House File 2705 - Introduced HOUSE FILE 2705 BY COMMITTEE ON WAYS AND MEANS (SUCCESSOR TO HSB 752) A BILL FOR An Act relating to state and local finances by modifying 1 individual and alternate income tax rates, withholding 2 credits, franchise tax deductions, methodologies for 3 determining property taxes, and property tax assessment 4 limitations, changing methods of determining compensation 5 of county officials, making contingent transfers from the 6 taxpayer relief fund, and making corrections, and including 7 effective date and applicability provisions. 8 BE IT ENACTED BY THE GENERAL ASSEMBLY OF THE STATE OF IOWA: 9 TLSB 6382HV (1) 90 jm/jh
H.F. 2705 DIVISION I 1 SINGLE INDIVIDUAL AND ALTERNATE INCOME TAX RATES BEGINNING IN 2 TAX YEAR 2025 3 Section 1. Section 421.27, subsection 9, paragraph a, 4 subparagraph (3), Code 2024, is amended to read as follows: 5 (3) In the case of all other entities, including 6 corporations described in section 422.36, subsection 5 , and all 7 other entities required to file an information return under 8 section 422.15, subsection 2 , the entitys Iowa net income 9 after the application of the Iowa business activity ratio, 10 if applicable, multiplied by the top income tax rate imposed 11 under section 422.5A 422.5 for the tax year, less any Iowa tax 12 credits available to the entity. 13 Sec. 2. Section 422.5, subsection 1, paragraph a, Code 2024, 14 is amended to read as follows: 15 a. A tax is imposed upon every resident and nonresident 16 of the state which tax shall be levied, collected, and paid 17 annually upon and with respect to the entire taxable income 18 as defined in this subchapter at rates as provided in section 19 422.5A a rate of three and eight-tenths percent . 20 Sec. 3. Section 422.5, subsection 2, paragraph b, Code 2024, 21 is amended to read as follows: 22 b. (1) In lieu of the computation in subsection 1 , or 23 in paragraph a of this subsection , if the married persons 24 filing jointly, head of households, or surviving spouses net 25 income exceeds thirteen thousand five hundred dollars, the 26 regular tax imposed under this subchapter shall be the lesser 27 of the alternate state individual income tax rate specified in 28 subparagraph (2) of four and three-tenths percent times the 29 portion of the net income in excess of thirteen thousand five 30 hundred dollars or the regular tax liability computed without 31 regard to this sentence. Taxpayers electing to file separately 32 shall compute the alternate tax described in this paragraph 33 using the total net income of the spouses. The alternate tax 34 described in this paragraph does not apply if one spouse elects 35 -1- LSB 6382HV (1) 90 jm/jh 1/ 49
H.F. 2705 to carry back or carry forward a net operating loss as provided 1 under the Internal Revenue Code or in section 422.9 . 2 (2) (a) (i) (A) For the tax year beginning on or after 3 January 1, 2023, but before January 1, 2024, the alternate tax 4 rate is 6.00 percent. 5 (B) For the tax year beginning on or after January 1, 2024, 6 but before January 1, 2025, the alternate tax rate is 5.70 7 percent. 8 (C) For the tax year beginning on or after January 1, 2025, 9 but before January 1, 2026, the alternate tax rate is 5.20 10 percent. 11 (ii) This subparagraph division (a) is repealed January 1, 12 2026. 13 (b) For tax years beginning on or after January 1, 2026, the 14 alternate tax rate is 4.40 percent. 15 Sec. 4. Section 422.5, subsection 3, paragraph b, Code 2024, 16 is amended to read as follows: 17 b. (1) In lieu of the computation in subsection 1 or 2 , 18 if the married persons filing jointly, head of households, 19 or surviving spouses net income exceeds thirty-two thousand 20 dollars, the regular tax imposed under this subchapter shall be 21 the lesser of the alternate state individual income tax rate 22 specified in subparagraph (2) of four and three-tenths percent 23 times the portion of the net income in excess of thirty-two 24 thousand dollars or the regular tax liability computed without 25 regard to this sentence. Taxpayers electing to file separately 26 shall compute the alternate tax described in this paragraph 27 using the total net income of the spouses. The alternate tax 28 described in this paragraph does not apply if one spouse elects 29 to carry back or carry forward a net operating loss as provided 30 under the Internal Revenue Code or in section 422.9 . 31 (2) (a) (i) (A) For the tax year beginning on or after 32 January 1, 2023, but before January 1, 2024, the alternate tax 33 rate is 6.00 percent. 34 (B) For the tax year beginning on or after January 1, 2024, 35 -2- LSB 6382HV (1) 90 jm/jh 2/ 49
H.F. 2705 but before January 1, 2025, the alternate tax rate is 5.70 1 percent. 2 (C) For the tax year beginning on or after January 1, 2025, 3 but before January 1, 2026, the alternate tax rate is 5.20 4 percent. 5 (ii) This subparagraph division (a) is repealed January 1, 6 2026. 7 (b) For tax years beginning on or after January 1, 2026, the 8 alternate tax rate is 4.40 percent. 9 Sec. 5. Section 422.5, subsection 6, Code 2024, is amended 10 by striking the subsection. 11 Sec. 6. Section 422.16, subsection 2, paragraph e, Code 12 2024, is amended to read as follows: 13 e. For the purposes of this subsection , state income tax 14 shall be withheld at the highest rate described in section 15 422.5A 422.5 from supplemental wages of an employee in those 16 circumstances in which the employer treats the supplemental 17 wages as wholly separate from regular wages for purposes 18 of withholding and federal income tax is withheld from the 19 supplemental wages under section 3402(g) of the Internal 20 Revenue Code. 21 Sec. 7. Section 422.16B, subsection 2, paragraph a, Code 22 2024, is amended to read as follows: 23 a. (1) A pass-through entity shall file a composite return 24 on behalf of all nonresident members and shall report and pay 25 the income or franchise tax imposed under this chapter at the 26 maximum state income or franchise tax rate applicable to the 27 member under section 422.5A 422.5 , 422.33 , or 422.63 on the 28 nonresident members distributive shares of the income from the 29 pass-through entity. 30 (2) The tax rate applicable to a tiered pass-through entity 31 shall be the maximum state income tax rate under section 422.5A 32 422.5 . 33 Sec. 8. Section 422.16C, subsection 4, paragraph a, Code 34 2024, is amended to read as follows: 35 -3- LSB 6382HV (1) 90 jm/jh 3/ 49
H.F. 2705 a. A taxpayer making an election under this section shall 1 be subject to tax in an amount equal to the maximum rate under 2 section 422.5A 422.5 , imposed against the taxable income of the 3 taxpayer for the taxable year properly determined under this 4 chapter and allocated and apportioned to the state under the 5 rules adopted by the department. The tax shall be due with the 6 taxpayers return required under this chapter . 7 Sec. 9. Section 422.16C, subsection 5, paragraph a, 8 subparagraph (2), Code 2024, is amended to read as follows: 9 (2) The difference between one hundred percent and the 10 highest individual income tax rate in effect for the tax year. 11 Sec. 10. Section 422.21, subsection 5, Code 2024, is amended 12 to read as follows: 13 5. The director shall determine for the 2023 calendar year 14 and each subsequent calendar year the annual and cumulative 15 inflation factors for each calendar year to be applied to tax 16 years beginning on or after January 1 of that calendar year. 17 The director shall compute the new dollar amounts as specified 18 to be adjusted in section 422.5 by the latest cumulative 19 inflation factor and round off the result to the nearest one 20 dollar. The annual and cumulative inflation factors determined 21 by the director are not rules as defined in section 17A.2, 22 subsection 11 . 23 Sec. 11. Section 422.25A, subsection 5, paragraph c, 24 subparagraphs (3), (4), and (5), Code 2024, are amended to read 25 as follows: 26 (3) Determine the total distributive share of all final 27 federal partnership adjustments and positive reallocation 28 adjustments as modified by this title that are reported to 29 nonresident individual partners and nonresident fiduciary 30 partners and allocate and apportion such adjustments as 31 provided in section 422.33 at the partnership or tiered partner 32 level, and multiply the resulting amount by the maximum highest 33 individual income tax rate pursuant to section 422.5A for the 34 reviewed year. 35 -4- LSB 6382HV (1) 90 jm/jh 4/ 49
H.F. 2705 (4) For the total distributive share of all final federal 1 partnership adjustments and positive reallocation adjustments 2 as modified by this title that are reported to tiered partners: 3 (a) Determine the amount of such adjustments which are of a 4 type that would be subject to sourcing to Iowa under section 5 422.8, subsection 2 , paragraph a , as a nonresident, and then 6 determine the portion of this amount that would be sourced to 7 Iowa under those provisions as if the tiered partner were a 8 nonresident. 9 (b) Determine the amount of such adjustments which are of 10 a type that would not be subject to sourcing to Iowa under 11 section 422.8, subsection 2 , paragraph a , as a nonresident. 12 (c) Determine the portion of the amount in subparagraph 13 division (b) that can be established, as prescribed by the 14 department by rule, to be properly allocable to indirect 15 partners that are nonresident partners or other partners not 16 subject to tax on the adjustments. 17 (d) Multiply the total of the amounts determined in 18 subparagraph divisions (a) and (b), reduced by any amount 19 determined in subparagraph division (c), by the highest 20 individual income tax rate pursuant to section 422.5A for the 21 reviewed year. 22 (5) For the total distributive share of all final federal 23 partnership adjustments and positive reallocation adjustments 24 as modified by this title that are reported to resident 25 individual partners and resident fiduciary partners, multiply 26 that amount by the highest individual income tax rate pursuant 27 to section 422.5A for the reviewed year. 28 Sec. 12. RATE OF WITHHOLDING. Notwithstanding any other 29 provision of law to the contrary, for tax years beginning on 30 or after January 1, 2025, any required rate of withholding 31 shall not be higher than the rate for the applicable tax year 32 pursuant to section 422.5 as amended by this division of this 33 Act. 34 Sec. 13. REPEAL. 2022 Iowa Acts, chapter 1002, sections 19, 35 -5- LSB 6382HV (1) 90 jm/jh 5/ 49
