PDI POLICY PERSPECTIVES | March 5, 2017
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Legislative Session Update

Monday, March 6, 2017, will mark the 57th Session day of the scheduled 100-day session.
A subcommittee meeting in the House Lounge with several people waiting to speak about a bill. This one involves Certificate of Need_ a program at Public Health that regulates the locating of new health centers.
A subcommittee meeting in the House Lounge with several people waiting to speak about a bill. This one involves Certificate of Need, a program at Public Health that regulates the locating of new health centers.
The Legislature will be looking to wrap up all of its remaining work in the next six weeks or so.
 
First Funnel
This past Friday was the "first funnel deadline," an administrative mechanism the Legislature uses to winnow away legislation that is not showing forward progress enough to have a realistic goal of becoming law. If a bill has not been approved by the committee to which it was assigned by the first funnel deadline, it is dead for the year. For example, a bill assigned to the House Education Committee to stay alive would need to have been assigned to a subcommittee, passed the subcommittee and then passed the full committee. Bills assigned to the committees on Ways & Means, Oversight and Appropriations are exempt from the funnel deadlines.
 
The first funnel deadline is probably the most challenging stage of the session for a legislator or a lobbyist (aside from the closing 2-4 days) because the funnel week and the week before it are stacked wall-to-wall with meetings from early morning often deep into the night. It is not uncommon to have meetings on bills every 15 minutes to a half hour from 8am to 6pm, and to also have multiple occurrences of three or more at the same time
A subcommittee on a bill to get rid of several boards and commissions drew so many attendees that over 50 people crowded the hallway never able to enter the room.
A subcommittee on a bill to get rid of several boards and commissions drew so many attendees that over 50 people crowded the hallway never able to enter the room.
that requires racing across the building in order to weigh in on legislation while you have a chance.  
 
Heavy Lifting on Many Issues
This year's first funnel week was particularly exhausting due to the heavy lifting that had to be done on some of the priority bills for the majority party in the House and Senate. These included a major gun bill in the House, legislation to overhaul the Worker Comp system in both chambers, abortion bills dealing with both life at conception and a ban on procedures after 20 weeks, Voter ID legislation in both chambers, water quality legislation in both chambers, legislation to ban sanctuary cities, medical malpractice legislation, legislation to add regional representation to the Des Moines Water Works board, legislation to both continue and to expand the State's cannabidiol program, legislation to get rid of a number of professional licensure boards and commissions, and legislation to replace the popular bottle bill with a beautification grant program.  Some of these issues didn't make it, some had to be altered heavily in order to survive, and some stayed largely intact as introduced.
 
A lot of media focus this week was on the Worker Comp legislation, since the bills were just introduced and then rushed through subcommittee and committee in both chambers to keep them alive. The bill is extremely technical and really requires a decent understanding of the system and potential abuses to understand how it will impact workers and companies. Opponents are saying it is far-reaching and unnecessary; proponents claim the changes are desperately needed to update Iowa's system. The Iowa League of Cities does have a handy section-by-section analysis of the bill HERE.
 
The gun bill in the House has been covered heavily in the media for weeks, and it was slimmed down considerably in order to remove some of the controversy. The biggest piece to be stripped out was the prohibition on cities, counties, community colleges and the Regents Universities being able to regulate guns on their property. The bill still contains the controversial "Stand Your Ground" section, along with allowing kids of any age to shoot with their parents, and several permits changes that are largely non-controversial.
Room 116 of the Capitol_ packed during a subcommittee meeting on Worker Comp legislation.
Room 116 of the Capitol, packed during a subcommittee meeting on Worker Comp legislation.
 
The next few weeks will consist of two main things: Preparation for both the Second Funnel and the Budget
 
Second Funnel
The second funnel deadline is now four weeks away (on March 31, 2016), and is the date by which legislation, in order to stay alive, will need to have been passed by the committee to which it was assigned in BOTH the House and the Senate. To get ready for the second funnel, both the House and the Senate need to pass as many of their priority bills as quickly as possible over to the other chamber with enough time for the second chamber to be able to get the bill into committee, assigned a subcommittee, passed by a subcommittee and then passed by the full committee. The next couple weeks, in particular, will be loaded with floor debate in both the House and Senate. (Note though that if a bill exists in identical form in both chambers, and has been passed by committee in both chambers, it has qualified for the funnel deadline, even though it hasn't yet passed either the House or Senate.)
 
