POLICY PERSPECTIVES | March 18, 2018
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Legislative Session Update

March Madness Indeed
Week Ten of the 2018 session of the 87th General Assembly proved to be very eventful, much more so than the typical second funnel week. Everyone entered the building Monday morning prepared for a crazy week, but were shocked when the Senate Majority Leader announced his immediate resignation. The news ate up the first half of the week and put a pinch on the Legislature's ability to clear very many bills through the second funnel deadline on March 16th. (The second funnel is a deadline by which any non-tax or spending bill needs to have been passed out of a policy committee in the opposite chamber from where it was introduced in order to stay alive for the rest of session.)
 
Senate Leadership
Now-former Senator and Majority Leader Bill Dix was elected to the Iowa Senate in 2010. He previously served five terms in the House. Dix led the Senate Republican caucus since 2013 and was largely credited with leading them into the majority in the 2016 election, after which he was selected as Majority Leader. In that role, he was one of the top three most powerful people in the Iowa Capitol, along with Governor Kim Reynolds and Speaker of the House Linda Upmeyer.
 
News of Dix's retirement was followed by an announcement from Senate Republicans that they would select a new Majority Leader in a meeting on Wednesday morning. In that meeting, they determined that Senate President Jack Whitver of Ankeny would move up into the Senate Majority Leader position. Whitver is succeeded as Senate President by Senator Charles Schneider of West Des Moines, the Chair of the Senate Appropriations Committee and former Majority Whip. Senator Amy Sinclair from Allerton has been promoted to Majority Whip after having been an assistant majority leader.
 
Another Special Election
Since Dix's seat has been vacated during a legislative session, there is a compressed timeline for filling the seat. A special election to fill the Senate District 25 seat has been scheduled by the Governor for April 10. Democrat Tracy Freese, who planned to challenge Dix in November, will run in the special election against Annette Sweeney, a former Iowa Republican Representative. This is the seventh special election of this two-year General Assembly.
 
Remaining Agenda
The leadership bombshell in the Senate threw the funnel week schedule further into chaos, so many bills that faced an uncertain future just ended up being thrown overboard. How the Senate's priorities change in the final weeks remains uncertain, but with Monday, March 19th, being Session Day 71 of the 100-day session, it's looking increasingly likely that the legislative focus may narrow to the budget and little else, possibly some tax reform.
 
Budget Update
The one thing the Legislature MUST do before leaving town for the year is the budget. That includes both passing bills to fund the next fiscal year (FY 2019 which starts July 1, 2018) and making adjustments, if necessary, to ensure that FY 2018 does not end with a deficit. As you know, there has been an ongoing discussion since December about a deappropriations bill that would cut FY 2018 expenditures by as high as nearly $50 million.
 
On March 9, the Revenue Estimating Conference (REC) met to establish their updated revenue estimates for FYs 2018 and 2019. The REC added $33 million to the balance sheet for 2018 and about $207 million for 2019. According to the Legislative Services Agency, this still means the State is looking at a FY 2018 shortfall of $3.6 million. The recent volatility of revenue estimates means the Legislature and Governor are still likely to deappropriate money from FY 2018 though the amount is anybody's guess.
 
This week, we expect to see the budget discussion heating up. There will likely be a decision made about deappropriations, budget targets will be released so that appropriations subcommittees can begin assembling their budgets, and we should have a better sense as to what the Legislature will attempt to do with tax reform.
PDI Issue Focus
TIF Bills
Still no changes on the TIF bills - SF 2267 and HF 2063.  However, they are alive all session.  AND there is always a chance that changes to TIF could be tucked into a tax reform bill, so keep talking to your legislators about TIF!
 
Lease Purchase  
Legislation (HF 2253) to subject certain lease-purchase contracts between a private party and a city to statutory competitive bidding requirements has survived the funnel and will likely be passed by the Senate soon.  Be sure to be talking with your legislators and with your cities about this and inserting your input into this discussion.  The legislation currently includes lease purchase projects that involve TIF, however some legislators have talked about talking out that section.   
 
Carving out High Quality Jobs for Rural Iowa
Legislation (HF 2447) that would require at least 50% of all High Quality Jobs financial assistance and tax credits to be directed to small cities passed through subcommittee and will be discussed further in the days ahead.  This is a perfect opportunity to discuss with your legislators any ideas you may have for driving economic development in rural Iowa.  This bill clearly shows they are looking for ideas, so be sure to share any you have with them. 

