End of Session POLICY PERSPECTIVES | April 28, 2017
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Legislative Session Update

The 2017 Legislative Session officially came to a close at 7:14AM on Saturday, April 22, 2017 when the Iowa House and Senate both adjourned "Sine Die." Sine Die means "without a day" and indicates the Legislature does not plan to meet again in session until called to do so by the Iowa Constitution on the second Monday of January.
 
The biggest takeaways from the session would be some major policy changes coupled with huge budget cuts across most of state government (except education). On the policy front, the Legislature and Governor passed the first major reforms of the State's collective bargaining and worker compensation laws in several years, along with Stand Your Ground gun legislation, Voter ID legislation, and legislation banning abortions after 20 weeks.
 
On the budget front, the Legislature took on closing the biggest gap in revenue projections in several years, making midyear adjustments to the tune of a quarter billion dollars ($118 million in early session deappropriations and then $131 million borrowed from the Rainy Day Fund). On top of that, the new Fiscal Year (FY) 2018 budget they passed actually spends $14 million LESS than the adjusted current year.
 
In order to get there while still putting $40 million in new money into education, more money into the State Patrol, and while still paying back the amount they had to temporary borrow from the Rainy Day Fund, the rest of the budget had to be riddled with steep cuts on top of cuts many agencies saw midyear. The result, in many cases, are departments seeing their lowest budgets in many years and needing to trim staff and programs. Some entire programs (like the Leopold Center, for example) were eliminated, while some departments were given the flexibility to figure out how to manage their cuts and which programs they would eliminate.
 
In leadership's closing comments, it was clear that they intend to come into the 2018 legislative session with a full of head of steam to take on tax reform. They have also talked about school choice and pension reform.
 
The Governor now has 30 days to review and take action on the bills sent to him in the last three days of the session. With policy bills, his options are to sign them into law or to veto them. With spending bills, the Governor has the added option of using a line item veto to strike out sections of appropriations bills. This typically means those dollars would simply not be allocated. However, in the rare cases of a program having a standing appropriation in law, a line item veto could be beneficial to the program.
 
For example, the Resource Enhancement and Protection (REAP) program has a standing appropriation of $20 million/year. However, it has never been funded at that level because the Legislature puts a provision in an appropriations bill every year to cap REAP at a lower level (this year, all the way down at $12 million). If the Governor vetoed that REAP cap language, the amount for REAP would revert to the $20 million allocation specified in law.
PDI Budget Issues

As stated in the opening story, the budget saw cuts all across the board with the exception of K-12 education seeing an increase. Some of the cuts most of interest to you are as follows:
 
Economic Development Budget
  • The IEDA Administration budget, has been cut by another $1.085 M (to about $13.4M) in FY2018.  This is on top of earlier cuts in current FY 2017 of $1.031 M.  For comparison, in FY 2016 (which ended June 30, 2016), IEDA's Administration budget was $15.5 M.
  • COG Funding was cut by $15,000 to $175,000
  • Gaming funds that go to IEDA for Tourism Marketing were capped at $900,000. This was at $1.178 million in FY 2016
  • The Iowa Workforce Development budget was cut by about $2.2 million from the end of FY 2016 to $15.641 million
  • The Small Business Development Centers lost their $101,000 General Fund appropriation
  • The High Quality Jobs Program was level-funded at $15.9 million
  • STEM Scholarships were also level-funded at $1 million
  • Regents Economic Development programs were level-funded at $8.7 million (However, a total of $9.9 million was cut from the Regents' other funding in the Education Appropriations Bill)
  • Skilled Workforce Training dollars at community colleges were also level-funded in the Education Appropriations Bill.
Infrastructure Budget 
  • $1 million for Great Places Infrastructure Grants (level)
  • $5 million for Community Attraction and Tourism (level)
  • Regional Sports Authorities - $500K (level)
  • Lake Restoration - $9.6M (increase of $1M)
  • Water Trails and Low Head Dams - Zeroed out (from $1M)
  • State Park Infrastructure - $2M (a cut from $3M)
  • Recreational Trails - $1 M ($1.5 million below the Governor's request)
  • $1 M to the Railroad Revolving Loan and Grant Fund
Tax Credits / Tax Reform and TIF

In the final weeks of the session, we leaned on you a few times to weigh in with legislators in support of tax increment financing (TIF) and tax credit programs.  The House seemed intent on moving legislation to slash TIF by removing the $5.40 levy from the increment (HF 656) and to greatly reduce some economic development tax credit programs (HF 652). 

