assembly during the last regular session beginning 9 3 prior to July 1 of the applicable fiscal year. 9 4 8. Adjustments to calculation of income taxes, franchise tax, 9 5 and moneys and credits tax. The adjustments to the calculation 9 6 of the income taxes, franchise tax, and moneys and credits tax 9 7 listed in section 421C.1, subsection 6, shall not be allowed 9 8 for any tax year beginning during a fiscal year beginning on or 9 9 after July 1, 2018, unless the applicability of the adjustment 9 10 to tax years beginning during that fiscal year was expressly 9 11 approved through an Act of the general assembly during the last 9 12 regular session beginning prior to July 1 of the applicable 9 13 fiscal year. 9 14 Sec. 4. CORRESPONDING AMENDMENTS LEGISLATION. Additional 9 15 legislation may be required to fully implement this division 9 16 of this Act. The director of the department of revenue shall, 9 17 in compliance with section 2.16, prepare draft legislation for 9 18 submission to the legislative services agency, if necessary, to 9 19 implement the annual review and approval of tax expenditures 9 20 under this division of this Act and under other provisions of 9 21 law. 9 22 DIVISION III 9 23 PROPERTY TAX CREDITS AND PAYMENTS LIMITATION 9 24 Sec. 5. Section 25B.7, subsection 2, Code 2017, is amended 9 25 to read as follows: 9 26 2. The requirement for fully funding and the consequences 9 27 of not fully funding credits and exemptions under subsection 1 9 28 also apply to all of the following: 9 29 a. Homestead tax credit pursuant to sections 425.1 through 9 30 425.15. 9 31 b. Low=income property tax credit and elderly and disabled 9 32 property tax credit pursuant to sections 425.16 through 425.40. 9 33 c. Family farm property tax credit pursuant to chapter 425A. 9 34 d. Agricultural land property tax credit pursuant to chapter 9 35 426. 10 1c.e. Military service property tax credit and exemption 10 2 pursuant to chapter 426A, to the extent of six dollars and 10 3 ninety=two cents per thousand dollars of assessed value of the 10 4 exempt property. 10 5 f. Business property tax credit pursuant to chapter 426C. 10 6 g. Manufactured or mobile home tax credit pursuant to 10 7 section 435.22. 10 8 Sec. 6. Section 425.1, subsections 1, 2, and 3, Code 2017, 10 9 are amended to read as follows: 10 10 1. a. A homestead credit fund is created.ThereFor fiscal 10 11 years beginning before July 1, 2018, there is appropriated 10 12 annually from the general fund of the state to the department 10 13 of revenue to be credited to the homestead credit fund, an 10 14 amount sufficient to implement this chapter. 10 15 b.TheSubject to the availability of funding, the director 10 16 of the department of administrative services shall issue 10 17 warrants on the homestead credit fund payable to the county 10 18 treasurers of the several counties of the state under this 10 19 chapter. 10 20 2.TheSubject to the availability of funding, the homestead 10 21 credit fund shall be apportioned each year so as to give a 10 22 credit against the tax on each eligible homestead in the 10 23 state in an amount equal to the actual levy on the first four 10 24 thousand eight hundred fifty dollars of actual value for each 10 25 homestead. 10 26 3.TheSubject to the availability of funding, the amount 10 27 due each county shall be paid in two payments on November 15 10 28 and March 15 of each fiscal year, drawn upon warrants payable 10 29 to the respective county treasurers. The two payments shall 10 30 be as nearly equal as possible. 10 31 Sec. 7. Section 425.23, subsection 3, paragraph a, Code 10 32 2017, is amended to read as follows: 10 33 a. A person who is eligible to file a claim for credit 10 34 for property taxes due and who has a household income of 10 35 eight thousand five hundred dollars or less and who has an 11 1 unpaid special assessment levied against the homestead may 11 2 file a claim for a special assessment credit with the county 11 3 treasurer. The department shall provide to the respective 11 4 treasurers the forms necessary for the administration of 11 5 this subsection. The claim shall be filed not later than 11 6 September 30 of each year. Upon the filing of the claim, 11 7 interest for late payment shall not accrue against the amount 11 8 of the unpaid special assessment due and payable. The claim 11 9 filed by the claimant constitutes a claim for credit of an 11 10 amount equal to the actual amount due upon the unpaid special 11 11 assessment, plus interest, payable during the fiscal year for 11 12 which the claim is filed against the homestead of the claimant. 