Property Tax Backfill to Local Governments
In the last edition, we discussed the forward progress of legislation in the Senate (Senate File 2081) which would phase out the $152 million backfill out over three years (really two years - going to two-thirds, one-third and then gone in Year 3). This legislation is available for consideration by the Senate Appropriations Committee for the rest of the session, but more importantly, could be tucked into other legislation.
 
This past week, backfill scaledown legislation (HSB 678) was also introduced in the House and assigned to a subcommittee consisting of Representatives Grassley, Highfill and Hall. The House bill would cut the backfill by about a third in FY 2019, and by $25 million per year during FYs 2020-2022, leaving it at $25 million per
year thereafter.
 
Advocates for the backfill need to be sure they are vocal about the issue, and ESPECIALLY about not affecting the upcoming year. Both of these bills start in FY 2019, the fiscal year that begins July 1, 2018, for which local governments have already certified their budgets.
 
The Iowa League of Cities has a one-page explanation to help you with reaching out to legislators in support of the backfill. You can download it HERE. Additionally, you can find a table showing how all the backfill dollars are distributed by going HERE.
The Election Outlook
 
In addition to being the second funnel deadline, March 16th was also the filing deadline for legislative candidates to file their papers for the November election. One development that has become abundantly clear is that the next General Assembly will include a lot of new faces due to a large number of retirements (not including, of course, any incumbents that are unsuccessful in their efforts to win another term).
 
Here is the list of retirements, as of the Friday filing deadline:
 
Senate
  • Sen. Rick Bertrand, R (Senate District 7) of Sioux City.
  • Sen. Matt McCoy, D (Senate District 21) of Des Moines is running for Polk County Supervisor. He has served 22 years in the Iowa Senate.
  • Sen. Wally Horn, D (Senate District 35) of Cedars Rapids. Sen. Horn is the longest continually serving state legislator in Iowa's history. He is finishing his ninth four-year term in the Iowa Senate. Before that, he served five two-year terms in the Iowa House.
  • Sen. Bob Dvorsky, D (Senate District 37) of Coralville. Sen. Dvorsky has served 24 years in the Iowa Senate.
  • Sen. Mark Chelgren, R (Senate District 41) of Ottumwa. Mariannette Miller-Meeks, former Director of the Iowa Department of Public Health, and who ran against Congressman David Loebsack, has announced she is running as the Republican for this seat.
House
  • Rep. Chuck Holz, R (House District 5) of LeMars.
  • Rep. Helen Miller, D (House District 9) of Ft. Dodge.
  • Rep. Ralph Watts, R (House District 19) of Adel.
  • Rep. Clel Baudler, R (House District 20) of Greenfield.
  • Rep. Greg Heartsill, R (House District 28) of Chariton.
  • Rep. Chris Hagenow, R (House District 43) is moving to Rep. Ralph Watts district (HD19). Rep. Hagenow is the Republican Majority Leader in the House.
  • Rep. Rob Taylor, R (House District 44) of West Des Moines.
  • Rep. Chip Baltimore, R (House District 47) of Boone.
  • Rep. Kristi Hager, R (House District 56) of Waukon.
  • Rep. Ken Rizer, R (House District 68) of Marion.
  • Rep. Todd Taylor, D (House District 70) of Cedar Rapids is running for the seat that will be vacated by Sen. Wally Horn.
  • Rep. Dawn Pettengill, R (House District 75) of Mt. Auburn.
  • Rep. Guy VanderLinden, R (House District 79) of Oskaloosa.
  • Rep. Larry Sheets, R (House District 80) of Moulton.
  • Rep. Jerry Kearns, D (House District 83) of Keokuk.
  • Rep. Dave Heaton, R (House District 84) of Mt. Pleasant.
  • Rep. Abby Finkenauer, D (House District 99) of Dubuque is running for Congress against U.S. Rep. Rod Blum.