H.F. 2705 20, 21, 22, 23, and 24, are repealed. 1 Sec. 14. REPEAL. 2023 Iowa Acts, chapter 115, sections 20 2 and 21, are repealed. 3 Sec. 15. REPEAL. Section 422.5A, Code 2024, is repealed. 4 Sec. 16. EFFECTIVE DATE. This division of this Act takes 5 effect January 1, 2025. 6 Sec. 17. APPLICABILITY. This division of this Act applies 7 to tax years beginning on or after January 1, 2025. 8 DIVISION II 9 TARGETED JOBS WITHHOLDING CREDIT 10 Sec. 18. Section 403.19A, subsection 3, paragraph c, 11 subparagraphs (1) and (2), Code 2024, are amended to read as 12 follows: 13 (1) The pilot project city and the economic development 14 authority shall enter into a withholding agreement with each 15 employer concerning the targeted jobs withholding credit. The 16 withholding agreement shall provide for the total amount of 17 withholding credits awarded, as negotiated by the economic 18 development authority, the pilot project city, and the 19 employer. An agreement shall not provide for an amount of 20 withholding credits that exceeds the amount of the qualifying 21 investment made in the project. An agreement shall not be 22 entered into with a business currently located in this state 23 unless the business either creates or retains ten jobs or makes 24 a qualifying investment of at least five hundred thousand 25 one million dollars within the pilot project city. The 26 withholding agreement may have a term of years negotiated by 27 the economic development authority, the pilot project city, 28 and the employer, of up to ten years. A withholding agreement 29 specifying a term of years or a total amount of withholding 30 credits shall terminate upon the expiration of the term of 31 years specified in the agreement or upon the award of the total 32 amount of withholding credits specified in the agreement, 33 whichever occurs first. An employer shall not be obligated to 34 enter into a withholding agreement. An agreement shall not be 35 -6- LSB 6382HV (1) 90 jm/jh 6/ 49
H.F. 2705 entered into with an employer not already located in a pilot 1 project city when another Iowa community is competing for the 2 same project and both the pilot project city and the other Iowa 3 community are seeking assistance from the authority. 4 (2) The pilot project city and the economic development 5 authority shall not enter into a withholding agreement after 6 June 30, 2024 2027 . 7 Sec. 19. Section 403.19A, subsection 3, paragraph f, Code 8 2024, is amended to read as follows: 9 f. Pursuant to rules adopted by the economic development 10 authority, the pilot project city employer shall provide on an 11 annual basis to the economic development authority information 12 documenting the employers compliance of each employer with 13 each requirement of the withholding agreement, including but 14 not limited to the number of jobs created or retained and 15 the amount of investment made by the employer. The economic 16 development authority shall, in response to receiving such 17 information from the pilot project city employer , assess the 18 level of compliance by each employer and provide to the pilot 19 project city recommendations for either maintaining employer 20 compliance with the withholding agreement or terminating the 21 agreement for noncompliance under paragraph g . The economic 22 development authority shall also provide each such assessment 23 and recommendation report to the department of revenue. 24 DIVISION III 25 FRANCHISE TAX INVESTMENT SUBSIDIARIES 26 Sec. 20. Section 422.34, subsection 1, Code 2024, is amended 27 to read as follows: 28 1. All state, national, private, cooperative, and savings 29 banks, credit unions, title insurance and trust companies, 30 federally chartered savings and loan associations, production 31 credit associations, insurance companies or insurance 32 associations, reciprocal or inter-insurance exchanges, and 33 fraternal beneficiary associations , and investment subsidiaries 34 included on a return due to an election under section 422.60, 35 -7- LSB 6382HV (1) 90 jm/jh 7/ 49
H.F. 2705 subsection 1, paragraph b . 1 Sec. 21. Section 422.60, subsection 1, Code 2024, is amended 2 to read as follows: 3 1. a. A franchise tax according to and measured by net 4 income is imposed on financial institutions for the privilege 5 of doing business in this state as financial institutions. 6 b. (1) A financial institution with an investment 7 subsidiary may elect under the regulations of the director to 8 include the income and expenses of an investment subsidiary 9 on the franchise tax return for the purpose of imposing the 10 franchise tax in paragraph a . 11 (2) An election made under this paragraph shall require 12 the inclusion of the income and expenses of the investment 13 subsidiary on all subsequent returns of the financial 14 institution so long as the investment subsidiary remains a 15 subsidiary of the financial institution unless the director 16 determines that the filing of separate returns will more 17 clearly disclose the taxable income of the investment 18 subsidiary or financial institution. This determination shall 19 be made after specific request by the taxpayer for the filing 20 of separate returns. 21 Sec. 22. Section 422.61, subsection 3, paragraph f, Code 22 2024, is amended to read as follows: 23 f. (1) A Except as provided in subparagraph (2), a 24 deduction shall not be allowed for that portion of the 25 taxpayers expenses computed under this paragraph which is 26 allocable to an investment in an investment subsidiary. The 27 portion of the taxpayers expenses which is allocable to an 28 investment in an investment subsidiary is an amount which bears 29 the same ratio to the taxpayers expenses as the taxpayers 30 average adjusted basis, as computed pursuant to section 1016 31 of the Internal Revenue Code, of investment in that investment 32 subsidiary bears to the average adjusted basis for all assets 33 of the taxpayer. The portion of the taxpayers expenses that 34 is computed and disallowed under this paragraph shall be added. 35 -8- LSB 6382HV (1) 90 jm/jh 8/ 49
H.F. 2705 (2) A deduction shall not be disallowed and may be 1 subtracted for that portion of the taxpayers expenses computed 2 under this paragraph which is allocable to an investment in 3 an investment subsidiary if the taxpayer makes an election to 4 include the investment subsidiary on the same return required 5 of the taxpayer pursuant to section 422.62. 6 Sec. 23. Section 422.63, subsection 1, Code 2024, is amended 7 to read as follows: 8 1. a. The franchise tax is imposed annually in an amount 9 equal to the percent specified in subsection 2 of the net 10 income received or accrued during the taxable year. If the 11 net income of the financial institution is derived from its 12 business carried on entirely within the state, the tax shall 13 be imposed on the entire net income, but if the business is 14 carried on partly within and partly without the state, the 15 portion of net income reasonably attributable to the business 16 within the state shall be specifically allocated or equitably 17 apportioned within and without the state under rules of the 18 director. 19 b. For purposes of apportioning income within and without 20 the state, if an election is made pursuant to section 422.60, 21 subsection 1, paragraph b , the commercial domicile of an 22 investment subsidiary included on the return of the financial 23 institution pursuant to the election shall be that of the 24 financial institution rather than the investment subsidiary. 25 Sec. 24. EFFECTIVE DATE. This division of this Act takes 26 effect January 1, 2025. 27 Sec. 25. APPLICABILITY. This division of this Act applies 28 to tax years beginning on or after January 1, 2025. 29 DIVISION IV 30 PROPERTY TAX PROCEDURES 31 Sec. 26. Section 24.2A, subsection 2, paragraph a, Code 32 2024, is amended to read as follows: 33 a. On or before 4:00 p.m. on March 15 5 of each year, 34 each political subdivision shall file with the department 35 -9- LSB 6382HV (1) 90 jm/jh 9/ 49