Budget
The Revenue Estimating Conference (REC) will meet on March 14, 2017, to assess State revenues and expenditures and to revise their estimates as to how much money the Legislature and Governor have to work with in the upcoming year. If they revise upward, then the Legislature will move forward on the budget process using (lower) numbers produced in the December REC meeting. If the revise downward, then the Legislature will need to start putting together the FY 2018 budget using the newer lower numbers. If the downward revision is large enough, it COULD require the Legislature to write and pass another deappropriations bill that attempts to lower expenditures even further over the final three and a half months of the current fiscal year.
 
Once the REC numbers are in, the Legislature will begin the budget process. The first step of that will be to divide the available revenues among the seven Appropriations Committee subcommittees and determine the overall amount each of them is authorized to expend in each appropriations bill. This is often referred to as establishing budget targets. Once the targets are set, each Appropriations Subcommittee begins that work of allocating those funds among the programs within their jurisdiction.
 
That means the next two weeks are a good time to be talking to your legislators about programs important to you! Once the appropriations bills are written, and your priority is underfunded, getting it increased requires taking it from someone else. That's never an easy proposition.
 
Public Hearings Monday/Tuesday
Late this past week, lawmakers set four public hearings for this Monday and Tuesday, March 6 & 7 at the Capitol. They are at different times on the following issues: the Des Moines Water Works bill, legislation blocking local governments from setting their own rules on issues like minimum wage (commonly called "preemption"), the Voter ID bill, and the Worker Comp bill. You can read the notices and sign up to speak at one of the public hearings by following THIS LINK. Additionally, if you feel strongly about these or any other issues, do not hesitate to contact your legislators; you can find them HERE 
Water Quality Heating Up
After weeks with lots of mentions, but without much actual legislative action on the issue, water quality took a leap forward last week. Legislation advanced in both and House and the Senate and a third proposal began to take shape behind the scenes.
 
We'll start with the Governor's bill (SSB 1034), since anyone tracking the issue last year will recognize 1034 as last year's House bill. The bill would devote over $700 million to water quality over the next 12 years, roughly $260 million from the General Fund and about $184 million by tapping into the Rebuild Iowa's Infrastructure Fund (RIIF), which is otherwise used for a number of state programs ranging from building projects at the Regents Universities to trail funding and Resource Enhancement and Protection (REAP) funding. The bill would also replace the sales tax on metered water with a water service excise tax to fund a $284 million expansion of the existing wastewater treatment program for local governments. The bill passed out of the Senate Natural Resources Committee Thursday by a vote of 12 to 1. It will now likely head to the Senate Ways & Means Committee for more review.
 
In the House, the Agriculture Committee passed HSB 135 with a 13-5 vote, the House's new-and-improved version of their bill from last year. The bill appropriates $232 million over the fiscal years 2018 to 2030 from the RIIF to the Water Quality Infrastructure Fund, along with $262 million from the General Fund. Similarly, the bill would phase-in a replacement of the sales tax on metered water with an excise tax that is devoted to water and wastewater treatment investments by local governments. This equals about $738 million over the bill's life span.
 
The bill would create a nutrient exchange system that could be employed to help communities lower their water and wastewater treatment costs by supporting investments elsewhere in the watershed. The bill makes it possible for the Iowa Finance Authority to make more funds available to local governments by authorizing them to bond against the funds generated by the excise tax. Finally, the bill expands the ability to be able to use 28E agreements to further these water quality goals.
 