11 13 However, where the claimant is an individual described in 11 14 section 425.17, subsection 2, paragraph "a", subparagraph 11 15 (2), and the tentative credit is determined according to the 11 16 schedule in subsection 1, paragraph "b", subparagraph (2), 11 17 of this section, the claim filed constitutes a claim for 11 18 credit of an amount equal to one=half of the actual amount 11 19 due and payable during the fiscal year. The treasurer shall 11 20 certify to the director of revenue not later than October 11 21 15 of each year the total amount of dollars due for claims 11 22 allowed. The amount of reimbursement due each county shall 11 23 be certified by the director of revenue and, subject to the 11 24 availability of funding, paid by the director of the department 11 25 of administrative services by November 15 of each year, drawn 11 26 upon warrants payable to the respective treasurer.There 11 27For fiscal years beginning before July 1, 2018, there is 11 28 appropriated annually from the general fund of the state to the 11 29 department of revenue an amount sufficient to carry out the 11 30 provisions of this subsection. The treasurer shall credit any 11 31 moneys received from the department against the amount of the 11 32 unpaid special assessment due and payable on the homestead of 11 33 the claimant. 11 34 Sec. 8. Section 425.39, Code 2017, is amended to read as 11 35 follows: 12 1 425.39 Fund created == appropriation == priority. 12 2 The elderly and disabled property tax credit and 12 3 reimbursement fund is created.ThereFor fiscal years 12 4 beginning before July 1, 2018, there is appropriated annually 12 5 from the general fund of the state to the department of revenue 12 6 to be credited to the elderly and disabled property tax credit 12 7 and reimbursement fund, from funds not otherwise appropriated, 12 8 an amount sufficient to implement this division for claimants 12 9 described in section 425.17, subsection 2, paragraph "a", 12 10 subparagraph (1). 12 11 Sec. 9. Section 425A.1, Code 2017, is amended to read as 12 12 follows: 12 13 425A.1 Family farm tax credit fund. 12 14 The family farm tax credit fund is created in the office 12 15 of the treasurer of state.ThereFor fiscal years beginning 12 16 before July 1, 2018, there shall be transferred annually to 12 17 the fund the first ten million dollars of the amount annually 12 18 appropriated to the agricultural land credit fund, provided in 12 19 section 426.1. Any balance in the fund on June 30 shall revert 12 20 to the general fund. 12 21 Sec. 10. Section 426.1, Code 2017, is amended to read as 12 22 follows: 12 23 426.1 Agricultural land credit fund. 12 24 There is created as a permanent fund in the office of the 12 25 treasurer of state a fund to be known as the agricultural 12 26 land credit fund, and for the purpose of establishing and 12 27 maintaining this fund for each fiscal year beginning before 12 28 July 1, 2018, there is appropriated thereto from funds in the 12 29 general fund not otherwise appropriated the sum of thirty=nine 12 30 million one hundred thousand dollars of which the first ten 12 31 million dollars shall be transferred to and deposited into the 12 32 family farm tax credit fund created in section 425A.1. Any 12 33 balance in said fund on June 30 shall revert to the general 12 34 fund. 12 35 Sec. 11. Section 426A.1A, Code 2017, is amended to read as 13 1 follows: 13 2 426A.1A Appropriation. 13 3ThereFor fiscal years beginning before July 1, 2018, there 13 4 is appropriated from the general fund of the state the amounts 13 5 necessary to fund the credits provided under this chapter. 13 6 Sec. 12. Section 426A.2, Code 2017, is amended to read as 13 7 follows: 13 8 426A.2 Military service tax credit. 13 9TheSubject to the availability of funding, moneys shall 13 10 be apportioned each year so as to replace all or a portion of 13 11 the tax which would be due on property eligible for military 13 12 service tax exemption in the state, if the property were 13 13 subject to taxation, the amount of the credit to be not more 13 14 than six dollars and ninety=two cents per thousand dollars of 13 15 assessed value of property which would be subject to the tax, 13 16 except for the military service tax exemption. 