H.F. 2705 of management a report containing all necessary information 1 for the department of management to compile and calculate 2 amounts required to be included in the statements mailed under 3 paragraph b . If a county or city fails to file all necessary 4 information with the department of management by 4:00 p.m. on 5 March 5, taxes levied by the county or city shall be limited to 6 the prior years budget amount. 7 Sec. 27. Section 24.2A, subsection 2, paragraph b, 8 unnumbered paragraph 1, Code 2024, is amended to read as 9 follows: 10 Not later than March 20 15 , the county auditor, using 11 information compiled and calculated by the department of 12 management under paragraph a , shall send to each property 13 owner or taxpayer within the county by regular mail an 14 individual statement containing all of the following for 15 each of the political subdivisions comprising the owners or 16 taxpayers taxing district: 17 Sec. 28. Section 24.2A, subsection 2, paragraph b, 18 subparagraphs (5) and (6), Code 2024, are amended to read as 19 follows: 20 (5) An For the budget for the fiscal year beginning July 21 1, 2024, an example comparing the amount of property taxes on 22 a residential property with an actual value of one hundred 23 thousand dollars in the current fiscal year and such amount 24 on the residential property using the proposed property 25 tax dollars for the budget year, including the percentage 26 difference percent change in such amounts. For the budget for 27 fiscal years beginning on or after July 1, 2025, an example 28 comparing the amount of property taxes on a residential 29 property with an actual value of one hundred thousand dollars 30 in the current fiscal year and one hundred ten percent of such 31 amount on the residential property using the proposed property 32 tax dollars for the budget year, including the percent change 33 in such amounts. 34 (6) An For the budget for the fiscal year beginning July 35 -10- LSB 6382HV (1) 90 jm/jh 10/ 49
H.F. 2705 1, 2024, an example comparing the amount of property taxes 1 on a commercial property with an actual value of one hundred 2 thousand dollars in the current fiscal year and such amount on 3 the commercial property using the proposed property tax dollars 4 for the budget year, including the percentage difference 5 percent change in such amounts. For the budget for fiscal 6 years beginning on or after July 1, 2025, an example comparing 7 the amount of property taxes on a commercial property with an 8 actual value of three hundred thousand dollars in the current 9 fiscal year and one hundred ten percent of such amount on the 10 commercial property using the proposed property tax dollars for 11 the budget year, including the percent change in such amounts. 12 Sec. 29. Section 24.2A, subsection 2, paragraph b, Code 13 2024, is amended by adding the following new subparagraph: 14 NEW SUBPARAGRAPH . (10) A link to the department of 15 managements internet site where the property owner or taxpayer 16 may view an example of the statement and a brief explanation of 17 the information included on the statement. 18 Sec. 30. Section 24.2A, subsection 4, paragraph a, Code 19 2024, is amended to read as follows: 20 a. Each political subdivision shall set a time and place 21 for a public hearing on the political subdivisions proposed 22 property tax amount for the budget year and the political 23 subdivisions information included in the statements under 24 subsection 2 . The proposed property tax hearing shall be set 25 on a date on or after March 20 of the budget year immediately 26 preceding the budget year for which the tax is being proposed. 27 At the hearing, the governing body of the political subdivision 28 shall receive oral or written testimony from any resident or 29 property owner of the political subdivision. This public 30 hearing shall be separate from any other meeting of the 31 governing body of the political subdivision, including any 32 other meeting or public hearing relating to the political 33 subdivisions budget, and other business of the political 34 subdivision that is not related to the proposed property tax 35 -11- LSB 6382HV (1) 90 jm/jh 11/ 49
H.F. 2705 amounts and the information in the statements shall not be 1 conducted at the public hearing. After all testimony has been 2 received and considered, the governing body may decrease, but 3 not increase, the proposed property tax amount to be included 4 in the political subdivisions budget. 5 Sec. 31. Section 24.2A, subsection 4, paragraph b, Code 6 2024, is amended by adding the following new subparagraph: 7 NEW SUBPARAGRAPH . (4) Failure of a newspaper to publish a 8 required notice under this paragraph shall not be considered a 9 failure of a political subdivision to provide required notice 10 under this paragraph if all of the following conditions are 11 met: 12 (a) Notice of the public hearing was provided to each 13 property owner and each taxpayer within the political 14 subdivision in statements required under subsection 2, 15 paragraph b . 16 (b) The political subdivision can demonstrate to the county 17 auditor that the political subdivision provided sufficient time 18 for the newspaper to publish the notice. 19 Sec. 32. Section 24.2A, subsection 4, paragraph c, Code 20 2024, is amended to read as follows: 21 c. Notice of the hearing shall also be posted and clearly 22 identified on the political subdivisions internet site 23 for public viewing beginning on the date of the newspaper 24 publication and shall be maintained on the political 25 subdivisions internet site with all such prior year notices 26 and copies of the statements mailed under subsection 2 . 27 Additionally, if the political subdivision maintains a social 28 media account on one or more social media applications, the 29 public hearing notice or an electronic link to the public 30 hearing notice shall be posted on each such account on the same 31 day as the a date no later than the date of publication of the 32 notice. 33 Sec. 33. Section 176A.8, subsection 6, Code 2024, is amended 34 to read as follows: 35 -12- LSB 6382HV (1) 90 jm/jh 12/ 49
H.F. 2705 6. To prepare annually before March 15 April 30 a budget for 1 the fiscal year beginning July 1 and ending the following June 2 30, in accordance with the provisions of chapter 24 and certify 3 the budget to the board of supervisors of the county of their 4 extension district as required by law. 5 Sec. 34. Section 176A.10, subsection 1, unnumbered 6 paragraph 1, Code 2024, is amended to read as follows: 7 The extension council of each extension district shall, at 8 a meeting held before March 15 April 30 , estimate the amount 9 of money required to be raised by taxation for financing the 10 county agricultural extension education program authorized in 11 this chapter . The annual tax levy and the amount of money to 12 be raised from the levy for the county agricultural extension 13 education fund shall not exceed the following: 14 Sec. 35. Section 257.19, subsection 2, Code 2024, is amended 15 to read as follows: 16 2. Certification of a boards intent to participate for a 17 budget year, the method of funding, and the amount to be raised 18 shall be made to the department of management not later than 19 April 15 30 of the base year. Funding for the instructional 20 support program shall be obtained from instructional support 21 state aid and from local funding using either an instructional 22 support property tax or a combination of an instructional 23 support property tax and an instructional support income 24 surtax. 25 Sec. 36. Section 309.93, unnumbered paragraph 1, Code 2024, 26 is amended to read as follows: 27 On or before April 15 30 of each year, the board of 28 supervisors, with the assistance of the county engineer, shall 29 adopt and submit to the department for approval the county 30 secondary road budget for the next fiscal year. The budget 31 shall include an itemized statement of: 32 Sec. 37. Section 331.301, Code 2024, is amended by adding 33 the following new subsection: 34 NEW SUBSECTION . 9A. Pursuant to the general grant of home 35 -13- LSB 6382HV (1) 90 jm/jh 13/ 49
H.F. 2705 rule power conferred by the Constitution of the State of Iowa 1 and if not inconsistent with the laws of the general assembly, 2 a county that has designated more than one city to be a county 3 seat may consolidate or reduce the number of county seats by 4 ordinance. 5 Sec. 38. Section 331.434, subsection 7, Code 2024, is 6 amended by striking the subsection and inserting in lieu 7 thereof the following: 8 7. a. A county may collect taxes for a fiscal year for 9 which no budget has been certified, but the county shall not 10 distribute any funds collected for a fiscal year until the 11 county certifies its budget and transmits the certified budget 12 to the county auditor. 13 b. Taxes levied by a county whose budget is certified after 14 April 30 shall be limited to the taxes levied for the previous 15 fiscal year subject to applicable levy rate limits in this 16 chapter. However, that amount shall not exceed the amount the 17 county could collect based on property assessments for the 18 fiscal year for which the county failed to certify property 19 taxes. 20 c. The department of management may waive the limitation 21 in paragraph b for a county if the department of management 22 finds, after a showing of evidence by the county, that failure 23 to certify the budget by April 30 was caused by one or more of 24 the following: 25 (1) A newspaper failed to publish a notice of hearing 26 as required under section 24.2A after the county gave the 27 newspaper sufficient time to publish the notice. 28 (2) A verifiable public emergency or weather-related event 29 which forced the cancellation of a public hearing as required 30 under section 24.2A. 31 (3) An illness or unexpected vacancy of one or more board 32 members caused a lack of a quorum necessary to hold a hearing 33 as required under section 24.2A. 34 (4) A failure of state software or a state process caused 35 -14- LSB 6382HV (1) 90 jm/jh 14/ 49