A third proposal, being drafted by Rep. Bobby Kaufmann, would improve upon the House and Senate bills by implementing the IWILL proposal, a permanent $200 million/year funding that flows into the Natural Resources and Outdoor Recreation Trust Fund, at least 60% of which would have to be used for specific water quality. While Rep. Kaufmann's proposal is still in drafting, the details of the bill are as follows:
  • Division 1 of the bill would increase the state sales tax by 1/8 of a cent on January 1, 2018, then again on January 1, 2019, and then a final 1/8 cent on January 1, 2020. The division also makes technical changes to ensure the 1-cent for schools does not change.
  • Division 2 of the bill would require the Department of Revenue to determine exactly how much revenue was raised in Division 1 so that same amount could be used for income tax cuts. The bill would reduce the nine state income tax rates by an amount that would equal that number, starting with the lowest rate and then moving to the next rate after eliminating that rate.
  • Division 3 of the bill would convert the sales tax on metered water into a six percent excise tax, all of which would eventually be transferred to the wastewater and drinking water treatment financial assistance fund. The bill also makes other changes to make it easier for cities to use these funds.
  • Division 4 of the bill would require that at least 60 percent of the money deposited in the Natural Resources and Outdoor Recreation Trust Fund be used on research-based water quality initiatives that are part of the Iowa Nutrient Reduction Strategy, have a life expectancy of more than 24 months, and provide for multiple natural resource benefits.
We hope to see Rep. Kaufmann's bill introduced and numbered soon.
Other Issues

Preemption
In the last issue, we explained a little about the preemption issue and why PDI is supporting this legislation (House File 295 - Click HERE).  As we note in the opening story, there will be a public hearing on this bill on Monday and we may see the bill debated in the full House of Representatives this week. 

Tax Credit Discussion

We continue to monitor discussions in the legislative arena about making changes to tax credit programs, and how that might effect economic development.  The Iowa Policy Project in Iowa City referenced a report from the Iowa Department of Revenue (HERE) on the Research Activities Tax Credit in the hopes of driving policy makers toward making changes to this program.  PDI has a long history of standing alongside the Iowa Chamber Alliance, the Association of Business and Industry, and others to depend this program. 

With the first funnel now behind us, any thoughts about altering tax credit programs would likely come to light in the days ahead.

Post-First Funnel Bill Tracker List

Listed below in the FIRST Table are bills we are tracking for you that SURVIVED the first funnel deadline. In the SECOND table, we list the bills we are tracking for you that DIED in the funnel (though be advised a similar version may still be alive).
 
Bills Still Alive
Bill# Title Status
HF231
EDA Powers and Programs
Summary | Details
Signed

Addresses Economic Development Authority powers and programs.
HF288
Water Service Taxation
Summary | Details
House Ways & Means Committee

Exempts from the state sales tax the sales price from the sale or furnishing by a water utility of a water service in the state to consumers or users. 
HF291
Collective Bargaining
Summary | Details
Signed

Makes changes to several employment matters involving public employees, including collective bargaining, educator employment matters, personnel records and settlement agreements, and city civil service requirements.
HF295
Minimum Wage
Summary | Details
House Floor

Prohibits a county or city from providing for any terms or conditions of employment that exceed or conflict with the requirements of federal or state law relating to a minimum or living wage rate, any form of employment leave, hiring practices, employment benefits, scheduling practices, or other terms or conditions of employment.
HF335
Public Recreational Use Area Tax Credit
Summary | Details
House Ways & Means Committee

Provides a tax credit and other benefits for private land owners who make land and water areas available for public recreational purposes.   
HF403
Confidentiality for Government Volunteers
Summary | Details
House Floor

Provides that personal information for government volunteers is confidential.
HF439
Workforce Housing Tax Incentives Program
Summary | Details
House Ways & Means Committee

Increases the maximum dollar amount that may be allocated to the Workforce Housing Tax Incentives Program.
HF478
Property Assessment Appeal Board
Summary | Details
House Ways & Means Committee

Makes changes to the property assessment appeal board.
HF517
Gun Law Changes
Summary | Details
House Floor

Makes several provisions related to carrying, possessing, acquiring, and using weapons, including allowing the possessing of pistols and revolvers by individuals under age 14, permitting concealed carry at the State Capitol, and justifiable use of reasonable and deadly force (stand your ground)., or 
HF518
Workers' Compensation
Summary | Details
House Floor

Makes several provisions related to workers' compensation.
HF521
Alcoholic Beverage Control
Summary | Details
House Floor

Makes several changes concerning alcoholic beverage control and matters administered by the Alcoholic Beverages Division of the Department of Commerce.
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.
HSB121
Tax Law Administration
Summary | Details
House Ways & Means Committee