13 17 Sec. 13. Section 426C.2, subsection 1, Code 2017, is amended 13 18 to read as follows: 13 19 1. A business property tax credit fund is created in the 13 20 state treasury under the authority of the department. For the 13 21 fiscal year beginning July 1, 2014, there is appropriated from 13 22 the general fund of the state to the department to be credited 13 23 to the fund, the sum of fifty million dollars to be used for 13 24 business property tax credits authorized in this chapter. For 13 25 the fiscal year beginning July 1, 2015, there is appropriated 13 26 from the general fund of the state to the department to be 13 27 credited to the fund, the sum of one hundred million dollars 13 28 to be used for business property tax credits authorized in 13 29 this chapter. Fortheeach fiscal year in the fiscal period 13 30 beginning July 1, 2016,and each fiscal year thereafter,and 13 31 ending June 30, 2018, there is appropriated from the general 13 32 fund of the state to the department to be credited to the fund, 13 33 the sum of one hundred twenty=five million dollars to be used 13 34 for business property tax credits authorized in this chapter. 13 35 Sec. 14. Section 426C.5, subsections 2 and 3, Code 2017, are 14 1 amended to read as follows: 14 2 2.TheSubject to the availability of funds, the director 14 3 of revenue shall authorize the department of administrative 14 4 services to draw warrants on the fund payable to the county 14 5 treasurers of the several counties of the state in the amounts 14 6 certified by the department. 14 7 3.TheSubject to the availability of funds, the amount due 14 8 each county shall be paid in two payments on November 15 and 14 9 March 15 of each fiscal year, drawn upon warrants payable to 14 10 the respective county treasurers. The two payments shall be as 14 11 nearly equal as possible. 14 12 Sec. 15. Section 435.22, subsection 4, paragraphs e and f, 14 13 Code 2017, are amended to read as follows: 14 14 e.TheSubject to the availability of funds, the amounts 14 15 due each county shall be paid by the department of revenue on 14 16 December 15 of each year, drawn upon warrants payable to the 14 17 respective county treasurers. The county treasurer in each 14 18 county shall apportion the payment in accordance with section 14 19 435.25. 14 20 f.ThereFor fiscal years beginning before July 1, 2018, 14 21 there is appropriated annually from the general fund of the 14 22 state to the department of revenue an amount sufficient to 14 23 carry out this subsection. 14 24 Sec. 16. Section 441.21A, subsection 1, paragraph a, Code 14 25 2017, is amended to read as follows: 14 26 a. For each fiscal year beginning on or after July 1, 2014, 14 27 but before July 1, 2018, there is appropriated from the general 14 28 fund of the state to the department of revenue an amount 14 29 necessary for the payment of all commercial and industrial 14 30 property tax replacement claims under this section for the 14 31 fiscal year. However, for a fiscal year beginning on or after 14 32 July 1, 2017, the total amount of moneys appropriated from the 14 33 general fund of the state to the department of revenue for the 14 34 payment of commercial and industrial property tax replacement 14 35 claims in that fiscal year shall not exceed the total amount of 15 1 money necessary to pay all commercial and industrial property 15 2 tax replacement claims for the fiscal year beginning July 1, 15 3 2016. 15 4 EXPLANATION 15 5 The inclusion of this explanation does not constitute agreement with 15 6 the explanation's substance by the members of the general assembly. 15 7 This bill relates to state and local government revenue and 15 8 finance. 15 9 DIVISION I ==== TAX EXPENDITURE STUDY. Division I requires 15 10 the legislative services agency (LSA) to conduct a study on 15 11 the fiscal impact that tax expenditures for certain taxes 15 12 identified in the bill have on the revenue=raising capacity 15 13 of the state. "Tax expenditure" is defined in the bill, 15 14 but generally includes any exclusion from the operation or 15 15 collection of a tax such as a credit, exemption, deduction, 15 16 rebate, or refund. The first study is required to be 15 17 completed in 2018, and subsequent studies are required every 15 18 even=numbered year thereafter. The 2018 study is required to 15 19 examine the relevant tax expenditures for the most recent year 15 20 for which complete tax expenditure data is available. Each 15 21 subsequent study shall examine the relevant tax expenditure 15 22 data for the year or years for which complete data is available 15 23 since the last complete year studied. However, if there is 15 24 no new year with complete tax expenditure data available, LSA 15 25 shall examine the available data for the year following the 15 26 last complete year that was the subject of a previous report. 