Policy Perspectives
February 7, 2016
Professional Developers of Iowa's Bill Tracker is HERE 
Presidential Caucuses + Weather
Friday, February 5 marked the 26th day of the 100-day scheduled legislative session. Week Four at the Statehouse was a challenging one, cut short by Presidential caucuses, bad weather, and the passing of a former legislator. Despite the hurdles, legislative leaders did not cancel the work week. However, it was shortened to cram all legislative activity into Wednesday and Thursday morning to allow legislators time to travel to Epworth to honor the passing of Senator Tom Hancock.
Former Senator Hancock passed away suddenly just after midnight last Sunday from an apparent heart attack. He was a Dubuque County Supervisor that served two terms in the Iowa Senate. Hancock was 67 years old and spent 31 years working for the US Postal Service prior to his elected positions in the Legislature and in Dubuque County. He was also a past President of the Iowa Firefighters Association and the Dubuque County EMS Association, and served as Chief of the Epworth Volunteer Fire Department for 16 years.
FY 2017 Budget
As you know, it takes agreement from the House, the Senate and the Governor in order to enact the budget each year. The budget process usually involves each of those three entities introducing their own budget numbers, starting with the Governor's budget in the first week of session.
Senate Democrats announced their FY 2017 budget targets this week. Budget targets are the broad numbers that each of the appropriations subcommittees is authorized to allocate. As you may know, we are allowed to spend 99% of the state's revenues for state budgeting.  The Senate Democrats spend all but $4.7 million of that target. Where the different sides end up arguing is when trying to decide whether and how other revenues fit into the budget picture. For example, House Republicans are already arguing that the Senate budget proposal spends 101.1 % of the ongoing revenue.
The bottom line is that two of the three budget proposals are out and it's only early February. This signals that legislators are trying to get things moving so they can adjourn on or really close to their 100-day session mark. If the House Republicans bring their budget numbers forward soon, then the individual budget bills can start to take shape.   You can view the Senate Budget targets HERE.
A variable that could complicate the state budget process this year is the perceived health of the state economy. Two indicators being tracked by the Iowa Department of Revenue's index on the state economy reached lows not seen since 2009 in December, which could signal a softening of the economy. One of the indicators tracks manufacturing demand and the other tracks diesel fuel demand. Overall, the index dropped 0.5 percent in December, marking 12 consecutive months of declines. If lawmakers start to get nervous about the state revenue numbers going down, it could affect the timeline for passing the FY 2017 budget.
Other Big Issues
School Funding
School Supplemental Aid is again a contentious issue, as expected. The Senate is holding firm on an increase of 4% to schools. The House has approved 2%, and the Governor suggested 2.45%. Leaders of the Education Committee in both chambers have expressed their interest in resolving this issue as soon as possible. However, neither side appears to be budging.
The Secure an Advanced Vision for Education (SAVE) Fund is also creating a lot of angst in the Capitol right now. It began in the 1990s as the School Infrastructure Local Option (SILO) sales tax, and was converted into a statewide sales tax in the decade following. It consists of a state-wide 1-cent sales tax which is distributed to schools on a per-pupil basis to be used for infrastructure needs or property tax relief. The SAVE sales tax is set to expire on December 31, 2029. This seems like a ways off, but for schools wishing to build infrastructure that requires bonding, having the certainty of a longer expiration date is crucial.
The Governor has proposed extending the SAVE tax while diverting part of the future growth in revenues toward water quality. The House Ways & Means Committee would like to extend it but divert future growth toward property tax relief. The House Education Committee also would like to extend the SAVE tax, but would divert future revenues toward districts that have disproportionate costs, such as higher costs for transportation or higher property tax rates due to lower property values. How they proceed remains to be seen, but it's unclear whether a pure extension of the SAVE tax would have the support of the Legislature and Governor without one of these changes in the future funding stream.
The House and Governor are pushing legislation that would update Iowa's tax code to conform to certain tax changes made by the U.S. Congress. They would like to see it enacted soon so the changes could be in effect for Iowans who are filing their taxes this Spring. If the House gets their way, the change would be retroactive back to the beginning of 2015, but it would cost $96 million. The Governor is advocating instead for a bill that would cost $49 million by taking effect in 2016. It is unclear whether the Senate will pass a version of the coupling bill, considering the budget challenges that lie ahead.
Medicaid Privatization
The Iowa Senate continues to fight the Governor's move to turn over control of the state's Medicaid system to private managed care companies. They have introduced legislation to end Medicaid privatization, and will hold legislative meetings on the issues on Monday, Feb 8. This is not an issue the Senate is likely to walk away from this session without some serious questions answered.
Legislative Forums
Now that Presidential Caucuses are over, it's time to engage in advocacy with your State Senator and Representative!! Please follow that link below to find out where legislative forums are occurring in your area!!
If you know of other legislative forums that do not appear on this list, let us know at info@ialobby.com!

