PDI POLICY PERSPECTIVES | February 5, 2017
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Please Attend  
PDI Grow Iowa Day at the Capitol 2017
Wednesday, February 8, 2017
10:30 a.m. - 12:00 noon
Note Time Change due to conflicting event
(Exhibitors set up at 9:00 a.m.)
State Capitol, Des Moines, IA
 
PDI Members:  Due to a competing lunch event at GID on Feb. 8 we are adjusting the schedule for maximum exposure & serving breakfast pizzas, arriving at 10:15 a.m.
 
Here are the details: 
9:00 - 10:00 am - Booth Set-Up
Location: The first floor of the Capitol - Rotunda 
*You should be able to load/unload your vehicle from the west front entrance of the Capitol. 
 
10:00 am - 10:15 am Legislative Briefing - Update from PDI's Legislative Committee
Co-Chairs and PDI's lobbyists. 
Location:  The first floor of the Capitol - Rotunda - In front of West Entrance - Behind PDI Registration/Pizza Tables. 
 
10:30 - 12:00 noon -PDI's Legislative Event - An opportunity to mingle with legislators and staff while enjoying free breakfast pizza and refreshments! 
Location: The first floor of the Capitol - Rotunda  
 
12:00 - 12:30 Booth Breakdown 
Location: The first floor of the Capitol - Rotunda.  
 
12:30 - 1:00 pm Legislative De-Briefing
Location:  The first floor of the Capitol - Rotunda - In front of West Entrance - Behind PDI Registration/Pizza Tables.  
Legislative Session Update
Monday, February 6, 2017, marks the 29th Session Day and the start of the fifth week of the 2017 legislative session. The Deappropriations bill that trimmed $113 million from the FY 2017 budget also trimmed 10 days from the legislative session (sort of) by cutting legislative per diems down to 100 days (instead of 110). The Legislature's target adjournment date is now April 18. The "sort of" is a reminder that the end of per diems is not a hard deadline for the end of session; they can, and often do, go past that date.
 
The first four weeks of session always contain a lot of very necessary busy work - speeches by the Governor, Chief Justice and Iowa National Guard, bill introductions by the dozen and getting freshman legislators up-to-speed on the process of committee and floor work. Because of all this, it is often difficult for the Legislature to grapple with many policy issues in the beginning of the session. This year has been no different, so they have honed in on three issues that they want/need to get done early: the deappropriations bill, school funding and legislation to remove state funding to Planned Parenthood.
 
The deappropriations bill has been signed by the Governor and is being implemented now by the Governor's team. The bill consists of about $88 million in cuts and about $25 million in fund transfers. The cuts hit most of state government - except K-12 schools and a few other areas - with a 4.5 percent reduction in the current fiscal year that ends June 30. The Governor's budget then proposes to extend that lower amount of funding to state agencies into the next two fiscal years (FY 2018 and FY 2019).
 
The fund transfer portion of the bill collects about $25 million from six pots of money at the State, the biggest of which was elimination of the $12 million Grow Iowa Value Fund, revenues remaining from the previous program. By far, the most contentious transfer (and the most talked about piece of the entire bill) was the complete elimination of the $6.135 million Iowa Cultural Trust Fund which was used to fund statewide educational programs to promote participation in, expanded support of, and local endowment building for Iowa nonprofit arts, history, and sciences and humanities organizations. If you want to know more about the Deappropriation Bill, you can review an analysis by the non-partisan Legislative Services Agency by clicking HERE.
 
The legislation to remove state funding to Planned Parenthood has passed the Senate and awaits House approval. It would eliminate the State's Family Planning waiver, a roughly $300,000 state expenditure that draws down about $3 million in federal matching funds.
 
School funding for the upcoming year has also passed the Senate and is awaiting consideration by the House this week. The Legislature is proposing to increase funding to Iowa's K-12 schools by 1.11 percent, or $40 million.   The Governor had proposed a two percent increase, but legislators were unwilling to consider that amount. They argue that school funding has increased by $640 million over the last six years, while most other state agencies have seen cuts, some of them multiple cuts. Senate President Jack Whitver noted in his newsletter that "nearly 56 percent of the entire state of Iowa budget is allocated to education spending." School officials have argued that anything less than a four percent increase will lead to layoffs and larger class sizes.
 