15 27 Following each study, LSA is required to issue a report to the 15 28 general assembly and the chairpersons of the legislative tax 15 29 expenditure committee by January 31 of the following year, 15 30 with the first report being required by January 31, 2019. The 15 31 bill requires the department of revenue and any other state or 15 32 local agency to cooperate with LSA in providing the information 15 33 necessary to complete each study. 15 34 DIVISION II == TAX EXPENDITURE LIMITATION. Division II 15 35 requires the general assembly to review all tax expenditures 16 1 during each regular session beginning in the 2018 regular 16 2 session. "Tax expenditure" is defined in the bill but 16 3 generally includes credits, deductions, exemptions, refunds, 16 4 and rebates available against the income taxes, franchise 16 5 taxes, moneys and credits tax, inheritance tax, sale and use 16 6 taxes, and various other special excise taxes imposed by the 16 7 state. 16 8 In order for any particular tax expenditure to be applicable 16 9 for a fiscal year beginning on or after July 1, 2018, the bill 16 10 requires the applicability of that tax expenditure during 16 11 the fiscal year to be approved through an Act of the general 16 12 assembly during the regular session preceding the beginning of 16 13 the fiscal year. Any such tax expenditure not approved for 16 14 a fiscal year as provided in the bill shall not be available 16 15 under Iowa law. 16 16 The bill provides rules for the applicability of different 16 17 types of tax expenditures. A withholding tax credit approved 16 18 for any particular fiscal year shall apply to amounts withheld 16 19 by an employer from wages paid during that fiscal year. Tax 16 20 credits approved for any particular fiscal year shall be 16 21 available for tax years beginning during that fiscal year. 16 22 Sales and use tax refunds approved for any particular fiscal 16 23 year shall be available for sales and use tax liability 16 24 incurred during that fiscal year. Sales and use tax and other 16 25 specified excise tax exemptions approved for any particular 16 26 fiscal year shall be available for sales, purchases, transfers, 16 27 or uses during that fiscal year. Inheritance tax exemptions 16 28 and deductions approved for any particular fiscal year shall 16 29 be available for estates of decedents dying during that 16 30 fiscal year. Exemptions and deductions provided against the 16 31 calculation of the income taxes, the franchise tax, and the 16 32 moneys and credits tax that are approved for any particular 16 33 fiscal year shall be available for tax years beginning during 16 34 that particular fiscal year. 16 35 The bill provides that additional legislation may be 17 1 required to fully implement the review and approval of tax 17 2 expenditures required under the bill and requires the director 17 3 of the department of revenue to prepare draft legislation 17 4 in compliance with Code section 2.16 for submission to the 17 5 legislative services agency, if necessary, to implement the 17 6 bill. 17 7 DIVISION III == PROPERTY TAX CREDITS AND PAYMENTS 17 8 LIMITATION. Division III strikes the standing limited or 17 9 unlimited appropriations in Iowa Code for several property tax 17 10 credits for fiscal years beginning on or after July 1, 2018. 17 11 This includes the homestead and disabled veteran property 17 12 tax credit in division I of Code chapter 425, the property 17 13 tax credit or rent reimbursement for elderly and disabled in 17 14 division II of Code chapter 425, the family farm tax credit in 17 15 Code chapter 425A, the agricultural land tax credit in Code 17 16 chapter 426, the military service tax credit in Code chapter 17 17 426A, the business property tax credit in Code chapter 426C, 17 18 and the manufactured and the mobile home tax credit in Code 17 19 section 435.22. To the extent these credits were not already 17 20 included under Code section 25B.7 (funding property tax credits 17 21 and exemptions), the bill adds these tax credits to the list 17 22 of tax credits which local governments are only required to 17 23 provide to the extent such credit will be funded by a state 17 24 appropriation. 17 25 Finally, the bill strikes, for fiscal years beginning on or 17 26 after July 1, 2018, the standing unlimited appropriation in 17 27 Code section 441.21A for the repayment to local governments of 17 28 commercial and industrial property tax replacement claims. LSB 2194SS (8) 87 mm/rn/sc
