SSB 1253

This bill relates to state and local government financing, programs, and operations by modifying provisions relating to school district funding, mental health and disability services funding, commercial and industrial property tax replacement payments, and other specified tax provisions. DIVISION I —— MENTAL HEALTH FUNDING. Division I of the bill relates to mental health and disability services funding. The bill creates a mental health and disability services regional supplement fund under the authority of the department of human services. For each fiscal year beginning on or after July 1, 2021, the bill appropriates from the general fund of the state to the mental health and disability services regional supplement fund an amount necessary to make all regional supplement payments for that fiscal year. The moneys available in a fiscal year in the mental health and disability services state supplement fund are appropriated to the department of human services for distribution to each mental health and disability services region on a per capita basis calculated using each region’s population for that fiscal year. _____ of the dollar amount used to calculate the regional supplement payments for the immediately preceding fiscal year plus the regional supplement growth factor for the fiscal year.5 percent.391 and used solely for providing mental health and disability services under the regional service system management plan. Under the bill, for the fiscal years beginning July 1, 2021, and July 1, 2022, each mental health and disability services region for which the region’s cash flow amount certified during the fiscal year exceeds a specified percentage of the proposed gross expenditures of the region for the fiscal year, the remaining quarterly payments of the region’s regional supplement payment are reduced by an amount equal to the amount by which the region’s cash flow amount certified exceeds the specified percentage of the proposed gross expenditures of the region for the fiscal year, but the reduction amount shall not exceed the total amount of the region’s regional supplement payment for the fiscal year. If the region’s remaining quarterly payments are insufficient to effectuate the required reductions, the region is required to pay to the department of human services any amount for which the reduction in quarterly payments could not be made. _____ services region for which a cash flow amount is certified during the fiscal year, the remaining quarterly payments of the region’s regional supplement payment shall be reduced by an amount equal to the amount certified, but the reduction amount shall not exceed the total amount of the region’s regional supplement payment for the fiscal year. If the region’s remaining quarterly payments are insufficient to effectuate the required reductions, the region is required to pay to the department of human services any amount for which the reduction in quarterly payments could not be made.6.1 to provide additional funding to mental health and disability services regions meeting certain eligibility criteria. The risk pool consists of moneys appropriated or credited to the risk pool by law. The bill appropriates $9,960,590 from the general fund of the state to the risk pool for the fiscal year beginning July 1, 2021. The bill appropriates $5,107,340 from the general fund of the state to the risk pool for the fiscal year beginning July 1, 2022. For each fiscal year beginning on or after July 1, 2025, the bill appropriates an amount equal to the risk pool growth factor multiplied by the ending balance of the risk pool at the conclusion of a specified fiscal year.5 percent.5 percent. _____ The bill establishes the composition of the risk pool board created in the bill. Members shall serve for three-year terms. Staff assistance to the board shall be provided by the department of human services. A regional administrator must apply to the risk pool board for assistance from the risk pool on or before October 31. The purpose of the assistance shall be to provide financial support for services provided by the regional administrator’s mental health and disability services region. The board is required to determine application requirements to ensure prudent use of risk pool assistance. The board may accept or reject an application for assistance in whole or in part. The decision of the board is final. The total amount of risk pool assistance shall be limited to the amount available in the risk pool for a fiscal year. Any unobligated balance in the risk pool at the close of a fiscal year shall remain in the risk pool for distribution in the succeeding fiscal year. Risk pool assistance shall only be made available to address one or more of the following circumstances: (1) continuing support for mandated services; (2) avoiding the need for reduction or elimination of critical services when the reduction or elimination places consumers’ health or safety at risk; (3) avoiding the need for reduction or elimination of a mobile crisis team or other critical emergency services when the reduction or elimination places the public’s health or safety at risk; (4) avoiding the need for reduction or elimination of the services or other support provided to entire populations of consumers with disabilities; and (5) avoiding the need for reduction or elimination of services or other support that maintain consumers in a community setting or that would create a risk that the consumers would be placed in more restrictive, higher cost settings. _____ shall be considered obligated. The bill establishes basic eligibility for risk pool assistance, including requirements that the mental health and disability services region is in compliance with the regional service system management plan