Makes changes related to the administration of state tax laws, including the administration of the research activities credit, income taxes, and the flood mitigation program.
HSB135
Water Quality Programs
Summary | Details
House Floor

Establishes new water quality programs, makes appropriations related to water quality, and creates a state water service excise tax and a related sales tax exemption.
HSB163
Bottle Bill Repeal and Replace
Summary | Details
House Floor

Repeals the beverage containers control law and replaces it with new recycling, litter control, and community enhancement programs.
HSB168
IWD Board
Summary | Details
House Floor

Modifies IWD Board membership requirements.
HSB36
EDA Programs and Projects
Summary | Details
House Floor

Makes changes to programs and projects administered by the Economic Development Authority.
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.
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. 
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.
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.
SF228
Certified Suppliers of Anchor Manufacturers
Summary | Details
Senate Ways & Means Committee

Creates an economic development program allowing certified suppliers of anchor manufacturers to make an adjustment to net income for state individual and corporate income tax purposes.
SF309
Individual Income Tax Exclusion
Summary | Details
Senate Ways & Means Committee

Excludes certain net capital gains from the individual income tax.
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.
SF394
Research Activities Tax Credits
Summary | Details
Senate Ways & Means Committee

Limits the aggregate amount of research activities tax credits that may be refunded.
SF435
Workers' Compensation
Summary | Details
Senate Floor

Makes several provisions related to workers' compensation.
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).
SSB1034
Water Quality/Wastewater Treatment
Summary | Details
Senate Floor

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.
SSB1125
Recreational Lake/Water District Bonding Authority
Summary | Details
Senate Ways & Means Committee

Gives combined benefited recreational lake and water quality districts the same power to issue bonds that cities have.
SSB1126
Energy Conservation
Summary | Details
Senate Floor

Extends existing energy conservation requirements to residential renovations and repairs.
SSB1141
Targeted Jobs Withholding Credit Pilot Project
Summary | Details
Senate Ways & Means Committee

Extends the targeted jobs withholding credit pilot project by five years.
SSB1146
Des Moines Water Works Restructuring
Summary | Details
Senate Floor

Creates a regional water authority and regional water authority board to assume the transfer of powers, duties, assets, and liabilities of a water utility.
SSB1155
Endow Iowa Tax Credits
Summary | Details
Senate Ways & Means Committee

Increases the amount of Endow Iowa tax credits that may be authorized by the economic development authority.
 

DEAD Bills
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.
HF212
Licensing Sanctions
Summary | Details
House State Government Committee

Prohibits College Student Aid Commission from initiating action to deny, revoke, or suspend any license authorized by the state to any person who has defaulted on an obligation owed to or collected by the commission.
HF328
Soil and Water Conservation Practice
Summary | Details
House Agriculture Committee

Exempts certain soil and water conservation practices from being considered as the practice of engineering.
HF378
Clean Water Fund
Summary | Details
House Agriculture Committee

Establishes a clean water fund supported by a separate state assessment of agricultural commodity organizations.
 
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.
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.
HJR7
County Reorganization
Summary | Details
House Local Government Committee

Proposes an amendment to the Iowa Constitution for the reorganization of counties beginning in January 2021.
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.
 
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.
HSB90
Professional Licensure Fees and Regulations
Summary | Details
House Local Government Committee

Makes changes to professional licensure fees and regulations.
HSB91
County and City Bonding
Summary | Details
House Local Government Committee

Makes changes relating to the designation of certain county and city activities  for bonding purposes.
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.
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.
SF289
Speed Limit Increase
Summary | Details
Senate Transportation Committee

Increases interstate highway speed limit to 75.
SF320
Topsoil Removal Disclosure
Summary | Details
Senate Commerce Committee

Requires a real estate transfer disclosure statement indicate whether topsoil has been removed from the property in the last 20 years.
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.
SSB1154
Minimum Wage
Summary | Details
Senate Local Government Committee

*A version of this bill in the House is alive and will likely be passed. Prohibits a county or city from adopting employment terms or conditions that exceed or conflict with federal or state requirements, including minimum wage, employment leave, hiring practices, employment benefits, and scheduling practices.

Your Legislative Team
The Advocacy Cooperative | Campbell/Patterson Consulting LLP, PO Box 1403, Des Moines, IA 50131
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