Those three issues have generated a lot of activity with activists on all sides at the Capitol. The building has been loaded with protestors multiple times, and legislators have been forced to continue committee work until late at night in order to continue moving those bills forward. Late night committee and floor work is typically rare early in the session.
 
Once those three issues are in the rear view mirror, the goals of the rest of the session will begin to come into focus. Other than the FY 2018 and 2019 budgets and changes to collective bargaining, many in the Capitol are anticipating the Legislature will take a "less is more" approach and try to save major policy initiatives until next year. There is a chance though that they could take up any number of other issues, such as water quality or tax reform, if they feel enough pressure from Iowans.
 
On a lighter note, legislators in the House enjoyed a brief retreat from the serious issues last week when Rep. Rob Bacon of Slater was able to get House colleagues Tom Moore and Joel Fry to collaborate on a resolution to honor Iowa's pork producers. House Resolution 3 was introduced by "Fry, Moore, Bacon" and passed on a voice vote.
 
Finally, on January 31, the full make-up of the General Assembly became complete when Monica Kurth won the Davenport special election, becoming the newest member of the Iowa House of Representatives. Rep. Kurth is a Democrat, so this does not change the makeup of the Iowa House (it remains 59 Republicans, 41 Democrats). Rep. Kurth is a Scott Community College educator and counselor. If you live in this district (House District 89), you can contact Rep. Kurth at her legislative email (monica.kurth@legis.iowa.gov).
Other Issues

Alcohol task force report
As you may recall, Governor Branstad last year asked Debi Durham, Director of the Iowa Economic Development Authority, and Stephen Larson, Administrator of the Iowa Alcoholic Beverages Division, to convene a task force to conduct a comprehensive review of Iowa's alcohol laws and determine steps that could be taken to improve the business climate for industry while not undercutting Iowa's existing three-tier system.
 
The study group consisted of 13 stakeholders that met over five months. The produced a final report (link HERE) with recommendations, some legislative and some longer term. We will be watching in the months ahead as legislation comes forth to advance some of these recommendations.
 
Backfill
As the Legislature proceeded on the deappropriations bill, we had some PDI members ask about whether the bill would cut any of the property tax backfill that was promised to cities during the property tax debate a few years ago. The answer is no, the backfill was not cut. As we move into creation of the FY 2018 budget, we will be watching this to ensure the backfill is not threatened.
 
Tight Budget
In the weeks ahead, legislators will begin crafting the FY 2018 and 2019 budgets. For FY 2018, the House has number showing they can allocate up to $7.4555 Billion in appropriations. On the current projections, now that the FY 2017 cuts have been made, they anticipate having up to $200.9 million in new revenues. However, $84.6 million of that new revenue is already spoken for in the following five areas:
  • Medicaid - The Governor's budget calls for a $42 million more (to almost 1.35B next year)
  • The Cash Reserve Fund and the Economic Emergency Fund are, by law, to be equal to 10 percent of the General Fund budget. They anticipate needing $20.4 million to meet this requirement.
  • Increases in pharmaceutical costs in Iowa's prisons ($2.2 million)
  • Increased contribution to the Peace Officers Retirement System (to $5M, was temporarily lowered to $2.5 M last year)
  • Technology Funding ($17.5 M) that can no longer be paid for out of the Infrastructure Budget
When the proposed $40 million to schools is added in, this leaves $76.3 million in new revenues, less than the $88 million they would need if they wanted to restore the cuts that were just made. There will no doubt be a lot of pressure on legislators on how (or even if) they allocate those resources.
 
What does this mean for us?
Advocates for economic development are going to need to be showing up and making their voices heard!! Years of cuts and frozen budgets at the Iowa Economic Development Authority (IEDA) have taken their toll, and we should not stand by silently and watch the level of funding from the deappropriations bill become the level allocated for the next two years. Call or email your legislators today, and tell them to increase funding for the IEDA!