requirements and that the region meets specified ending balance thresholds for certain fiscal years. The ending balance thresholds are a specified percentage of the actual gross expenditures of the mental health and disability services region for a specific fiscal year. The percentage for the fiscal year beginning July 1, 2021, is percent. The percentage for the fiscal year beginning July 1, 2022, is percent.424A authorizes each county to certify a property tax levy for payment of mental health and disability services within the mental health and disability services regional system. To coincide with the appropriation and payment of mental health and disability services regional supplement payments directly to the regions or to exempted counties, the bill ends the authority for such a property tax levy starting with the fiscal year beginning July 1, 2022.391. Effective July 1, 2022, the bill prohibits a county from transferring any funds of the county to the combined account of a mental health and disability services region.14 and shall revise the rate of taxation as necessary to raise the reduced amount. The department of management is required to report the reduction in the certified taxes and the revised rate of taxation to the county auditors by June 15, 2021. In order to timely implement the provisions of the bill establishing the risk pool for mental health and disability services regions for the fiscal year beginning July 1, 2021, and the fiscal year beginning July 1, 2022, the director of human services is required, subject to the membership requirements in the bill, to appoint temporary members of the risk pool board to review and approve risk pool assistance applications and establish alternative application deadlines and expedited application review and approval timelines. The bill provides that the department of human services may adopt emergency rules to implement the provisions of division I of the bill. Except as provided in division I of the bill, division I of the bill takes effect upon enactment. DIVISION II —— PROPERTY TAX REPLACEMENT PAYMENTS.21A establishes and appropriates amounts from the general fund of the state for commercial and industrial property tax replacement claims. Such claims are calculated by the department of revenue based on the difference between the actual value and assessed value of all commercial and industrial property in each taxing district in the state. Current law appropriates an amount necessary for the payment of all commercial and industrial property tax replacement claims for each fiscal year beginning on or after July 1, 2014, subject to a maximum total appropriation for fiscal years beginning on or after July 1, 2017, of the total amount necessary for the payment of replacement claims in the fiscal year beginning July 1, 2016. _____ 2027, and specifies that the maximum total appropriation for the fiscal years beginning on or after July 1, 2022, but before July 1, 2027, shall not exceed the total amount necessary for the payment of replacement claims in the fiscal year. The bill modifies the methodology for calculating and apportioning commercial and industrial property tax replacement claims for fiscal years beginning on or after July 1, 2022, but before July 1, 2027. The bill requires such claims to be calculated based on and paid to taxing authorities, as defined in the bill, instead of taxing districts as is required under current law.21A for the fiscal year beginning July 1, 2021, as calculated by the department of revenue in consultation with the department of management, and whether the taxing authority is a qualified taxing authority. The specified fractions are reduced over the period of fiscal years beginning July 1, 2022, and ending June 30, 2027, in the case of a qualified taxing authority, and ending June 30, 2025, in the case of a taxing authority that is not a qualified taxing authority. Under the bill, a taxing authority that is eligible to continue to receive commercial and industrial property tax replacement payments includes a city, county, community college, or other governmental entity or political subdivision in this state authorized to certify a levy on property located within such authority, but does not include a school district.14 percent of the total assessed value as of January 1, 2012, of specified taxable property located in the taxing authority. _____ after July 1, 2022, but before July 1, 2027, to be apportioned and credited by the governing body of the taxing authority among the taxing authority’s tax levies in the same proportion that each property tax levy bears to the total of all property tax levies imposed by the taxing authority for the fiscal year for which the payment is received.19 (tax increment financing).48 is required to review the commercial and industrial property tax replacement claim expenditures. The bill eliminates that required periodic review. DIVISION III —— SCHOOL FOUNDATION PERCENTAGE.5 percent of the regular program state cost per pupil.4 percent for school budget years beginning on or after July 1, 2022.3(1)(d) takes effect July 1, 2022. DIVISION IV —— PUBLIC EDUCATION AND RECREATIONAL TAX LEVY. Code chapter 300 authorizes the imposition of a voter-approved property tax levy for the establishment and maintenance of public recreation places and playgrounds, and necessary accommodations for the recreation places and playgrounds, in the public school buildings and grounds of the district. Code chapter 300 also authorizes each school board to cooperate with public or private agencies having custody and management of public parks or buildings or grounds open to the public for the supervision and instruction necessary to carry on public educational and recreational activities in the parks, buildings, and