H.F. 2705 the board to miss the required date to certify the countys 1 budget. 2 Sec. 39. Section 331.510, subsection 3, Code 2024, is 3 amended to read as follows: 4 3. An annual report not later than January 1 to the 5 department of management of the valuation by class of property 6 for each taxing district in the county as instructed by and on 7 forms provided by the department of management. The valuations 8 reported shall be those valuations used for determining 9 the levy rates necessary to fund the budgets of the taxing 10 districts for the following fiscal year. Each annual report 11 under this subsection for assessment years beginning on 12 or after January 1, 2024, shall distinguish such values as 13 revaluation or other type of addition to value, as defined 14 and submitted in the assessors abstract transmitted to the 15 department of revenue under section 441.45 . 16 Sec. 40. Section 384.1, subsection 3, paragraph c, Code 17 2024, is amended by adding the following new subparagraph: 18 NEW SUBPARAGRAPH . (4) Notwithstanding other provisions of 19 this paragraph, if a citys actual levy rate for the current 20 fiscal year is zero dollars per thousand dollars of assessed 21 value and the total assessed value used to calculate taxes 22 under this paragraph for the budget year exceeds one hundred 23 two and seventy-five hundredths percent, the citys tax levy 24 imposed by this paragraph may be levied at a rate not to exceed 25 eight dollars and ten cents per thousand dollars of assessed 26 valuation. 27 Sec. 41. Section 384.16, subsection 6, Code 2024, is amended 28 by striking the subsection and inserting in lieu thereof the 29 following: 30 6. a. Taxes from a city levy may be collected for a fiscal 31 year for which no budget has been certified, but the county 32 shall not distribute any funds collected from the levies to 33 the city until the city certifies its budget and transmits the 34 certified budget to the county auditor. 35 -15- LSB 6382HV (1) 90 jm/jh 15/ 49
H.F. 2705 b. Taxes levied by a city whose budget is certified after 1 April 30 shall be limited to the taxes levied for the previous 2 fiscal year subject to applicable levy rate limits in this 3 chapter. However, that amount shall not exceed the amount the 4 city could collect based on property assessments for the fiscal 5 year for which the city failed to certify property taxes. 6 c. The department of management may waive the limitation 7 in paragraph b for a city if the department of management 8 finds, after a showing of evidence by the city, that failure 9 to certify the budget by April 30 was caused by one or more of 10 the following: 11 (1) A newspaper failed to publish a notice of hearing as 12 required under section 24.2A after the city gave the newspaper 13 sufficient time to publish the notice. 14 (2) A verifiable public emergency or weather-related event 15 which forced the cancellation of a public hearing as required 16 under section 24.2A. 17 (3) An illness or unexpected vacancy of one or more council 18 members caused a lack of a quorum necessary to hold a hearing 19 as required under section 24.2A. 20 (4) A failure of state software or a state process caused 21 the council to miss the required date to certify the citys 22 budget. 23 Sec. 42. Section 403.22, subsection 5, Code 2024, is amended 24 to read as follows: 25 5. a. Except for a municipality with a population under 26 fifteen thousand, the division of the revenue under section 27 403.19 for each project under this section shall be limited 28 to tax collections for ten fiscal years beginning with the 29 second fiscal year after the year in which the municipality 30 first certifies to the county auditor the amount of any loans, 31 advances, indebtedness, or bonds which qualify for payment from 32 the division of the revenue in connection with the project. 33 b. A municipality with a population under fifteen thousand 34 may, with the approval of the governing bodies of all other 35 -16- LSB 6382HV (1) 90 jm/jh 16/ 49
H.F. 2705 affected taxing districts, extend the division of revenue under 1 section 403.19 for up to five years if necessary to adequately 2 fund the project. 3 c. Notwithstanding other time limitations provided by this 4 subsection, for urban renewal areas established before January 5 1, 2018, a municipality may, with the approval of the governing 6 bodies of all other affected taxing districts, extend the 7 division of revenue under section 403.19 for up to three years 8 if necessary to adequately fund the project. 9 d. The portion of the urban renewal area which is involved 10 in a project under this section shall not be subject to any 11 subsequent division of revenue under section 403.19 . 12 Sec. 43. Section 425.1A, Code 2024, is amended by adding the 13 following new subsection: 14 NEW SUBSECTION . 3. The list of the names, addresses, 15 and dates of birth of individuals allowed an exemption 16 under this section and maintained by the county recorder, 17 county treasurer, county assessor, city assessor, or other 18 governmental body and obtained for purposes of allowing an 19 exemption under this section is confidential information and 20 shall not be disseminated to any person unless otherwise 21 ordered by a court or released by the lawful custodian of 22 the records pursuant to state or federal law. The county 23 recorder, county treasurer, county assessor, city assessor, 24 or other governmental body responsible for maintaining the 25 names, addresses, and dates of birth of individuals allowed 26 an exemption under this section may display such exemption on 27 individual paper records and individual electronic records, 28 including display on an internet site. 29 Sec. 44. Section 441.45, Code 2024, is amended by adding the 30 following new subsection: 31 NEW SUBSECTION . 3. An assessor shall report valuations 32 of real property by parcel, including identifying additions 33 by revaluation or other type of addition to value, and shall 34 transmit and maintain the data in a manner that is compatible 35 -17- LSB 6382HV (1) 90 jm/jh 17/ 49
H.F. 2705 with software used by the county auditor and that allows the 1 county auditor to use the data to file the reports required by 2 section 331.510, subsections 3 and 4. 3 Sec. 45. 2023 Iowa Acts, chapter 71, section 137, is amended 4 to read as follows: 5 SEC. 137. Section 8.6 , Code 2023, is amended by adding the 6 following new subsection: 7 NEW SUBSECTION . 17. County and city bond issuance. To 8 annually prepare and file with the general assembly by December 9 January 1 a report specifying the updated population thresholds 10 as adjusted under section 331.442, subsection 5 , and section 11 384.26, subsection 5 , and detailing the use of the bond 12 issuance procedures under section 331.442, subsection 5 , and 13 section 384.26, subsection 5 , including the usage of such 14 procedures by counties and cities based on the population-based 15 limitations and the amount of bonds issued for each such usage. 16 Sec. 46. REPEAL. 1848 Iowa Acts, First Extraordinary 17 Session, chapter 52, is repealed. 18 Sec. 47. EFFECTIVE DATE. The following, being deemed of 19 immediate importance, take effect upon enactment: 20 1. The section of this division of this Act enacting section 21 24.2A, subsection 2, paragraph b, subparagraph (10). 22 2. The section of this division of this Act enacting section 23 24.2A, subsection 4, paragraph b, subparagraph (4). 24 3. The section of this division of this Act amending section 25 24.2A, subsection 4, paragraph c. 26 4. The section of this division of this division of this Act 27 amending section 176A.8, subsection 6. 28 5. The section of this division of this Act amending section 29 176A.10, subsection 1, unnumbered paragraph 1. 30 6. The section of this division of this Act amending section 31 257.19, subsection 2. 32 7. The section of this division of this Act amending section 33 309.93, unnumbered paragraph 1. 34 8. The section of this division of this Act enacting section 35 -18- LSB 6382HV (1) 90 jm/jh 18/ 49
H.F. 2705 331.301, subsection 9A. 1 9. The section of this division of this Act amending section 2 331.434, subsection 7. 3 10. The section of this division of this Act amending 4 section 331.510, subsection 3. 5 11. The section of this division of this Act enacting 6 section 384.1, subsection 3, paragraph c, subparagraph (4). 7 12. The section of this division of this Act amending 8 section 384.16, subsection 6. 9 13. The section of this division of this Act amending 10 section 403.22, subsection 5. 11 14. The section of this division of this Act enacting 12 section 441.45, subsection 3. 13 15. The section of this division of this Act repealing 1848 14 Iowa Acts, First Extraordinary Session, chapter 52. 15 Sec. 48. RETROACTIVE APPLICABILITY. The following apply 16 retroactively to January 1, 2024: 17 1. The sections of this division of this Act enacting the 18 following: 19 a. Section 24.2A, subsection 2, paragraph b, subparagraph 20 (10). 21 b. Section 24.2A, subsection 4, paragraph b, subparagraph 22 (4). 23 2. The sections of this division of this Act amending the 24 following: 25 a. Section 24.2A, subsection 4, paragraph c. 26 b. Section 176A.8, subsection 6. 27 c. Section 176A.10, subsection 1, unnumbered paragraph 1. 28 d. Section 257.19, subsection 2. 29 e. Section 309.93, unnumbered paragraph 1. 30 DIVISION V 31 COMPENSATION OF ELECTED COUNTY OFFICIALS 32 Sec. 49. Section 331.212, subsection 2, Code 2024, is 33 amended by adding the following new paragraphs: 34 NEW PARAGRAPH . i. Setting the compensation schedule of 35 -19- LSB 6382HV (1) 90 jm/jh 19/ 49