In the end, with your help, we were able to escape the session relatively unharmed on these fronts.  (I say "relatively" because you in the industry know that the press stories alone about cutting TIF and reducing/eliminating tax credit programs have probably hurt Iowa's job creation efforts.) 

What was crystal clear in the Legislature is that A LOT of legislators need economic developers to sit them down and walk them through how a lot of these programs work and how vital these tools are to you in your profession.  TIF and the tax credit program reductions you rely upon WILL BE ON THE TABLE next session.  If the Legislature is able to take on tax reform at a level that is big enough to change the playing field, then maybe some of these incentives won't be as necessary, but that's a big IF. 

Please take the time in the weeks ahead to reach out to your Representative and Senator about economic development.  Have them over to your office or take them out on a tour of the area.  PDI will be working with our partners in the industry in the weeks ahead on some of the messages our members should be conveying.  As information like that becomes available, it will be easier on you delivering information to a legislator with whom you have already established a good working relationship.
What Happened on Water Quality?
 
WISE Solution? IWILL? House bill? Senate bill? So, what is the deal with water quality? Changing bill numbers? Multiple committees? Confused yet? In a nutshell, here's a summary of the issue:
 
First, there are four main bill concepts to get straight: IWILL, WISE, the House bill and Senate bill.
 
IWILL - The Iowa's Water and Land Legacy (IWILL) is the effort to get the Legislature and Governor to increase the state sales tax by 3/8 cent in order to fund the Natural Resources and Outdoor Recreation Trust Fund, a permanent and constitutionally protected initiative passed overwhelmingly by voters in 2010. IWILL was included as a provision within the WISE Solution.
 
WISE Solution - The WISE Solution (HF 597) is a comprehensive water quality bill that was introduced on March 14 by Rep. Bobby Kaufmann and a dozen House Republicans. The bill included the full IWILL proposal to fund the trust fund, along provisions to clarify that 60% of trust fund revenues would be utilized for water quality initiatives under the Iowa Nutrient Reduction Strategy, to convert the sales tax on metered water into an excise tax that would fund city water and sewer infrastructure projects, and to cut income taxes for all Iowans by zeroing out the lowest tax brackets.
 
The main House Bill - The House advanced a water quality bill this year that (HF 612 and HF 538 and HSB 135) provided little funding initially, but was much more advanced on the policy side than their previous bill (which, incidentally, is largely the Senate and Governor's bill below). Without going into too much detail, the main point about the House bill is that it would address water quality through a focus on watersheds and pushing collaboration at the local level between landowners, local governments and others in an effort to facilitate them working together to fix the unique issues they face in that particular watershed.
 
The Senate bill - The Senate (and Governor's) bill (SF 512 and SF 482 and SSB 1034) is largely similar to last year's House bill in that it greatly relies on expanding the current grant program on water quality. While the current program certainly has success stories, critics have complained that the approach will never yield true and permanent results on water quality because of the voluntary, scattershot approach of the projects.
 
Both the House and the Senate bills contained limited initial funding. They both relied on using all or part of the conversion of the sales tax on metered water. During debate, the House members expressed their intent to look for other funding. The Senate bill included a provision that would also add in $15 million in Infrastructure Funds once bonds were paid off for the Vision Iowa program.
 
So, what happened? Shortly after the introduction of the WISE Solution, it became clear that while a growing number of legislators liked the concept, the Legislature would not ultimately be discussing a sales tax increase in the 2017 session. The sales tax increase issue would be better discussed in the 2018 session as a part within the overall discussion about tax reform (possibly by increasing the sales tax by one cent while simplifying and reducing income taxes).
 
This changed the discussion on water quality to policy only. In other words - If we are going to move forward on fixing Iowa's water, how should we do it? The Senate passed their bill, SF 512, on April 19, on a vote of 31-19 (with all 29 Republicans and two Democrats). On April 20, the House took up the Senate bill and REPLACED it with their own language from HF 612. They then passed that bill by a vote of 79-19 (with all but two of the 59 House Republicans - one against and one absent - and with a majority -22 - of the House Democrats).
 