grounds located within the district.13 and one-half cents per $1,000 of assessed value. The property tax levy under Code chapter 300 also provides financial support to community education programs established under Code chapter 276, which provide educational, recreational, cultural, and other community services and programs. Division IV of the bill repeals Code chapter 300 and makes corresponding amendments to other provisions of law effective July 1, 2022, and applies to fiscal years beginning on or after July 1, 2022. The bill provides that financial support for a community education program under Code chapter 276 may be provided from funds received by the school district under Code chapter 423F.3(6)(a)(1), moneys received by a school district from the secure an advanced vision for education fund may continue to be utilized for activities previously provided for under Code chapter 300 and Code chapter 276. Division IV also provides that moneys available in the public education and recreation levy fund at the conclusion of the fiscal year beginning July 1, 2021, and ending June 30, 2022, shall be expended by the school corporation for the purposes authorized under chapter 300, Code 2021. DIVISION V —— ELDERLY PROPERTY TAX CREDIT. Division V of the bill modifies the eligibility for and the calculation of the amount of the property tax credit for persons ages and older under Code chapter 425, subchapter II. Under the bill, a person filing a claim for the property tax credit who is at least years of age and who has a household income of less than 250 percent of the federal poverty level is eligible to receive a credit against property taxes due on the claimant’s homestead.23(1)(a) as if the claimant was an eligible claimant for a credit under that provision; and (2) the difference between the actual amount of property taxes due on the homestead during the applicable fiscal year minus the actual amount of property taxes due on the homestead based on a full assessment during the first fiscal year for which the claimant filed for a credit calculated under the bill and if the claimant has filed for the credit for each of the subsequent fiscal years after the first credit claimed.7(1), which requires the state to fund the cost of providing new property tax credits, shall not apply to the amount of the credit in excess of the amount paid by the director of revenue as determined in the bill. Division V of the bill applies to claims under Code chapter 425, subchapter II, filed on or after January 1, 2022. DIVISION VI —— FUTURE TAX CHANGES. The bill amends 2018 Iowa Acts, chapter 1161, section 133 (trigger), by striking the two conditions necessary for the trigger to occur, and specifies the provisions in 2018 Iowa Acts, chapter 1161, sections 99-132, take effect January 1, 2023.3146 billion, and also equaling or exceeding 104 percent of the net general fund revenues for the fiscal year ending June 30, 2021. If these two conditions are not satisfied, current law institutes the changes for tax years beginning on or after the January following the first fiscal year for which the two conditions do occur. _____ numerous tax changes for tax years beginning on or after January 1, 2023, described below. INDIVIDUAL INCOME TAX.50% For a married couple filing a joint return, the taxable income amounts in each bracket above are doubled. Also, the taxable income amounts in each bracket above will be indexed to inflation and increased in future tax years, beginning in the tax year following the 2023 tax year. INDIVIDUAL INCOME TAX CALCULATION. Under current law, the starting point for computing the Iowa individual income tax is federal adjusted gross income before the net operating loss deduction, which is generally a taxpayer’s gross income minus several deductions. From that point, Iowa requires several adjustments and then provides taxpayers with a deduction for federal income taxes paid, and the option to deduct a standard deduction or itemized deductions. The bill changes the starting point for computing the individual income tax to federal taxable income, which includes all deductions and adjustments taken at the federal level in computing tax, including a standard deduction or itemized deductions, and the qualified business income deduction allowed for certain income earned from a pass-through entity. Because the starting point changes to federal taxable income, and federal law does not provide for the filing status of married filing separately on a combined return, the bill repeals that filing status option for Iowa tax purposes. _____ carried over from a taxable year beginning prior to the 2023 tax year, but allows taxpayers to deduct any remaining Iowa net operating loss from a prior taxable year. The bill repeals the individual alternative minimum tax (AMT), allows an individual to claim any remaining AMT credit against the individual’s regular tax liability for the 2023 tax year, and then repeals the AMT credit in the tax year following the 2023 tax year. The bill repeals most Iowa-specific deductions, exemptions, and adjustments currently available when computing net income and taxable income under Iowa law, including the Iowa optional standard deduction and all itemized deductions, and the ability to deduct federal income taxes, except for a one-year phase out in the 2023 tax year for taxes paid, or refunds received, that relate to a prior year. The bill maintains the add-back for income from securities that are federally exempt but not state-exempt, and for bonus depreciation amounts. The bill maintains the general pension exclusion and the deduction for income from federal securities. The bill maintains the deduction for contributions to the Iowa 529 plan, the Iowa ABLE plan, a first-time homebuyer savings