H.F. 2705 elected county officers, if the board has not established or 1 has dissolved a county compensation board pursuant to section 2 331.905. 3 NEW PARAGRAPH . j. Dissolving a county compensation board. 4 Sec. 50. Section 331.321, subsection 1, paragraph l, Code 5 2024, is amended to read as follows: 6 l. Two members of the county compensation board in 7 accordance with section 331.905 , if the board of supervisors 8 has established a county compensation board . 9 Sec. 51. Section 331.322, subsections 6 and 7, Code 2024, 10 are amended to read as follows: 11 6. Review Annually prepare and review the compensation 12 schedule, or review the final compensation schedule of the 13 county compensation board if the board of supervisors has 14 established a county compensation board, and determine the 15 final compensation schedule in accordance with section 331.907 . 16 7. Provide necessary office facilities and the technical 17 and clerical assistance requested by the county compensation 18 board to accomplish the purposes of sections 331.905 and 19 331.907 , if the board of supervisors has established a county 20 compensation board . 21 Sec. 52. Section 331.905, subsection 1, unnumbered 22 paragraph 1, Code 2024, is amended to read as follows: 23 There is created in each county A board of supervisors may 24 vote to establish a county compensation board which subject to 25 the provisions of this section. The county compensation board 26 shall be composed of seven members who are residents of the 27 county. The members of the county compensation board shall be 28 selected as follows: 29 Sec. 53. Section 331.905, Code 2024, is amended by adding 30 the following new subsection: 31 NEW SUBSECTION . 7. A board of supervisors may dissolve a 32 county compensation board upon a majority vote of the members 33 of the board of supervisors. If the board of supervisors 34 has not established or has dissolved the county compensation 35 -20- LSB 6382HV (1) 90 jm/jh 20/ 49
H.F. 2705 board, the board of supervisors shall carry out the duties 1 as the county compensation board, including as provided in 2 section 331.907. Pursuant to section 331.907, in setting 3 the salary of the county sheriff, the board of supervisors 4 shall set the sheriffs salary so that it is comparable to 5 salaries paid to professional law enforcement administrators 6 and command officers of the state patrol, the division of 7 criminal investigation of the department of public safety, and 8 city police chiefs employed by cities of similar population to 9 the population of the county. 10 Sec. 54. Section 331.907, subsections 1 and 2, Code 2024, 11 are amended to read as follows: 12 1. The annual compensation of the auditor, treasurer, 13 recorder, sheriff, county attorney, and supervisors shall 14 be determined as provided in this section . The county 15 compensation board annually shall review the compensation 16 paid to comparable officers in other counties of this state, 17 other states, private enterprise, and the federal government. 18 In setting the salary of the county sheriff, the county 19 compensation board shall set the sheriffs salary so that it 20 is comparable to salaries paid to professional law enforcement 21 administrators and command officers of the state patrol, 22 the division of criminal investigation of the department of 23 public safety, and city police chiefs employed by cities of 24 similar population to the population of the county. The county 25 compensation board shall prepare a compensation schedule 26 for the elective elected county officers for the succeeding 27 fiscal year. The county compensation board shall provide 28 documentation to the board of supervisors that demonstrates 29 how the county compensation board determined the recommended 30 compensation schedule, including by providing the applicable 31 compensation information for comparable officers in other 32 counties of this state, other states, private enterprise, and 33 the federal government. A recommended compensation schedule 34 requires a majority vote of the membership of the county 35 -21- LSB 6382HV (1) 90 jm/jh 21/ 49
H.F. 2705 compensation board. 1 2. At the public hearing held on the county budget as 2 provided in section 331.434 , the county compensation board 3 shall submit its recommended compensation schedule for the 4 next fiscal year to the board of supervisors for inclusion 5 in the county budget. The board of supervisors shall review 6 the recommended compensation schedule for the elected county 7 officers and determine the final compensation schedule which 8 shall not exceed the compensation schedule recommended by 9 the county compensation board . In determining the final 10 compensation schedule if the board of supervisors wishes to 11 reduce the amount of the recommended compensation schedule, 12 the amount of salary increase proposed for each elected county 13 officer, except as provided in subsection 3 , shall be reduced 14 an equal percentage. In determining the final compensation 15 schedule for the elected county officers, the board of 16 supervisors may set compensation at less than the compensation 17 provided in the current compensation schedule if the position 18 is reduced to part-time under the recommended compensation 19 schedule. A copy of the final compensation schedule shall be 20 filed with the county budget at the office of the director of 21 the department of management. The final compensation schedule 22 takes effect on July 1 following its adoption by the board 23 of supervisors. For purposes of this subsection, current 24 compensation schedule means the compensation schedule in 25 effect when the board of supervisors considers the recommended 26 compensation schedule. 27 DIVISION VI 28 COUNTY AND CITY PROPERTY TAXES 29 Sec. 55. Section 331.423, subsection 1, paragraph b, 30 subparagraphs (2) and (3), Code 2024, are amended to read as 31 follows: 32 (2) (a) If the total assessed value used to calculate 33 taxes for general county services under this paragraph for the 34 budget year exceeds one hundred three two and seventy-five 35 -22- LSB 6382HV (1) 90 jm/jh 22/ 49
H.F. 2705 hundredths percent, but is less than one hundred six four 1 percent, of the total assessed value used to calculate taxes 2 for general county services for the current fiscal year, the 3 adjusted general county basic levy rate, as previously adjusted 4 under this subparagraph, if applicable, shall be reduced to 5 a rate per thousand dollars of assessed value that is equal 6 to one thousand multiplied by the quotient of the current 7 fiscal years actual property tax dollars certified for levy 8 under this subsection 1 divided by one hundred two one percent 9 of the total assessed value used to calculate such taxes for 10 the current fiscal year. For the budget year beginning July 11 1, 2024, only, the current fiscal years actual property tax 12 dollars certified for levy under this subsection 1 shall also 13 include property tax dollar amounts levied for general county 14 services by the county under section 331.426, Code 2023 , for 15 the fiscal year beginning July 1, 2023. 16 (b) If the total assessed value used to calculate taxes for 17 general county services under this paragraph for the budget 18 year is equal to or exceeds one hundred four percent, but 19 is less than one hundred six percent, of the total assessed 20 value used to calculate taxes for general county services for 21 the current fiscal year, the adjusted general county basic 22 levy rate, as previously adjusted under this subparagraph, if 23 applicable, shall be reduced to a rate per thousand dollars 24 of assessed value that is equal to one thousand multiplied 25 by the quotient of the current fiscal years actual property 26 tax dollars certified for levy under this subsection 1 divided 27 by one hundred two percent of the total assessed value used 28 to calculate such taxes for the current fiscal year. For 29 the budget year beginning July 1, 2024, only, the current 30 fiscal years actual property tax dollars certified for levy 31 under this subsection 1 shall also include property tax dollar 32 amounts levied for general county services by the county under 33 section 331.426, Code 2023, for the fiscal year beginning July 34 1, 2023. 35 -23- LSB 6382HV (1) 90 jm/jh 23/ 49
H.F. 2705 (c) If the total assessed value used to calculate taxes 1 for general county services under this paragraph for the 2 budget year is equal to or exceeds one hundred six percent of 3 the total assessed value used to calculate taxes for general 4 county services for the current fiscal year, the adjusted 5 general county basic levy rate, as previously adjusted under 6 this subparagraph, if applicable, shall be reduced to a rate 7 per thousand dollars of assessed value that is equal to one 8 thousand multiplied by the quotient of the current fiscal 9 years actual property tax dollars certified for levy under 10 this subsection 1 divided by one hundred three percent of 11 the total assessed value used to calculate such taxes for 12 the current fiscal year. For the budget year beginning July 13 1, 2024, only, the current fiscal years actual property tax 14 dollars certified for levy under this subsection 1 shall also 15 include property tax dollar amounts levied for general county 16 services by the county under section 331.426, Code 2023 , for 17 the fiscal year beginning July 1, 2023. 18 (3) (a) (i) In addition to the limitation under 19 subparagraph (2), if the countys actual levy rate imposed 20 under this subsection 1 for the current fiscal year is three 21 dollars and fifty cents or less per thousand dollars of 22 assessed value and the total assessed value used to calculate 23 taxes for general county services under this paragraph for the 24 budget year exceeds one hundred three two and seventy-five 25 hundredths percent, but is less than one hundred six four 26 percent, of the total assessed value used to calculate taxes 27 for general county services for the current fiscal year, the 28 levy rate imposed under this subsection 1 for the budget year 29 shall not exceed a rate per thousand dollars of assessed value 30 that is equal to one thousand multiplied by the quotient of the 31 current fiscal years actual property tax dollars certified for 32 levy under this subsection 1 divided by one hundred two one 33 percent of the total assessed value used to calculate taxes for 34 general county services for the current fiscal year. 35 -24- LSB 6382HV (1) 90 jm/jh 24/ 49
