Relating to the state sales and use tax by funding the natural resources and outdoor recreation trust fund through the sales tax, using sales and use taxes to create a baby bond program and fund, and including effective date provisions

This bill relates to the state sales and use tax by funding the natural resources and outdoor recreation trust fund through the sales tax, and using sales and use taxes to create a baby bond program and fund, and includes effective date provisions. DIVISION I —— SALES AND USE TAX. An amendment to the Iowa Constitution was ratified on November 2, 2010, which created a natural resources and outdoor recreation trust fund (fund) and dedicated a portion of state revenues to the fund for the purposes of protecting and enhancing water quality and natural areas in the state including parks, trails, and fish and wildlife habitat, and conserving agricultural soils in the state (article VII, section 10). 31.375 percent would generate. The state sales tax rate has not been increased since the effective date of the constitutional amendment, so no amounts have been credited to the fund. The bill increases the sales tax rate and the use tax rate from percent to percent January 1, 2022. As a result, moneys will be credited to the fund.43 to ensure that SAVE receives the same amount of sales and use tax revenues as it did prior to the sales and use tax increases provided in the bill. DIVISION II —— BABY BONDS PROGRAM AND FUND. The bill creates a baby bond program (program) by establishing an interest-bearing savings account for children in this state. The treasurer of state shall act as custodian of the savings accounts and disburse moneys contained in the savings accounts. The purpose of the program is to offer children in this state a fairer chance at economic stability and mobility. Commencing with the fiscal year beginning July 1, 2022, and every fiscal year thereafter, the bill transfers from sales and use tax revenues an amount equal to fund each active savings account in existence in the program on October with $500 until the child attains years of age. The bill defines “active savings account” to mean an account associated with a child under years of age. The bill requires each active savings account to be funded with $500 on the enrollment date and $500 on each subsequent enrollment anniversary date until the child attains years of age. The bill specifies the moneys in the fund shall be accessible to the child upon turning years of age to fund educational expenses or for the purchase of a first home located in this state. The bill further specifies that moneys in the account remain accessible for these purposes until years of age, and at such time any remaining moneys in the account revert to the general fund of the state. The bill defines “first home” to mean the first-time purchase of a residence by a resident, and who does not own, either individually or jointly, a single-family or multifamily residence, and who has not owned or purchased, either individually or jointly, a single-family or multifamily residence. The bill prohibits direct contributions to the account by the child or the child’s family. The bill requires the savings account of the child to be funded on the enrollment date and subsequently funded on the enrollment anniversary date until the child attains years of age. The bill prohibits a child who is not a resident of this state on or after their 18th birthday from receiving funds from the savings account. Beginning with births in this state on or after July 1, 2022, and on a form or in a manner prescribed by the treasurer of state, the parent or guardian of the child born in this state may notify the treasurer of state of the birth of the child to begin the enrollment process in the program. Upon receiving proper notification of the birth of the child in this state, the bill specifies the child shall be considered enrolled in the program. For a child born in this state prior to July 1, 2022, and who remains a resident of this state, or for a child who has been a resident of this state for at least two years prior to, on, or after July 1, 2022, a parent or guardian of a child may notify the treasurer of state to begin the enrollment process in the program. The bill requires the notification to be on a form or in the manner prescribed by the treasurer of state, and upon receiving proper notification the child shall be considered enrolled in the program. The bill requires the treasurer of state to make account balances within the program available through a secured internet site to each parent or guardian of a child enrolled in the program, or to a child who has attained years of age. The bill establishes a baby bond fund (fund) in the state treasury under the control of the treasurer of state consisting of sales and use tax revenues transferred to the fund for purposes of establishing the program. In order to receive moneys under the program established in the bill, a child who has attained years of age must apply for the moneys with the treasurer of state on a form or in a manner prescribed by the treasurer. Approved payments by the treasurer of state may be in the form of a one-time payment or in the form of multiple payments over a period of time. The bill specifies no property rights exist in the fund in favor of the child after the child has attained years of age. The bill requires the treasurer of state to adopt rules to administer the program, including establishing eligibility for the program based upon family income. DIVISION II —— EFFECTIVE DATE. The bill takes effect January 1, 2022.