SSB 3141

TRANSFERS FROM TAXPAYER RELIEF FUND. On July 1, 2024, the bill transfers $100 million from the taxpayer relief fund (TRF) to the ITEF.6 billion from the TRF to the trust fund. For FY 2027, and each fiscal year thereafter, the bill transfers from TRF to the trust fund, an amount equal to percent of moneys transferred into the TRF each fiscal year. TRUST FUND. _____ 1, 2025, separate and apart from all other public moneys or funds of this state and the balance in the trust fund shall not be considered part of the balance of the general fund of the state. The trust fund shall consist of all moneys collected by or appropriated or transferred to the trust fund including all interest, dividends, and rents, and shall also include all securities or investment income and other assets acquired by the use of the moneys in the trust fund and any other moneys that have been transferred or paid into the fund. The trust fund shall be administered by the Iowa public employees’ retirement system (IPERS). Beginning July 1, 2028, and each July thereafter, the bill transfers percent of the remaining balance of the trust fund at the close of the preceding fiscal year into the ITEF. After the individual income tax rate is adjusted to zero, the bill requires any moneys remaining in the trust fund to be transferred to the general fund of the state in the fiscal year the rate is adjusted to zero. ITEF. The bill establishes the ITEF on July 1, 2024. The ITEF shall consist of all moneys transferred to the fund from the trust fund or appropriated to or otherwise collected by ITEF for the purpose of reducing the individual income tax rate to zero. The ITEF shall also be administered by IPERS.5B in the bill. After the rate is adjusted to zero, the bill requires any moneys remaining in the ITEF to be transferred to the general fund of the state in the fiscal year the rates are adjusted to zero. EXPENSES. The investment management and administrative expenses for the trust fund and fund shall be charged against the investment income of the fund. _____ investment management and administrative expenses of the trust fund and ITEF to $2 million in the aggregate per year. BOARD. After July 1, 2024, the bill creates a board to establish policy and to review implementation of the policy, in matters relating to the investment of the trust fund and the ITEF. The bill establishes the board as trustee of both funds. The bill allows the board to review and approve, prior to the execution of a contract with the system, the hiring of each investment manager and investment consultant outside of state government. The bill allows the board to review and approve the selection of any bank used by IPERS for each fund. The bill requires the board to report to the fiscal committee of the legislative council. The board shall consist of members, including voting members and nonvoting members. The voting members shall be as follows: four public members, appointed by the governor who each have substantial experience in institutional investment, institutional finance, or business management; two public members, appointed by the governor who are citizens of the state; and the director of the department of management. The nonvoting members of the board shall be two state representatives, one appointed by the speaker of the house of representatives and one by the minority leader of the house, and two state senators, one appointed by the majority leader of the senate and one by the minority leader of the senate. IPERS. The bill requires IPERS and the board to develop separate investment policies for each fund. IPERS and the board have broader authority to establish the investment policy for the trust fund than the investment policy for ITEF. The investment policy for the ITEF shall be similar to the Iowa public employees’ retirement system in Code chapter 97B. _____ requires prudence, discretion, probable income, and probable safety, as if investing personal funds. The board is required to give appropriate consideration to investments that are reasonably designed to further the purposes of each fund, taking into consideration the risk of loss and the opportunity for gain or income associated with the investment or investment policy. The bill allows each fund to acquire and retain every kind of property and every kind of investment which persons of prudence, discretion, and intelligence acquire or retain for a personal account. The bill specifies if there is loss to either fund, IPERS, the employees of IPERS, the members of the board severally, and the board are not personally liable, and the loss shall be charged against the trust fund or fund, as applicable, unless the conduct involves malicious or wanton misconduct. IPERS, in accordance with the investment policy established by the board, is authorized under the bill to sell any securities or other property in the trust fund and reinvest the proceeds when such action may be deemed advisable by IPERS for the protection of the fund or the preservation of the value of the investment. The bill allows IPERS, subject to board approval, to execute contracts and agreements with investment advisors and consultants in the administration of investments of moneys in either fund. ADJUSTING INDIVIDUAL INCOME TAX RATE. By November 1, 2028, and by November each year thereafter, the department of management shall determine the amount of moneys available in the ITEF, and the net individual income tax receipts at the close of the preceding fiscal year. The amount available in the ITEF and the net tax receipts shall be provided to the department of revenue for the calculation to determine if the individual income tax rates may be adjusted. _____ new individual income tax rate in such a way that the rate would have generated an amount equal to the net receipts generated from the rate in the preceding fiscal year less the amount transferred from the ITEF. The bill prohibits the rate from being adjusted unless the amount of net sales and use tax revenue collected by the state during the most recent October through September calculation period is greater than 103 percent of the net sales and use tax revenue collected during the preceding calculation period covering the same months. The bill prohibits the rate from being adjusted unless the rate is able to be adjusted at least one-tenth of percent. The rate, when adjusted, shall be rounded down to the nearest one-tenth of percent. The bill prohibits the rate from being adjusted unless at least 150 percent of the amount to be transferred to the general fund of the state is available in the ITEF. The bill requires the moneys in the ITEF be transferred to the general fund of the state in the fiscal year the rate is adjusted.54. If a tax rate is adjusted, the bill requires the director of revenue to cause an advisory notice containing the new individual income tax rate to be published in the Iowa administrative bulletin and on the internet site of the department of revenue. The calculation and publication of the adjusted tax rate by the director of revenue is exempt from Code chapter 17A, and shall be submitted for publication by the first December following the determination date to adjust the tax rates. DIVISION II —— INDIVIDUAL INCOME TAX RATES. _____ but before January 1, 2025, and for the tax year beginning January 1, 2025, but before January 1, 2026.775 percent.65 percent.65 percent is the rate that will be subject to reduction by the processes established in the bill. DIVISION III —— FUTURE CONTINGENT CORPORATE INCOME TAX RATE. Under current law, a process exists by which corporate income tax rates may be lowered if net corporate income tax receipts for the preceding fiscal year exceed $700 million.5 percent.90 percent. DIVISION IV —— FUTURE CODE EDITING OF INTERNAL REFERENCES.5. The bill also eliminates references to “highest”, “maximum”, and “top” rate because the individual income tax rate becomes a flat rate commencing with tax years beginning on or after January 1, 2026.