H.F. 2705 (ii) For the budget year beginning July 1, 2024, only, 1 the countys actual levy rate imposed under this subsection 1 2 for the current fiscal year shall also include the amount per 3 thousand dollars of assessed value levied for general county 4 services by the county under section 331.426, Code 2023 , for 5 the fiscal year beginning July 1, 2023, and the current fiscal 6 years actual property tax dollars certified for levy under 7 this subsection 1 shall also include amounts levied for general 8 county services by the county under section 331.426, Code 2023 , 9 for the fiscal year beginning July 1, 2023. 10 (b) (i) In addition to the limitation under subparagraph 11 (2), if the countys actual levy rate imposed under this 12 subsection 1 for the current fiscal year is three dollars and 13 fifty cents or less per thousand dollars of assessed value and 14 the total assessed value used to calculate taxes for general 15 county services under this paragraph for the budget year is 16 equal to or exceeds one hundred four percent, but is less than 17 one hundred six percent, of the total assessed value used to 18 calculate taxes for general county services for the current 19 fiscal year, the levy rate imposed under this subsection 1 for 20 the budget year shall not exceed a rate per thousand dollars 21 of assessed value that is equal to one thousand multiplied by 22 the quotient of the current fiscal years actual property tax 23 dollars certified for levy under this subsection 1 divided by 24 one hundred two percent of the total assessed value used to 25 calculate taxes for general county services for the current 26 fiscal year. 27 (ii) For the budget year beginning July 1, 2024, only, 28 the countys actual levy rate imposed under this subsection 1 29 for the current fiscal year shall also include the amount per 30 thousand dollars of assessed value levied for general county 31 services by the county under section 331.426, Code 2023, for 32 the fiscal year beginning July 1, 2023, and the current fiscal 33 years actual property tax dollars certified for levy under 34 this subsection 1 shall also include amounts levied for general 35 -25- LSB 6382HV (1) 90 jm/jh 25/ 49
H.F. 2705 county services by the county under section 331.426, Code 2023, 1 for the fiscal year beginning July 1, 2023. 2 (c) (i) In addition to the limitation under subparagraph 3 (2), if the countys actual levy rate imposed under this 4 subsection 1 for the current fiscal year is three dollars and 5 fifty cents or less per thousand dollars of assessed value and 6 the total assessed value used to calculate taxes for general 7 county services under this paragraph for the budget year is 8 equal to or exceeds one hundred six percent of the total 9 assessed value used to calculate taxes for general county 10 services for the current fiscal year, the levy rate imposed 11 under this subsection 1 for the budget year shall not exceed a 12 rate per thousand dollars of assessed value that is equal to 13 one thousand multiplied by the quotient of the current fiscal 14 years actual property tax dollars certified for levy under 15 this subsection 1 divided by one hundred three percent of the 16 total assessed value used to calculate taxes for general county 17 services for the current fiscal year. 18 (ii) For the budget year beginning July 1, 2024, only, 19 the countys actual levy rate imposed under this subsection 1 20 for the current fiscal year shall also include the amount per 21 thousand dollars of assessed value levied for general county 22 services by the county under section 331.426, Code 2023 , for 23 the fiscal year beginning July 1, 2023, and the current fiscal 24 years actual property tax dollars certified for levy under 25 this subsection 1 shall also include amounts levied for general 26 county services by the county under section 331.426, Code 2023 , 27 for the fiscal year beginning July 1, 2023. 28 Sec. 56. Section 331.423, subsection 2, paragraph b, 29 subparagraphs (2) and (3), Code 2024, are amended to read as 30 follows: 31 (2) (a) If the total assessed value used to calculate 32 taxes for rural county services under this paragraph for the 33 budget year exceeds one hundred three two and seventy-five 34 hundredths percent, but is less than one hundred six four 35 -26- LSB 6382HV (1) 90 jm/jh 26/ 49
H.F. 2705 percent, of the total assessed value used to calculate taxes 1 for rural county services for the current fiscal year, the 2 adjusted rural county basic levy rate, as previously adjusted 3 under this subparagraph, if applicable, shall be reduced to 4 a rate per thousand dollars of assessed value that is equal 5 to one thousand multiplied by the quotient of the current 6 fiscal years actual property tax dollars certified for levy 7 under this subsection 2 divided by one hundred two one percent 8 of the total assessed value used to calculate such taxes for 9 the current fiscal year. For the budget year beginning July 10 1, 2024, only, the current fiscal years actual property tax 11 dollars certified for levy under this subsection 2 shall also 12 include property tax dollar amounts levied for rural county 13 services by the county under section 331.426, Code 2023 , for 14 the fiscal year beginning July 1, 2023. 15 (b) If the total assessed value used to calculate taxes 16 for rural county services under this paragraph for the budget 17 year is equal to or exceeds one hundred four percent, but 18 is less than one hundred six percent, of the total assessed 19 value used to calculate taxes for rural county services for 20 the current fiscal year, the adjusted rural county basic levy 21 rate, as previously adjusted under this subparagraph, if 22 applicable, shall be reduced to a rate per thousand dollars 23 of assessed value that is equal to one thousand multiplied 24 by the quotient of the current fiscal years actual property 25 tax dollars certified for levy under this subsection 2 divided 26 by one hundred two percent of the total assessed value used 27 to calculate such taxes for the current fiscal year. For 28 the budget year beginning July 1, 2024, only, the current 29 fiscal years actual property tax dollars certified for levy 30 under this subsection 2 shall also include property tax dollar 31 amounts levied for rural county services by the county under 32 section 331.426, Code 2023, for the fiscal year beginning July 33 1, 2023. 34 (c) If the total assessed value used to calculate taxes 35 -27- LSB 6382HV (1) 90 jm/jh 27/ 49
H.F. 2705 for rural county services under this paragraph for the budget 1 year is equal to or exceeds one hundred six percent of the 2 total assessed value used to calculate taxes for rural county 3 services for the current fiscal year, the adjusted rural 4 county basic levy rate, as previously adjusted under this 5 subparagraph, if applicable, shall be reduced to a rate 6 per thousand dollars of assessed value that is equal to one 7 thousand multiplied by the quotient of the current fiscal 8 years actual property tax dollars certified for levy under 9 this subsection 2 divided by one hundred three percent of 10 the total assessed value used to calculate such taxes for 11 the current fiscal year. For the budget year beginning July 12 1, 2024, only, the current fiscal years actual property tax 13 dollars certified for levy under this subsection 2 shall also 14 include property tax dollar amounts levied for rural county 15 services by the county under section 331.426, Code 2023 , for 16 the fiscal year beginning July 1, 2023. 17 (3) (a) (i) In addition to the limitation under 18 subparagraph (2), if the countys actual levy rate imposed 19 under this paragraph for the current fiscal year is three 20 dollars and ninety-five cents or less per thousand dollars of 21 assessed value and the total assessed value used to calculate 22 taxes for rural county services under this paragraph for the 23 budget year exceeds one hundred three two and seventy-five 24 hundredths percent, but is less than one hundred six four 25 percent, of the total assessed value used to calculate taxes 26 for rural county services for the current fiscal year, the levy 27 rate imposed under this subsection 2 for the budget year shall 28 not exceed a rate per thousand dollars of assessed value that 29 is equal to one thousand multiplied by the quotient of the 30 current fiscal years actual property tax dollars certified for 31 levy under this subsection 2 divided by one hundred two one 32 percent of the total assessed value used to calculate taxes for 33 rural county services for the current fiscal year. 34 (ii) For the budget year beginning July 1, 2024, only, 35 -28- LSB 6382HV (1) 90 jm/jh 28/ 49