IEDA Bills
PDI is tracking the IEDA department bills and providing assistance where we can.  IEDA's Legislative Liaison Jenny Klein has provided PDI members with a couple of one pagers to help explain their legislative efforts, the broad strokes of which you heard about already from Director Durham at PDI's fall conference.  Their Workforce House Tax Credit Expansion Bill (HSB 65 & SSB 1035) has a one pager available HERE.  The IEDA's technical correction bill (SF 176 & HSB 36) has a one pager available HERE.

TIF Chronicle
Good news! As of yet, nothing to report! 

Tax Credit Discussion
There has been some discussion at the Capitol about looking at the tax credits on the books and making some assessments as to what is working and what is not.  The discussion had begun well before the recent Des Moines Register story that claims the state loses $12.1 Billion because of tax credits (a copy of the article is HERE).  We'll be watching this issue closely as it develops.


Bills Being Tracked for PDI
This is a list of the bills being tracked for PDI and their status at the time of publication.  The online bill list is updated constantly, so if you wish to see the updated bill list, just go to http://www.ialobby.com/billtracker/bills.cfm?ClientID=5&NoHeader=0

Bill# Title Status
HF1
Executive Branch Program/Project Review
Summary | Details
House State Government Committee

Establishes an ongoing system of review and ongoing repeal dates for Executive Branch programs and projects.
HF100
Environmental Protection Agency Regulations
Summary | Details
House Natural Resources Committee

Nullifies the regulations of the US Environmental Protection Agency in Iowa.
HF158
Iowa Common Interest Ownership Act
Summary | Details
House Judiciary Committee

Creates the Iowa Common Interest Ownership Act.
HF76
Local Option Sales Tax Rate
Summary | Details
House Natural Resources Committee

Allows an increase in the maximum local option sales tax rate to fund local natural resources and outdoor recreation projects.
HF82
State Agency Fees
Summary | Details
House State Government Committee

Prohibits state agencies from establishing, imposing, or collecting fees for licenses and applications unless authorized by state or federal law.
HF90
Raceway Facility Sales and Use Tax Rebate
Summary | Details
House Ways & Means Committee

Modifies the sales and use tax rebate to the owner or operator of a raceway facility.
HJR4
Right to Hunt, Fish, Trap, Harvest Wildlife Constitutional Amendment
Summary | Details
House Natural Resources Committee

Proposes a state constitutional amendment establishing the right to hunt, fish, trap, and harvest wildlife.
HSB36
EDA Programs and Projects
Summary | Details
House Economic Growth Committee

Makes changes to programs and projects administered by the Economic Development Authority.
HSB40
EDA Powers and Programs
Summary | Details
House Economic Growth Committee

Addresses Economic Development Authority powers and programs.
HSB43
Local Option Sales Tax
Summary | Details
House Ways & Means Committee

Makes changes to the process for approving and imposing a the local option sales and services tax.
HSB60
City and County Zoning
Summary | Details
House Local Government Committee

Allows a city or county to allow, regulate, and restrict the transfer of development rights.
 
HSB65
Workforce Housing Tax Incentives Program
Summary | Details
House Economic Growth Committee

Increases the maximum dollar amount that may be allocated to the Workforce Housing Tax Incentives Program.
HSB67
Federal Immigration Law Enforcement
Summary | Details
House Public Safety Committee

Prohibits the state, counties, cities, and certain postsecondary educational institutions from limiting or restricting enforcement of federal immigration laws.
HSB9
Primary Road Fund
Summary | Details
House Transportation Committee

Allows the state transportation commission to periodically allocate funds from the Primary Road Fund (PRF) to the secondary and municipal road systems in exchange for retaining all or a portion of federal aid road funds that would otherwise be allocated to counties and cities.
SF1
Jobs Impact Statements
Summary | Details
Senate Floor

Requires that every proposed rule under a notice of intended action or publication without notice contain a jobs impact statement outlining the purpose and statutory authority of the rule and analyzes and sets out in detail the impact of the proposed rule on state agencies, local governments, the public, and the regulated entities, including regulated businesses and self-employed individuals affected by the rule.
SF103
Inheritance Tax Repeal
Summary | Details
Senate Ways & Means Committee