Join PDI for Grow Iowa Day this
Wednesday, February 10, 2016
at the Iowa State Capitol
from 11:00 a.m. to 2:00 p.m.
Timeline: First Funnel Approaches
The first funnel deadline will arrive on February 19, 2016. This is the first major deadline of the session. The funnel is a tool used by the Iowa Legislature to winnow out legislative ideas that are not showing forward progress. Any bill that has not been passed by the committee to which it was originally introduced by the first funnel deadline will be dead for the year. Bills before three special committees - Appropriations, Ways & Means and Oversight - are exempt from the funnel deadlines due to the nature and importance of their bills.
What does this mean at the Statehouse? There will be very little floor debate in the full House and Senate over the next two weeks. Instead, subcommittees will be meeting everywhere, at a rate sometimes as high as 40-50 per day. There will also be a lot of full committee meetings. The goal will be to give every policy proposal that has merit a fair chance to make the first funnel deadline. Despite this though, when business closes on February 19, several hundred bills will die for the year.

Other PDI Issues

Tax Increment Financing
No news on the upcoming TIF bill for this update.  House Ways & Means Committee Chairman Tom Sands indicated that it will have similar features to the TIF bill he introduced last year (HF 628).  For reference, you can view our summary of House File 628 HERE.

Renewable Chemical Production Tax Credit 
PDI and like-minded partners continue to push for the quick passage of legislation to advance Iowa's economy by focusing on the use of biomass as feedstocks for the production of building block chemicals (see one-pager HERE). Please take a moment to tell your legislators you support the Renewable Chemical Production Tax Credit (SSB 3001 and HSB 518)!!

FY 2017 Budget
Now that the Senate and Governor have released their budget numbers, we will likely see appropriations bills start to take shape shortly after the House releases their numbers.  Make no mistake, the House budget will be lower than both the Senate and the Governor's budgets.  In the days ahead, be sure to weigh in with legislators about the importance of state programs to your ability to be successful in your position.  Once the budget process starts, it will go faster than you think!
Bills Being Tracked

Below is a table of the bills we are tracking for you. Please be sure to check the "Bill Tracker" link at the top and bottom of this message to see a more current version.

Bill# Title Status
Rural Highways Speed Limit
Summary | Details 
House Transportation Committee 
Raises the speed limit on rural highways from 55 to 60 miles per hour. 
Rural Highways Speed Limit
Summary | Details 
House Transportation Committee 
Raises the speed limit on rural highways to 65 miles per hour.
Tax Increment Financing (TIF) Changes
Summary | Details 
House Ways & Means Committee 
Relates to TIF changes.
IWILL, Formula Changes, AMT
Summary | Details 
House Ways & Means Committee 
This bill would implement the 3/8 cent sales tax increase for the Natural Resources and Outdoor Recreation Trust Fund.  The bill also contains significant changes to the Trust Fund's voter-approved funding formula and creates an Iowa Alternative Minimum Tax (AMT).
Secure an Advanced Vision for Education (SAVE) Fund Extension
Summary | Details 
House Education Committee 
Extends the SAVE fund to January 1, 2050.
Promotion Areas/Lodging Fee
Summary | Details 
Senate Local Government Committee 
Relates to the establishment of promotion areas by cities and authorizes the imposition of a local lodging fee in those areas.
Property Tax Revenue from Wind Energy
Summary | Details 
Senate Ways & Means Committee 
Authorizes municipalities to provide for the division of property tax revenue (tax increment financing) collected against wind energy conversion property located within an urban renewal area.
Property Taxes for Wind Energy
Summary | Details 
Senate Ways & Means Committee 
Authorizes municipalities to provide for the division of property tax revenue (tax increment financing) collected against property located within an urban renewal area.
Urban Renewal Law
Summary | Details 
Senate Ways & Means Committee 
Relates to Iowa's urban renewal law by providing that urban renewal plans and projects  shall not include the use of revenue resulting from a division of taxes for a public building that is exempt from taxation.
Abandoned Building Program
Summary | Details 
Senate Natural Resources & Environment Committee 
Makes changes to city eligibility requirements for receipt of abandoned building program funding assistance.
Residential Metered Water
Summary | Details 
Senate Ways & Means Committee 
Exempts from the state sales tax the sales price from the sale or furnishing of water to residential customers and creates state and local residential water excise taxes.
Drug Prescribing and Dispensing Information Program
Summary | Details 
Senate Human Resources Committee 
Requires the Board of Pharmacy to implement improvements to facilitate secure access to the Iowa Prescription Monitoring Program through electronic health and pharmacy information systems.
Iowa Water & Land Legacy (IWILL)
Summary | Details 
Senate Ways & Means Committee 
Raises the state's sales tax to fund the Natural Resources and Outdoor Recreation Trust Fund.
High Quality Jobs Program & Chemical Production Tax Credit Program
Summary | Details 
Senate Economic Growth/Rebuild Iowa Committee 
Relates to the administration of programs by the economic development authority (EDA) by modifying the high quality jobs program and creating a renewable chemical production tax credit program.
Economic Development Authority
Summary | Details 
Senate Economic Growth/Rebuild Iowa Committee 
Makes changes to programs and duties of the Economic Development Authority.
Governor's Transportation Budget
Summary | Details 
Senate Appropriations Committee 
Governor's Transportation Budget.
Solar Energy Tax Credits
Summary | Details 
Senate Ways & Means Committee 
Increases the amount of business and residential solar energy tax credits that may be claimed annually.

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