With the closure of the session upon them, the Senate insisted on their language, unamended. However, the House, with their much larger bipartisan vote total, refused to accept the Senate language. The session ended in a stalemate on the issue. Be advised though that SF 512, as passed by the Senate, is still a live bill through the entire 2018 session.
 
What does this mean for IWILL? The more collaborative, watershed-based language in the House bill is much more friendly to the goals of the IWILL Coalition. If the WILL language were to pass, the water quality pieces of the House bill would actually fit within the 60% of IWILL that would have to be used for activities consistent with the Iowa Nutrient Reduction Strategy.
Bills Being Tracked for PDI

This is a list of the bills being tracked for PDI, starting with the bills that advanced to the Governor and then followed by the bills that did not complete the journey.  The bill list is updated constantly, so if you wish to see the updated bill list, just go to
http://www.ialobby.com/billtracker/pdi/
 
Bills that Advanced to the Governor

Bill# Title Status
HF203
Primary Road Fund
Summary | Details
Signed

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.
HF231
EDA Powers and Programs
Summary | Details
Signed

Addresses Economic Development Authority powers and programs.
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
Signed

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.
HF478
Property Assessment Appeal Board
Summary | Details
Sent to Governor

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

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).
HF518
Workers' Compensation
Summary | Details
Signed

Makes several provisions related to workers' compensation.
HF572
IWD Board
Summary | Details
Signed

Modifies IWD Board membership requirements.
HF607
Alcoholic Beverage Control (Chapter 123)
Summary | Details
Sent to Governor

Allows native distilleries to sell their products onsite (limited to 9 L per person, per day) and allows craft breweries to refill growlers onsite (limited to 72 oz). Makes other changes to 
HF608
Tax Law Administration
Summary | Details
Sent to Governor

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.
HF621
IEDA Technical Corrections
Summary | Details
Sent to Governor

Makes technical corrections to IEDA programs and projects.
HF643
Infrastructure (RIIF) Budget
Summary | Details
Sent to Governor

Appropriates $98.9 million from the Rebuild Iowa Infrastructure Fund (RIIF) and other special infrastructure accounts - a decrease of $400,000 from the current fiscal year.
SF1
Jobs Impact Statements
Summary | Details
Sent to Governor

Codifies the existing practice of attaching a jobs impact statement to every proposed or noticed rule.
SF130
FY17 Deappropriation
Summary | Details
Signed

Deappropriates $117 million for the current fiscal year (FY2017), which ends on June 30, 2017.
SF488
Workforce Housing Tax Incentives Program
Summary | Details
Sent to Governor

Increases the maximum dollar amount that may be allocated to the Workforce Housing Tax Incentives Program.
SF493
Recreational Lake/Water District Bonding Authority
Summary | Details
Signed

Gives combined benefited recreational lake and water quality districts the same power to issue bonds that cities have.
SF498
Federal Block Grant Appropriations
Summary | Details
Sent to Governor

Appropriates federal block grants for federal fiscal year 2018 & 2019.
 
SF510
Agriculture/Natural Resources Budget
Summary | Details
Sent to Governor

Appropriates $38.8 million to for agriculture, natural resources, and environmental protection, a $2.3 million cut (6%).  No change in the amount of other funds appropriated ($89.7 million).  
SF513
Economic Development Budget
Summary | Details
Sent to Governor

Appropriates $38.4 million for economic, workforce, and community development and housing programs for fiscal year 2018, a decrease of $3 million (8% cut). Increases appropriations from other funds by $10.7 million (total of $38.7 million). Moves Iowa Energy Center to IEDA, and repeals it July 1, 2022.
SF516
Standings Budget
Summary | Details
Sent to Governor

Reduces appropriations made automatically by law (called "standing" appropriations) by $12.5 million, and transfers $131.1 million from the Cash Reserve Fund to pay for current year (FY17) budget shortfalls. 