H.F. 2705 the countys actual levy rate imposed under this subsection 1 2 for the current fiscal year shall also include the amount 2 per thousand dollars of assessed value levied for rural county 3 services by the county under section 331.426, Code 2023 , for 4 the fiscal year beginning July 1, 2023, and the current fiscal 5 years actual property tax dollars certified for levy under 6 this subsection 2 shall also include amounts levied for rural 7 county services by the county under section 331.426, Code 2023 , 8 for the fiscal year beginning July 1, 2023. 9 (b) (i) In addition to the limitation under subparagraph 10 (2), if the countys actual levy rate imposed under this 11 paragraph for the current fiscal year is three dollars and 12 ninety-five cents or less per thousand dollars of assessed 13 value and the total assessed value used to calculate taxes 14 for rural county services under this paragraph for the budget 15 year exceeds one hundred four percent, but is less than one 16 hundred six percent, of the total assessed value used to 17 calculate taxes for rural county services for the current 18 fiscal year, the levy rate imposed under this subsection 2 for 19 the budget year shall not exceed a rate per thousand dollars 20 of assessed value that is equal to one thousand multiplied 21 by the quotient of the current fiscal years actual property 22 tax dollars certified for levy under this subsection 2 divided 23 by one hundred two percent of the total assessed value used 24 to calculate taxes for rural county services for the current 25 fiscal year. 26 (ii) For the budget year beginning July 1, 2024, only, 27 the countys actual levy rate imposed under this subsection 28 2 for the current fiscal year shall also include the amount 29 per thousand dollars of assessed value levied for rural county 30 services by the county under section 331.426, Code 2023, for 31 the fiscal year beginning July 1, 2023, and the current fiscal 32 years actual property tax dollars certified for levy under 33 this subsection 2 shall also include amounts levied for rural 34 county services by the county under section 331.426, Code 2023, 35 -29- LSB 6382HV (1) 90 jm/jh 29/ 49
H.F. 2705 for the fiscal year beginning July 1, 2023. 1 (c) (i) In addition to the limitation under subparagraph 2 (2), if the countys actual levy rate imposed under this 3 subsection 2 for the current fiscal year is three dollars and 4 ninety-five cents or less per thousand dollars of assessed 5 value and the total assessed value used to calculate taxes 6 for rural county services under this paragraph for the budget 7 year is equal to or exceeds one hundred six percent of the 8 total assessed value used to calculate taxes for rural county 9 services for the current fiscal year, the levy rate imposed 10 under this subsection 2 for the budget year shall not exceed a 11 rate per thousand dollars of assessed value that is equal to 12 one thousand multiplied by the quotient of the current fiscal 13 years actual property tax dollars certified for levy under 14 this subsection 2 divided by one hundred three percent of the 15 total assessed value used to calculate taxes for rural county 16 services for the current fiscal year. 17 (ii) For the budget year beginning July 1, 2024, only, 18 the countys actual levy rate imposed under this subsection 19 2 for the current fiscal year shall also include the amount 20 per thousand dollars of assessed value levied for rural county 21 services by the county under section 331.426, Code 2023 , for 22 the fiscal year beginning July 1, 2023, and the current fiscal 23 years actual property tax dollars certified for levy under 24 this subsection 2 shall also include amounts levied for rural 25 county services by the county under section 331.426, Code 2023 , 26 for the fiscal year beginning July 1, 2023. 27 Sec. 57. Section 384.1, subsection 3, paragraph c, 28 subparagraphs (2) and (3), Code 2024, are amended to read as 29 follows: 30 (2) (a) If the total assessed value used to calculate 31 taxes under this paragraph for the budget year exceeds one 32 hundred three two and seventy-five hundredths percent, but is 33 less than one hundred six four percent, of the total assessed 34 value used to calculate taxes under this subsection for the 35 -30- LSB 6382HV (1) 90 jm/jh 30/ 49
H.F. 2705 current fiscal year, the adjusted city general fund levy rate, 1 as previously adjusted under this subparagraph, if applicable, 2 shall be reduced to a rate per thousand dollars of assessed 3 value that is equal to one thousand multiplied by the quotient 4 of the current fiscal years actual property tax dollars 5 certified for levy under this subsection divided by one hundred 6 two one percent of the total assessed value used to calculate 7 such taxes for the current fiscal year. For the budget year 8 beginning July 1, 2024, only, the current fiscal years actual 9 property tax dollars certified for levy under this subsection 10 shall also include property tax dollar amounts levied under the 11 provisions specified in paragraph b , subparagraphs (1), (2), 12 and (3). 13 (b) If the total assessed value used to calculate taxes 14 under this paragraph for the budget year exceeds one hundred 15 four percent, but is less than one hundred six percent, of 16 the total assessed value used to calculate taxes under this 17 subsection for the current fiscal year, the adjusted city 18 general fund levy rate, as previously adjusted under this 19 subparagraph, if applicable, shall be reduced to a rate 20 per thousand dollars of assessed value that is equal to one 21 thousand multiplied by the quotient of the current fiscal 22 years actual property tax dollars certified for levy under 23 this subsection divided by one hundred two percent of the total 24 assessed value used to calculate such taxes for the current 25 fiscal year. For the budget year beginning July 1, 2024, only, 26 the current fiscal years actual property tax dollars certified 27 for levy under this subsection shall also include property 28 tax dollar amounts levied under the provisions specified in 29 paragraph b , subparagraphs (1), (2), and (3). 30 (c) If the total assessed value used to calculate taxes 31 under this paragraph for the budget year is equal to or exceeds 32 one hundred six percent of the total assessed value used to 33 calculate taxes under this subsection for the current fiscal 34 year, the adjusted city general fund levy rate, as previously 35 -31- LSB 6382HV (1) 90 jm/jh 31/ 49
H.F. 2705 adjusted under this subparagraph, if applicable, shall be 1 reduced to a rate per thousand dollars of assessed value that 2 is equal to one thousand multiplied by the quotient of the 3 current fiscal years actual property tax dollars certified for 4 levy under this subsection divided by one hundred three percent 5 of the total assessed value used to calculate such taxes for 6 the current fiscal year. For the budget year beginning July 7 1, 2024, only, the current fiscal years actual property tax 8 dollars certified for levy under this subsection shall also 9 include property tax dollar amounts levied under the provisions 10 specified in paragraph b , subparagraphs (1), (2), and (3). 11 (3) (a) (i) In addition to the limitation under 12 subparagraph (2), if the citys actual levy rate imposed under 13 this subsection for the current fiscal year is eight dollars 14 and ten cents or less per thousand dollars of assessed value 15 and the total assessed value used to calculate taxes under this 16 paragraph for the budget year exceeds one hundred three two and 17 seventy-five hundredths percent, but is less than one hundred 18 six four percent, of the total assessed value used to calculate 19 taxes under this subsection for the current fiscal year, the 20 levy rate imposed under this paragraph for the budget year 21 shall not exceed a rate per thousand dollars of assessed value 22 that is equal to one thousand multiplied by the quotient of the 23 current fiscal years actual property tax dollars certified for 24 levy under this subsection divided by one hundred two percent 25 of the total assessed value used to calculate taxes under this 26 subsection for the current fiscal year. 27 (ii) For the budget year beginning July 1, 2024, only, the 28 citys actual levy rate imposed under this subsection for the 29 current fiscal year shall also include the sum of the amounts 30 per thousand dollars of assessed value specified in paragraph 31 b , subparagraphs (1), (2), and (3), and the current fiscal 32 years actual property tax dollars certified for levy under 33 this subsection shall also include property tax dollar amounts 34 levied by the city under the provisions specified in paragraph 35 -32- LSB 6382HV (1) 90 jm/jh 32/ 49
H.F. 2705 b , subparagraphs (1), (2), and (3). 1 (b) (i) In addition to the limitation under subparagraph 2 (2), if the citys actual levy rate imposed under this 3 subsection for the current fiscal year is eight dollars and 4 ten cents or less per thousand dollars of assessed value and 5 the total assessed value used to calculate taxes under this 6 paragraph for the budget year exceeds one hundred four percent, 7 but is less than one hundred six percent, of the total assessed 8 value used to calculate taxes under this subsection for the 9 current fiscal year, the levy rate imposed under this paragraph 10 for the budget year shall not exceed a rate per thousand 11 dollars of assessed value that is equal to one thousand 12 multiplied by the quotient of the current fiscal years actual 13 property tax dollars certified for levy under this subsection 14 divided by one hundred two percent of the total assessed value 15 used to calculate taxes under this subsection for the current 16 fiscal year. 17 (ii) For the budget year beginning July 1, 2024, only, the 18 citys actual levy rate imposed under this subsection for the 19 current fiscal year shall also include the sum of the amounts 20 per thousand dollars of assessed value specified in paragraph 21 b , subparagraphs (1), (2), and (3), and the current fiscal 22 years actual property tax dollars certified for levy under 23 this subsection shall also include property tax dollar amounts 24 levied by the city under the provisions specified in paragraph 25 b , subparagraphs (1), (2), and (3). 26 (c) (i) In addition to the limitation under subparagraph 27 (2), if the citys actual levy rate imposed under this 28 subsection for the current fiscal year is eight dollars and 29 ten cents or less per thousand dollars of assessed value 30 and the total assessed value used to calculate taxes under 31 this paragraph for the budget year is equal to or exceeds 32 one hundred six percent of the total assessed value used to 33 calculate taxes under this subsection for the current fiscal 34 year, the levy rate imposed under this paragraph for the budget 35 -33- LSB 6382HV (1) 90 jm/jh 33/ 49