Repeals the state inheritance tax and the state qualified use inheritance tax effective July 1, 2017.
SF104
High Quality Jobs Criteria
Summary | Details
Senate Ways & Means Committee

Alters the high quality jobs criteria to no longer allow projects that only have capital investment, but no new job creation. 
SF110
Water Quality and Soil Conservation Assessment
Summary | Details
Senate Agriculture Committee

Requires commodity organizations to establish a separate state assessment for water quality and soil conservation, if approved by a majority of its members at a referendum.
SF127
Raceway Facility Sales and Use Tax Rebate
Summary | Details
Senate Ways & Means Committee

Modifies the sales and use tax rebate to the owner or operator of a raceway facility.
SF130
Appropriations for FY2016-17
Summary | Details
Signed

Makes appropriations reductions and reallocations for FY2016-17.
SF14
Sales Tax Increase
Summary | Details
Senate Ways & Means Committee

Increases state sales tax rate from 6 percent to 6.375 percent and provides for the transfer of sales tax revenues to the natural resources and outdoor recreation trust fund.
SF148
Federal Low-Income Housing Credits
Summary | Details
Senate Commerce Committee

Prohibits the Iowa finance authority from allowing a developer fee to exceed an amount equal to 10% of the total project costs for federal low-income housing credits.
SF149
Administrative Rules and Rulemaking
Summary | Details
Senate State Government Committee

Makes provisions for the review of administrative rules and the rule making process.
SF16
Wind Energy Conversion Property Tax Division and Allocation
Summary | Details
Senate Ways & Means Committee

Requires property taxes collected from wind energy conversion property located in an urban renewal area be allocated to and, when collected, paid into the funds for the respective taxing districts in the same manner as all other property taxes.
SF167
State Sales and Use Tax
Summary | Details
Senate Ways & Means Committee

Increases the state sales and use tax to 6.375%, and provides for the transfer of sales tax revenues to the natural resources and outdoor recreation trust fund. Amends the transfer of use tax revenues to the SAVE fund to 15.6863%.
SF17
Property Taxes from Wind Energy Conversion
Summary | Details
Senate Ways & Means Committee

Requires property taxes collected from wind energy conversion property located in an urban renewal area be allocated to and, when collected, paid into the funds for the respective taxing districts in the same manner as all other property taxes.
SF176
IEDA Technical Corrections
Summary | Details
Senate Floor

Makes technical corrections to IEDA programs and projects.
SF179
IRS-Bonus Depreciation Provisions
Summary | Details
Senate Ways & Means Committee

Temporarily updates the Code references to the Internal Revenue Code and decouples from certain federal bonus depreciation provisions.
SF180
EDA Powers and Programs
Summary | Details
Senate Floor

Addresses Economic Development Authority powers and programs.
SF38
Individual Income & State Sales and Use Taxes
Summary | Details
Senate Ways & Means Committee

Repeals the individual income tax and increases the state sales and use tax rates.
SF82
Inheritance Tax
Summary | Details
Senate Ways & Means Committee

Reduces the state inheritance tax rate over a nine-year period with the tax repealed effective July 1, 2027.
SJR1
State Spending Limit/Constitutional Amendment
Summary | Details
Senate Appropriations Committee

Proposes an amendment to the Iowa Constitution that limits state spending to 99% of revenue estimates, or 104% of the revenue estimates for the current fiscal year (whichever is greater).
SJR4
Right to Hunt, Fish, Trap, Harvest Wildlife Constitutional Amendment
Summary | Details
Senate Natural Resources & Environment Committee

Proposes a state constitutional amendment establishing the right to hunt, fish, trap, and harvest wildlife.
SSB1034
Water Quality/Wastewater Treatment
Summary | Details
Senate Natural Resources & Environment Committee

Modifies existing wastewater treatment program, establishes new water quality programs, and creates a water service excise tax and sales tax exemption.
SSB1035
Workforce Housing Tax Incentives Program
Summary | Details
Senate Ways & Means Committee

Increases the maximum dollar amount that may be allocated to the Workforce Housing Tax Incentives Program.
Your Legislative Team
The Advocacy Cooperative | Campbell/Patterson Consulting LLP, PO Box 1403, Des Moines, IA 50131
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