account, and an individual development account. The bill also maintains the deductions for military pension income, military active duty pay, social security retirement benefits, certain payments received for providing unskilled in-home health care, certain amounts received from the veterans trust fund, victim compensation awards, biodiesel production refunds, certain wages paid to individuals with disabilities or individuals previously convicted of a felony, certain organ donations, and Segal AmeriCorps education award payments.7(29) to make the deduction only applicable to taxpayers who are at least years old and who have net income below $100,000. _____ businesses by permitting the taxpayer to take the deduction if either of the following apply: the taxpayer materially participated in the farming business for at least years and held the real property for at least years; or the taxpayer sold the real property to a relative. The bill expands the definition of “relative” to include an entity in which a relative of the taxpayer has a legal or equitable interest in the entity as an owner, member, partner, or beneficiary. The bill provides a new deduction for any income of an employee resulting from the payment by an employer, whether paid to the employee or a lender, of principal or interest on the employee’s qualified education loan.13, to require that any amount of itemized deduction, standard deduction, personal exemption deduction, or qualified business income deduction that was allowed in computing federal taxable income shall be added back. CORPORATE INCOME TAX AND FRANCHISE TAX CALCULATION. Under current law, the starting point for calculating the corporate income tax and franchise tax is federal taxable income before the net operating loss deduction, because net operating loss is calculated at the state level. The bill repeals the separate calculation of net operating loss at the state level. As a result, the bill requires taxpayers to add back any federal net operating loss deduction carried over from a taxable year beginning prior to the trigger year, but allows taxpayers to deduct any remaining Iowa net operating loss from a prior taxable year. The bill also repeals most Iowa-specific deductions, exemptions, and adjustments currently available when computing net income and taxable income under Iowa law. The bill maintains the add-back for income from securities that are federally exempt but not state exempt, and for bonus depreciation amounts. _____ income from federal securities, for foreign dividend and subpart F income, for certain wages paid to individuals with disabilities or individuals previously convicted of a felony, and for biodiesel production refunds. DIVISION VII —— CHARITABLE CONSERVATION CONTRIBUTION TAX CREDIT. Division VII of the bill repeals the charitable conservation contribution tax credit available against the individual and corporate income taxes. Currently, individual and corporate income taxes are reduced by an amount equal to percent of the fair market value of real property located in this state that is conveyed unconditionally in perpetuity by the taxpayer for conservation purposes. Division VII of the bill applies to such conveyances occurring on or after July 1, 2021. DIVISION VIII —— FOREST RESERVATIONS. Current Code chapter 427C authorizes a property tax exemption for certain forest reservations and fruit-tree reservations. The bill provides that for assessment years beginning on or after January 1, 2022, a forest reservation is allowed the exemption authorized under Code chapter 427C if the owner is actively engaged in the operation or management of the forest reservation. For each forest reservation exemption for which the application was filed on or before the effective date of division VIII of the bill, in order to receive or continue receiving the exemption, the owner must file by February 1, 2022, on a form prepared by the department of natural resources, evidence that the owner meets the requirements for active engagement in the operation or management of the reservation. Division VIII of the bill grants the department of natural resources the authority to adopt rules to interpret the provisions of the bill relating to the requirement that the owner be actively engaged in the operation or management of the forest reservation.19(10)(l)).19(10)(c)). The bill limits the period of the exemption for forest reservations to five years and provides that the five-year exemption period for applications filed on or before February 1, 2022, begins with the assessment year beginning January 1, 2022, unless, if applicable, the owner fails to satisfy the requirement in the bill to provide evidence of being actively engaged in the operation or management of the forest reservation. The bill also specifies that upon expiration of the applicable exemption period for forest reservations or fruit-tree reservations under Code chapter 427C, the owner may reapply for an exemption if the property meets all the criteria for the exemption under the chapter. The bill requires the department of natural resources to review each application for a forest reservation tax exemption before the application is accepted. The bill requires the department of natural resources to use aerial photographs to determine forest reservation eligibility and authorizes an on-site review, if necessary. Additionally, an area that is a forest reservation may be inspected each year by the department of natural resources to determine if the area is maintained as forest reservation. _____ proceedings, actions, or remedies attributable to an assessment year beginning before January 1, 2022. Division VIII of the bill takes effect upon enactment and includes applicability and retroactive applicability provisions.