Bills that Fell Short but can be discussed next year

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


HF100
Environmental Protection Agency Regulations
Summary | Details
House Natural Resources Committee


HF158
Iowa Common Interest Ownership Act
Summary | Details
House Judiciary Committee


HF288
Water Service Taxation
Summary | Details
House Ways & Means Committee


HF328
Soil and Water Conservation Practice
Summary | Details
House Agriculture Committee


HF335
Public Recreational Use Area Tax Credit
Summary | Details
House Ways & Means Committee


HF378
Clean Water Fund
Summary | Details
House Agriculture Committee


HF403
Confidentiality for Government Volunteers
Summary | Details
House Floor


HF592
Homeownership Development Tax Credit
Summary | Details
House Ways & Means Committee


HF597
The WISE Solution for Water Quality
Summary | Details
House Ways & Means Committee


HF603
Eminent Domain
Summary | Details
Senate Floor


HF612
Water Quality Programs
Summary | Details
Withdrawn


HF651
Property Tax Assessments
Summary | Details
House Ways & Means Committee


HF655
Local Option Sales Tax
Summary | Details
House Floor


HF656
TIF - $5.40 Levy Removal
Summary | Details
House Floor


HF652
State Tax Credits
Summary | Details
House Ways & Means Committee


HF76
Local Option Sales Tax Rate
Summary | Details
House Natural Resources Committee


HF82
State Agency Fees
Summary | Details
House State Government Committee


HF90
Raceway Facility Sales and Use Tax Rebate
Summary | Details
House Ways & Means Committee


HJR4
Right to Hunt, Fish, Trap, Harvest Wildlife Constitutional Amendment
Summary | Details
House Natural Resources Committee


HJR7
County Reorganization
Summary | Details
House Local Government Committee


HSB138
Governor's Deregulation Bill
Summary | Details
House State Government Committee


HSB60
City and County Zoning
Summary | Details
House Local Government Committee


HSB90
Professional Licensure Fees and Regulations
Summary | Details
House Local Government Committee


HSB91
County and City Bonding
Summary | Details
House Local Government Committee


SF103
Inheritance Tax Repeal
Summary | Details
Senate Ways & Means Committee


SF104
High Quality Jobs Criteria
Summary | Details
Senate Ways & Means Committee


SF110
Water Quality and Soil Conservation Assessment
Summary | Details
Senate Agriculture Committee


SF14
Sales Tax Increase
Summary | Details
Senate Ways & Means Committee


SF148
Federal Low-Income Housing Credits
Summary | Details
Senate Commerce Committee


SF149
Administrative Rules and Rulemaking
Summary | Details
Senate State Government Committee


SF16
Wind Energy Conversion Property Tax Division and Allocation
Summary | Details
Senate Ways & Means Committee


SF167
State Sales and Use Tax
Summary | Details
Senate Ways & Means Committee


SF17
Property Taxes from Wind Energy Conversion
Summary | Details
Senate Ways & Means Committee


SF179
IRS-Bonus Depreciation Provisions
Summary | Details
Senate Ways & Means Committee


SF228
Certified Suppliers of Anchor Manufacturers
Summary | Details
Senate Ways & Means Committee


SF289
Speed Limit Increase
Summary | Details
Senate Transportation Committee


SF309
Individual Income Tax Exclusion
Summary | Details
Senate Ways & Means Committee


SF320
Topsoil Removal Disclosure
Summary | Details
Senate Commerce Committee


SF38
Individual Income & State Sales and Use Taxes
Summary | Details
Senate Ways & Means Committee


SF394
Research Activities Tax Credits
Summary | Details
Senate Ways & Means Committee


SF456
Des Moines Water Works Restructuring
Summary | Details
Senate Unfinished Business Calendar


SF512
Water Quality/Wastewater Treatment
Summary | Details
Senate Floor, Second Time


SF82
Inheritance Tax
Summary | Details
Senate Ways & Means Committee


SJR4
Right to Hunt, Fish, Trap, Harvest Wildlife Constitutional Amendment
Summary | Details
Senate Natural Resources & Environment Committee


SJR9
General Fund Expenditure Limitation Constitutional Amendment
Summary | Details
House Appropriations Committee


SSB1126
Energy Conservation
Summary | Details
Senate State Government Committee


SSB1141
Targeted Jobs Withholding Credit Pilot Project
Summary | Details
Senate Ways & Means Committee


SSB1154
Minimum Wage
Summary | Details
Senate Local Government Committee


SSB1155
Endow Iowa Tax Credits
Summary | Details
Senate Ways & Means Committee


SSB1186
Bottle Bill Repeal and Replace
Summary | Details
House Ways & Means Committee

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