SSB 3157

_____ the explanation’s substance by the members of the general assembly. This bill relates to state and local revenue and finances and modifies sales and use taxes, the charitable conservation contribution tax credit available against individual and corporate income taxes, the automobile rental excise tax, the water service tax, the local option tax, and credits moneys to the natural resource and outdoor recreation trust fund. 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 beginning January 1, 2023. In lieu of the local option and sales services tax revenue repealed in another division of the bill, the bill transfers a specified amount of the state sales and use tax revenues collected to the local sales and use tax fund established under Code chapter 423B, for allocation and expenditure in a manner similar to that which was provided for local sales and services tax revenues. _____ purposes of that fund.2A(2). DIVISION II —— AUTOMOBILE RENTAL EXCISE TAX. The bill increases the automobile rental excise tax from percent to percent on the rental of automobiles rented on or after January 1, 2023. DIVISION III —— WATER SERVICE TAX. The bill raises the water service tax on the furnishing of water to consumers from percent to percent.134A. The bill strikes the provision requiring one-half of the water service tax moneys be deposited into the water quality financial assistance fund and requires all moneys generated from the water service tax be deposited into the general fund of the state. The bill also strikes the future repeal of the water service excise tax. The division takes effect January 1, 2023. DIVISION IV —— CHARITABLE CONSERVATION CONTRIBUTION TAX CREDIT. The bill prohibits a charitable conservation contribution tax credit from being claimed against the individual or corporate income tax, except for qualified real property interests conveyed prior to January 1, 2023. The bill allows the credit in excess of tax liability to carry forward for qualified real property interests conveyed prior to January 1, 2023. The bill preserves existing rights and is intended to not limit, modify, or otherwise adversely affect any amount of the tax credit issued, awarded, or allowed prior to the repeal date of any tax credit. The division takes effect January 1, 2023, and applies to tax years beginning on or after that date. _____ DIVISION V —— LOCAL OPTION TAXES. Code chapter 423B authorizes, following approval at election, the imposition of a local option sales and services tax at a rate not to exceed one percent to be administered similarly to the state sales and services tax and authorizes the imposition of a local vehicle tax. The bill strikes the authorization for the local vehicle tax and also strikes the authorization to impose the local option sales and services tax under Code chapter 423B, but instead authorizes cities and counties to expend specified state sales and use tax revenues that are deposited in the local sales and use tax fund following the increase of the state sales and use taxes rates in previous sections of the bill. Under the bill, sales and services tax revenue credited to and deposited in each county’s account within the local sales and use tax fund must be expended by each recipient county and city as required by the jurisdiction’s revenue purpose statement, including a revenue purpose statement approved at election prior to January 1, 2023, and in effect on or set to take effect on or after January 1, 2023, for the use of local option sales and use tax revenue previously collected under Code chapter 423B, or be used to reduce specified property tax levies. The bill also modifies the requirements and permissible uses of funds received under Code chapter 423B. The bill specifies that for a county with a population of 400,000 or more, a revenue purpose statement governing the use of revenues for the unincorporated area of the county approved on or after January 1, 2023, shall require the use of percent of such moneys for property tax relief. Additionally, the bill provides that property tax relief includes payments under a Code chapter 28E agreement for purposes of a regional transit district if such payments are used to reduce the regional transit district levy. _____ under Code chapter 423B for such regional transit district purposes shall not exceed percent of the amount received and for a county with a population of 400,000 or more, for the unincorporated area, shall not exceed percent. The board of supervisors of each county and the city council of each city may adopt by resolution a revenue purpose statement for the expenditure of funds received under Code chapter 423B. The revenues transferred to the local sales and use tax fund continue to be allocated to the specific county account for the county in which the tax was collected. Additionally, all cities and counties are eligible to receive the allocation of revenues, not just those that had previously approved the local option tax. As provided in another division of the bill, specified amounts of use tax revenue is transferred to the local use tax supplement fund, as created in the bill. Moneys in the local use tax supplement fund are annually appropriated to the department of revenue to be