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/  
 
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.
HF2098 
Job Training Tax Credit Program
Summary | Details 
House Ways & Means Committee 
 
Creates a job training tax credit program.
HF2253 
Construction Competitive Bidding Requirements
Summary | Details 
Senate Floor
 
Makes changes to competitive bidding requirements for construction on properties that certain government entities will lease or lease-purchase.
HF2321 
Criminal History Checks
Summary | Details 
Senate Floor
 
Requires a criminal history check for department of workforce development applicants and makes changes to unemployment insurance requirements.
HF2373 
Property Taxation
Summary | Details 
House Ways & Means Committee 
 
Modifies property taxation relating to assessment and exemption of certain property, modifies provisions relating to property assessment appeals, and provides for the reimbursement of certain appeal costs.
HF2374 
Tax Credit Repeal
Summary | Details 
House Ways & Means Committee 
 
Repeals certain state income tax credits, and provides for the future repeal of tax credits.
HF2438 
SAVE Fund Extension
Summary | Details 
House Floor
 
Extends the 6 percent sales tax rate and the allocation to the SAVE fund until January 1, 2050.
HF2440 
Water Quality Programs
Summary | Details 
Senate Floor
 
Makes changes to existing water quality programs.
HF2447 
High Quality Jobs Program
Summary | Details 
House Ways & Means Committee 
 
Requires that at least 50 percent of awards made through the High Quality Jobs Program be awarded to small cities.
HF2448 
Sports Betting
Summary | Details 
House Ways & Means Committee 
 
Authorizes gambling licensees to conduct sports betting.
HF2458 
Future Ready Iowa Act
Summary | Details 
Senate Unfinished Business Calendar
 
Creates the Future Ready Iowa Act.
HF2463 
Workforce Housing Tax Incentives Program Eligibility
Summary | Details 
House Unfinished Business Calendar
 
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.
HF575 
Bottle Bill Repeal and Replace
Summary | Details 
House Ways & Means Committee 
 
Repeals the beverage containers control law and replaces it with new recycling, litter control, and community enhancement programs.
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 Ways & Means Committee 
 
Would remove the $5.40 levy from the TIF increment for all future projects.
HSB636 
Innovation Fund Tax Credit Program
Summary | Details 
House Ways & Means Committee 
 
Extends the innovation fund tax credit program.
HSB672 
Telephone Company Property Tax Assessment Process
Summary | Details 
House Ways & Means Committee 
 
Changes the central assessment process for telegraph and telephone companies.
HSB678 
Property Tax Backfill
Summary | Details 
House Appropriations Committee 
 
Phases out the roughly $150 million property tax backfill, starting in FY 2019 (which starts July 1, 2018).  Cuts one-third ($50 million) from the backfill in Year One and then $25 million every year thereafter.
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.
SF2117 
FY18 Deappropriation
Summary | Details 
House 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,
 
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.
SF2216 
SAVE Fund Extension
Summary | Details 
Senate Ways & Means Committee 
 
Extends the 6 percent sales tax rate and the allocation to the SAVE fund until January 1, 2050.
SF2267 
TIF Reduction
Summary | Details 
Senate Ways & Means Committee 
 
Makes changes to Tax Increment Financing.
SF2287 
High Quality Job Program Tax Incentives
Summary | Details 
Senate Ways & Means Committee 
 
Allows investment tax credit to an eligible business.
SF2311 
Public Utilities
Summary | Details 
House Floor
 
Modifies various provisions relating to public utilities.
SF2342 
State Agency Restrictions
Summary | Details 
Senate Unfinished Business Calendar
 
Prohibits a state agency from implementing or enforcing any standard, requirement, or threshold unless explicitly required or permitted by a state statute or a federal statute or regulation.
SF2353 
State and Local Workforce Development Boards
Summary | Details 
House Floor
 
Makes changes to the state and local workforce development boards.
SF2383 
Senate Tax Reform Package
Summary | Details 
House Ways & Means Committee 
 
The Senate's tax reform package.
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.
SSB3152 
Telephone Company Property Tax Assessment Process
Summary | Details 
Senate Floor
 
Changes the central assessment process for telegraph and telephone companies.
SSB3195 
Tax Reform
Summary | Details 
Senate Ways & Means Committee 
 
Makes changes to income taxes, the sales and use taxes and local option sales tax, the hotel and motel excise tax, the automobile rental excise tax, the Iowa educational savings plan trust, and the Iowa ABLE savings plan trust.
SSB3200 
Workforce Housing Tax Incentives Program
Summary | Details 
Senate Ways & Means Committee 
 
Modifies the workforce housing tax incentives program.
SSB3201 
EDA Housing Agreements
Summary | Details 
Senate Ways & Means Committee 
 
Allows EDA to grant an extension for up to one year from the date the extension for eligible housing businesses to complete building or rehabilitation projects.
 
Your Legislative Team
The Advocacy Cooperative | Campbell/Patterson Consulting LLP, PO Box 1403, Des Moines, IA 50131
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