POLICY PERSPECTIVES | February 4, 2018
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THANK YOU to all those who were able to join us for the This Is Iowa Legislative Showcase at the Iowa Fairgrounds!!

The revised open air format was a great success, and much preferred by the 50 House Representatives and 26 Senators who attended, all of whom seemed to stay longer than they did under the old format. The organizing committee will compile feedback from the event, compare notes, and chart a course for 2019. If you have thoughts about the event, feel free to email them to info@ialobby.com and we'll be sure they get passed along.
Legislative Session Update

Monday, February 5, marks Session Day 29 of the scheduled 100-day session. Four weeks down and ten to go before target adjournment.
 
Monday also marks caucus night across Iowa, so be sure to attend yours! The Legislature will not be working in Des Moines that day in order to enable legislators to attend their own caucuses. While this is not a presidential election year, the Governor and Lieutenant Governor's race will be on November's ballot along with all statewide elective offices (Attorney General, Auditor, Treasurer, Secretaries of State and of Agriculture), all four congressional races, the entire 100-member Iowa House, 25 seats of the 50-member Iowa Senate, and a number of local races.
 
First Funnel Coming
We are now two short weeks away from the first major deadline of the legislative session - the First Funnel on Friday, February 16, 2018. There are two "funnels" built into the Legislature's schedule every year that are essentially winnowing devices for eliminating any legislation that is not making forward progress. By the first funnel, any non-tax or spending bill must have been approved by the committee to which it was assigned or else it is dead for the year. There are still ways to advance a concept after the funnel deadline through amendment to another bill or leadership bills.
 
A byproduct of the coming first funnel deadline is that bills are being introduced at a furious pace right now. It is absolutely CRITICAL that you look through the bill list and keep checking it often to see if anything new pops up. The looming funnel deadline often means a subcommittee meeting may be scheduled on a bill right after the bill is introduced. In the days ahead, some bills will go from introduction to being voted out of committee within a number of hours.
 
FY 2018 De-Appropriations
While the coming funnel keeps the policy committees racing, the House, Senate and Governor continue to negotiate on the budget. Not the upcoming FY 2019 budget that begins July 1, 2018, but the current FY 2018. The Governor suggested a deappropriations package that totals around $27 million; the Senate has moved their version out of committee that cuts closer to $52 million. We are waiting to see what the House proposes. Whatever they end up with will need to be cut from the CURRENT FISCAL YEAR, which has less than five months remaining.
 
Why the big disparity between the Governor and the Senate's deappropriations bill? You may recall from last Fall that the fiscal year takes some time to close out. Fiscal Year 2017, despite ending at midnight on July 1, 2017, was not finalized until October 2017 due to the amount of time it takes to ensure receipts and expenditures made into and out of the State's multiple accounts gets recorded in the proper place. Senator Schneider, the Senate Appropriations Committee Chair, explained in committee that the Senate would like to cut enough from FY 2018 not just to balance the numbers, but to put 1/2 of one percent in the bank, just in case numbers continue to sour after the Legislature has left town for the year. Needing to return in October for a Special Legislative session to make transfers out of the State's emergency funds right before the November election is not ideal.
 
The Fiscal Year 2019 budget is expected to be equally contentious. However, work on that cannot really begin until after the March meeting of the Revenue Estimating Conference (REC), the date of which has not yet been set. The Legislature has to review the December 2017 estimate and the March 2018 estimate and then enact a budget that uses the lower of the two projected revenue numbers. We do not expect to see much about the FY 2019 budget until after those numbers are determined (other than the one percent - $32 million - increase for schools which was announced this week).
PDI Issue Focus

Issue Alert - Economic Development Funding Cuts 
The single biggest issue of concern for PDI right now at the Capitol is how the deappropriations bill ends up treating economic development. The Senate version of the bill (SF 2117) contains some staggering cuts to economic development resources, and these are cuts that would need to occur between NOW and June 30, 2018. These cuts include the following:
  • $396,039 from the IEDA Administration budget. This budget was cut by over $1 million just last year (about 7.49 %), down to $13.4M. This cut would take this line item down to about $13 million going into the FY 2019 budget cycle.
  • $150,000 from Regional Tourism Marketing at IEDA. This budget was capped last year at $900,000 from its normal level of $1.1 to $1.3 million. This cut would take this line item down to $750,000 going into the FY 2019 budget cycle.
  • $7 million from the High Quality Jobs Program at IEDA, leaving $8.9 million (a cut of 44%).
  • $7 million from the Skilled Worker and Job Creation Fund to the State's General Fund.
You should take a moment to contact your legislators and let them know your thoughts. You can find your legislators by going HERE and typing in your home address.
 