used for supplement payments to cities and counties.7, Code 2022. If moneys in the fund are insufficient to pay all supplement amounts for the year, the director of revenue shall prorate the payment of the supplement payments.7 for that year. The bill establishes a future repeal of the Code section establishing the supplement payments on January 1, 2043. Moneys in the fund upon the repeal shall be transferred to the appropriate county accounts for the counties from which the tax was paid.10 allows a city in which a local sales and services tax is imposed to, by ordinance and following approval of the board of supervisors, to provide for the use of a designated amount of increased local option sales and services tax revenue for urban renewal purposes. The bill modifies provisions governing this authorization to provide for the use of a specified amount of the applicable increased state sales tax revenues deposited in the local sales and use tax fund in lieu of the increased local option sales and services tax revenue. The bill allows city ordinances providing for the use of certain local option sales and services tax revenues for urban renewal purposes in effect on January 1, 2023, to remain in effect until expiration, amendment, or repeal. The bill also eliminates the authority to impose a local sales and services tax under the quad cities interstate metropolitan authority compact under Code chapter 28A beginning on January 1, 2023. The division takes effect January 1, 2023. DIVISION VI —— NATURAL RESOURCES AND OUTDOOR RECREATION TRUST FUND. The bill amends provisions in Code chapter 461 (the natural resources and outdoor recreation Act) that is to implement Article VII, section 10, of the Constitution of the State of Iowa when the sales tax is increased. The bill increases the sales tax in division I. The Code chapter establishes the natural resources and outdoor recreation trust fund (trust fund) and associated accounts (renamed trust accounts) supported by a portion of state revenue generated by an increase in the state’s sales tax. _____ and wildlife habitat, and conserve agricultural soils in this state. ALLOCATIONS OF TRUST FUND MONEYS. The bill alters the percentage of moneys to be allocated from the trust fund (trust fund moneys) to its trust accounts, including the natural resources trust account administered by the department of natural resources (DNR), the soil conservation and water protection trust account (renamed the soil conservation and nonpoint source water protection trust account) administered by the department of agriculture and land stewardship (DALS), the watershed protection trust account administered by DNR in cooperation with DALS, the local conservation partnership trust account administered by DNR, the trails trust account (renamed the water and land trails trust account) administered by DOT in cooperation with DNR, and the lake restoration trust account (renamed the lake and stream restoration trust account) administered by DNR. It also reduces the allocations of trust fund moneys to the Iowa resources enhancement and protection (REAP) fund administered by DNR. It transfers trust fund moneys allocated to the renamed soil conservation and nonpoint source water protection trust account and the watershed protection trust account to the water quality infrastructure fund used to support nonpoint water quality programs administered by DALS; and to the water quality financial assistance fund administered by the Iowa finance authority (IFA) to support the wastewater and drinking water treatment financial assistance program (administered by IFA), the water quality financing program (administered by IFA), and the water quality urban infrastructure program (administered by DALS). The bill revises provisions in the local conservation partnership trust account as a program to be administered by DNR. _____ account to the water quality financial assistance fund upon direction by the custodial department. The bill eliminates current funding sources, including the annual appropriation to the REAP fund from the general fund which is due to expire on June 30, 2026, and both a tax on the sales price on water service, which another division of the bill repeals, and the use of wagering tax receipts, which would otherwise expire on July 1, 2039. ADMINISTRATION. The bill provides that the legislative council is to appoint a committee to review the trust fund and its allocations. The bill requires the economic development authority to be involved in decisions that use trust fund moneys to support initiatives with a recreational purpose. In making decisions to expend trust fund moneys, a higher priority is given to supporting an initiative that furthers a goal of the Iowa nutrient reduction strategy. A higher priority is provided to maintaining or preserving existing public use lands rather than acquiring new land. Several provisions place restrictions upon the use of trust fund moneys for support relating to certain initiatives, including athletic fields or facilities. Trust fund moneys cannot be used to support an exercise of eminent domain powers. REPEAL. Code chapter 461 is repealed December 31, 2051. EFFECTIVE DATE. The division of the bill takes effect January 1, 2023.