Future Ready Iowa
The Governor's Future Ready Iowa bill (SSB 3087 and HSB 602) has been introduced in both chambers and should see discussion soon. The Governor's Office provided us with a summary of the bill that you can review HERE. PDI is supporting this legislation.
 
Tax Increment Financing
The TIF Bill we alerted you to recently (HF 2063) was passed by subcommittee, but faces an uncertain future in the House Ways & Means Committee. PDI is registered in opposition to the bill and testified against it in subcommittee. We have committed to legislators that we are willing to work with them on the legislation, however the large scope of the bill makes it difficult to determine exactly what TIF problems the Legislature really wants to address. Please keep talking with your legislators about TIF and let us know what kind of feedback you receive.
 
Property Tax Backfill
With the Iowa budget continuing to be dire, we are closely monitoring the Legislature's moves with regard to the Commercial & Industrial Property Tax Replacement Claims system, commonly referred to as the "Backfill." As we stated in the last issue, PDI is on record as supporting the continuation of the backfill.  
If you need background information about the backfill, a one pager with some history and talking points is available HERE. Also, an Excel spreadsheet is available HERE that will allow you to look up how much your city, county, school district or other taxing entity receives from the backfill.
   
Lease Purchase
Legislation (HSB 568 and SSB 3110) that would curtail a local government's ability to use "lease purchase" for projects is moving forward in both legislative chambers. The legislation was recently amended to expand the definition of public improvement in order to block this use in projects that are paid for in whole or in part with public money. PDI initially registered as Undecided in order to be able to track the legislation. You can find some media stories about the bill HERE and HERE.
Bills Being Tracked for PDI

This is a list of the bills being tracked for PDI. 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/

HF2004
Workforce Housing Tax Incentives Program Eligibility
Summary | Details
House Ways & Means Committee

Amends the definition of "small city" for eligibility for the Workforce Housing Tax Incentives Program to include any city or township located in whole or in part in one of the 88 least populated counties.
HF2038
Nonreversion/Reallocation of State Funds
Summary | Details
House Appropriations Committee

Allows state agencies to keep up to 10% of the funds appropriated that are unencumbered or unobligated at the close of the fiscal year (funds won't revert).
HF2046
Sales Tax Collection
Summary | Details
House Ways & Means Committee

Amends definition of "retailer maintaining a place of business in this state" for the collection of sales tax from out-of-state retailers.
HF2047
Legislative Tax Credit Review Committee
Summary | Details
House Ways & Means Committee

Creates a legislative tax credit review committee.
HF2063
Urban Renewal Law Changes
Summary | Details
House Ways & Means Committee

Makes changes to the urban renewal law.
HF2096
Midwest Interstate Passenger Rail Compact
Summary | Details
House Transportation Committee

Establishes the Midwest Interstate Passenger Rail Compact.
HF2098
Job Training Tax Credit Program
Summary | Details
House Ways & Means Committee

Creates a job training tax credit program.
HF2164
Transgender Access to Public Facilities
Summary | Details
House Judiciary Committee

Provides that educational institutions are not required to allow access to toilet facilities, locker rooms, or living facilities designated for use by persons of one sex to a person of the other sex.
 
HF2210
Drainage/Levee District Pumping Stations
Summary | Details
House Agriculture Committee

Requires a board of supervisors to establish a pumping station or divide a station that is part of a drainage or levee district when it receives a petition by one or more owners of land to be benefited by the station. 
HF2216
General Obligation Bond Amount Limitations
Summary | Details
House Local Government Committee

Increases the bond amount limitations for general obligation bonds.
HF597
The WISE Solution for Water Quality
Summary | Details
House Ways & Means Committee

A permanent $180-200 million/year 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.
HF603
Eminent Domain
Summary | Details
Senate Floor

Addresses the use of eminent domain and the procedures and compensation required for the use of eminent domain.
HF656
TIF - $5.40 Levy Removal
Summary | Details
House Floor

Would remove the $5.40 levy from the TIF increment for all future projects.
HSB568
Construction Competitive Bidding Requirements
Summary | Details
House Floor

Makes changes to competitive bidding requirements for construction on properties that certain government entities will lease or lease-purchase.
HSB592
Sports Betting
Summary | Details
House State Government Committee

Authorizes gambling licensees to conduct sports betting.
HSB615
Criminal History Checks
Summary | Details
House Labor Committee

Requires a criminal history check for department of workforce development applicants and makes changes to unemployment insurance requirements.
SF2043
Inheritance Tax Repeal
Summary | Details
Senate Ways & Means Committee

Repeals the state inheritance tax and the state qualified use inheritance tax.
SF2069
Forest Reservation Property Tax Exemption
Summary | Details
Senate Ways & Means Committee

Lowers the property tax exemption for forest reservations.
SF2074
Raceway Facility Construction Sales Tax Rebate
Summary | Details
Senate Ways & Means Committee

Makes changes to sales tax rebates for construction at certain raceway facilities.
SF2080
State General Fund Expenditure Limitation
Summary | Details
Senate Appropriations Committee

Revises calculations for the general fund expenditure limitation, increases reserve fund balances, creates a safety net fund, creates an Iowa personal income tax rate reduction fund, and provides for related state personal income tax rate reductions.
SF2081
Commercial and Industrial Property Tax Replacement Claims
Summary | Details
Senate Appropriations Committee

Eliminates the appropriation for commercial and industrial property tax replacement claims.
SF2116
Intrastate Commerce
Summary | Details
Senate Commerce Committee

Provides that all goods produced or manufactured in the state that remain in the state are not subject to federal law, or the constitutional authority of the US Congress to regulate interstate commerce.
SF2117
FY18 Deappropriation
Summary | Details
Senate Floor

Cuts the current fiscal year (FY18) budget by $50.1 million, about $20 million more than the Governors' recommendation.  Cuts regional tourism marketing, skilled worker and job creation fund, hawk-i, autism support program fund, Regents universities, community colleges, vocational rehabilitation, autism support program, human services,
 
SF2127
EDA Agreements with Housing Businesses
Summary | Details
Senate Commerce Committee

Extends EDA's authority to provide incentives and assistance to eligible housing businesses to build or rehabilitate single-family homes, or multiple dwelling unit buildings, in economic development enterprise zones.
SF2152
Tax Credit Transferability
Summary | Details
Senate Ways & Means Committee

Provides an exception to the tax credit transfer restrictions placed on housing businesses under the enterprise zone program
SF2161
Agriculture and Natural Resources Programs
Summary | Details
Senate Ways & Means Committee

Amends several agriculture and natural resources programs.
SF512
Water Quality/Wastewater Treatment
Summary | Details
Signed

Modifies existing wastewater treatment program, establishes new water quality programs, and creates a water service excise tax and sales tax exemption.
SSB3082
County Zoning Violations
Summary | Details
Senate Local Government Committee

Allows a court to order the costs incurred by a county to abate or correct a county zoning violation be assessed against the property for collection in the same manner as a property tax. 
SSB3087
Future Ready Iowa Act
Summary | Details
Senate Commerce Committee

Creates the Future Ready Iowa Act.
SSB3093
Public Utilities
Summary | Details
Senate Commerce Committee

Modifies various provisions relating to public utilities.
SSB3097
Abandoned Structures and Abatement
Summary | Details
Senate Local Government Committee

Changes certain procedures relating to abandoned structures and abatement.
Your Legislative Team
The Advocacy Cooperative | Campbell/Patterson Consulting LLP, PO Box 1403, Des Moines, IA 50131
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