H.F. 2705 year shall not exceed a rate per thousand dollars of assessed 1 value that is equal to one thousand multiplied by the quotient 2 of the current fiscal years actual property tax dollars 3 certified for levy under this subsection divided by one hundred 4 three percent of the total assessed value used to calculate 5 taxes under this subsection for the current fiscal year. 6 (ii) For the budget year beginning July 1, 2024, only, the 7 citys actual levy rate imposed under this subsection for the 8 current fiscal year shall also include the sum of the amounts 9 per thousand dollars of assessed value specified in paragraph 10 b , subparagraphs (1), (2), and (3), and the current fiscal 11 years actual property tax dollars certified for levy under 12 this subsection shall also include property tax dollar amounts 13 levied by the city under the provisions specified in paragraph 14 b , subparagraphs (1), (2), and (3). 15 Sec. 58. APPLICABILITY. This division of this Act applies 16 to taxes and budgets for fiscal years beginning on or after 17 July 1, 2025. 18 DIVISION VII 19 PROPERTY TAX ASSESSMENT LIMITATIONS 20 Sec. 59. Section 441.21, subsection 5, paragraph a, Code 21 2024, is amended to read as follows: 22 a. (1) For valuations established as of January 1, 1979, 23 property valued by the department of revenue pursuant to 24 chapters 428, 433 , and 437 , and 438 shall be considered as 25 one class of property and shall be assessed as a percentage 26 of its actual value. The percentage shall be determined by 27 the director of revenue in accordance with the provisions of 28 this section . For valuations established as of January 1, 29 1979, the percentage shall be the quotient of the dividend and 30 divisor as defined in this section . The dividend shall be the 31 total actual valuation established for 1978 by the department 32 of revenue, plus ten percent of the amount so determined. 33 The divisor for property valued by the department of revenue 34 pursuant to chapters 428, 433 , and 437 , and 438 shall be the 35 -34- LSB 6382HV (1) 90 jm/jh 34/ 49
H.F. 2705 valuation established for 1978, plus the amount of value added 1 to the total actual value by the revaluation of the property 2 by the department of revenue as of January 1, 1979. For 3 valuations established as of January 1, 1980, property valued 4 by the department of revenue pursuant to chapters 428, 433 , and 5 437 , and 438 shall be assessed at a percentage of its actual 6 value. The percentage shall be determined by the director of 7 revenue in accordance with the provisions of this section . For 8 valuations established as of January 1, 1980, the percentage 9 shall be the quotient of the dividend and divisor as defined in 10 this section . The dividend shall be the total actual valuation 11 established for 1979 by the department of revenue, plus eight 12 percent of the amount so determined. The divisor for property 13 valued by the department of revenue pursuant to chapters 428, 14 433 , and 437 , and 438 shall be the valuation established for 15 1979, plus the amount of value added to the total actual 16 value by the revaluation of the property by the department of 17 revenue as of January 1, 1980. For valuations established as 18 of January 1, 1981, and each year thereafter, the percentage 19 of actual value at which property valued by the department of 20 revenue pursuant to chapters 428, 433 , and 437 , and 438 shall 21 be assessed shall be calculated in accordance with the methods 22 provided herein, except that any references to ten percent in 23 this subsection shall be eight percent. 24 (2) For valuations established on or after January 1, 25 2013, property valued by the department of revenue pursuant to 26 chapter 434 shall be assessed at a portion of its actual value 27 determined in the same manner at which property assessed as 28 commercial property is assessed under paragraph b for the same 29 assessment year. 30 (3) For valuations established for the assessment year 31 beginning January 1, 2025, the percentage of actual value at 32 which property valued by the department of revenue pursuant to 33 chapters 428 and 438 shall be assessed shall be ninety-eight 34 percent. 35 -35- LSB 6382HV (1) 90 jm/jh 35/ 49
H.F. 2705 (4) For valuations established for the assessment year 1 beginning January 1, 2026, the percentage of actual value at 2 which property valued by the department of revenue pursuant 3 to chapters 428 and 438 shall be assessed shall be ninety-six 4 percent. 5 (5) For valuations established for the assessment year 6 beginning January 1, 2027, the percentage of actual value at 7 which property valued by the department of revenue pursuant to 8 chapters 428 and 438 shall be assessed shall be ninety-four 9 percent. 10 (6) For valuations established for the assessment year 11 beginning January 1, 2028, the percentage of actual value at 12 which property valued by the department of revenue pursuant 13 to chapters 428 and 438 shall be assessed shall be ninety-two 14 percent. 15 (7) For valuations established on or after January 1, 2029, 16 the percentage of actual value at which property valued by the 17 department of revenue pursuant to chapters 428 and 438 shall be 18 assessed shall be ninety percent. 19 Sec. 60. Section 441.21, subsections 9 and 10, Code 2024, 20 are amended to read as follows: 21 9. Not later than November 1, 1979, and November 1 of 22 each subsequent year, the director shall certify to the 23 county auditor of each county the percentages of actual 24 value at which residential property, agricultural property, 25 commercial property, industrial property, property valued 26 by the department of revenue pursuant to chapters 428 and 27 438, property valued by the department of revenue pursuant 28 to chapter 434 , and property valued by the department of 29 revenue pursuant to chapters 428, 433 , and 437 , and 438 in 30 each assessing jurisdiction in the county shall be assessed 31 for taxation, including for assessment years beginning on 32 or after January 1, 2022, the percentages used to apply the 33 assessment limitations under subsection 5 , paragraphs b 34 and c . The county auditor shall proceed to determine the 35 -36- LSB 6382HV (1) 90 jm/jh 36/ 49
H.F. 2705 assessed values of agricultural property, residential property, 1 commercial property, industrial property, property valued by 2 the department of revenue pursuant to chapters 428 and 438, 3 property valued by the department of revenue pursuant to 4 chapter 434 , and property valued by the department of revenue 5 pursuant to chapters 428, 433 , and 437 , and 438 by applying 6 such percentages to the current actual value of such property, 7 as reported to the county auditor by the assessor, and the 8 assessed values so determined shall be the taxable values of 9 such properties upon which the levy shall be made. 10 10. The percentages of actual value computed by the 11 department of revenue for agricultural property, residential 12 property, commercial property, industrial property, property 13 valued by the department of revenue pursuant to chapters 14 428 and 438, property valued by the department of revenue 15 pursuant to chapter 434 , and property valued by the department 16 of revenue pursuant to chapters 428, 433 , and 437 , and 438 , 17 including for assessment years beginning on or after January 1, 18 2022, the percentages used to apply the assessment limitations 19 under subsection 5 , paragraphs b and c , and used to 20 determine assessed values of those classes of property do not 21 constitute a rule as defined in section 17A.2, subsection 11 . 22 Sec. 61. APPLICABILITY. This division of this Act applies 23 to assessment years beginning on or after January 1, 2025. 24 DIVISION VIII 25 TAXPAYER RELIEF FUND 26 Sec. 62. Section 8.54, subsection 5, paragraph b, Code 2024, 27 is amended to read as follows: 28 b. For fiscal years in which it is anticipated that moneys 29 will be transferred from the taxpayer relief fund to the 30 general fund of the state in accordance with section 8.57E, 31 subsection 2 , paragraph b , the original state general fund 32 expenditure limitation amount provided for in subsection 33 3 shall not be readjusted to include the amount of moneys 34 anticipated to be so transferred. This paragraph is repealed 35 -37- LSB 6382HV (1) 90 jm/jh 37/ 49
H.F. 2705 on the date that section 8.57E, subsection 2 , paragraph b , is 1 repealed July 1, 2029 . 2 Sec. 63. Section 8.57E, subsection 2, paragraph b, Code 3 2024, is amended by striking the paragraph and inserting in 4 lieu thereof the following: 5 b. (1) For the fiscal year beginning July 1, 2024, and for 6 each fiscal year thereafter, if the actual net revenue for the 7 general fund of the state for the fiscal year is less than the 8 net general fund appropriation for the fiscal year, there is 9 transferred from the taxpayer relief fund to the general fund 10 of the state an amount equal to fifty percent of the difference 11 or the remaining balance of the taxpayer relief fund, whichever 12 is lower. 13 (2) For purposes of this paragraph, net general fund 14 appropriation means the total appropriations from the general 15 fund of the state enacted by the general assembly and approved 16 by the governor or otherwise provided by law for the fiscal 17 year, minus reversions to the general fund of the state. 18 (3) This paragraph is repealed July 1, 2029. 19 DIVISION IX 20 CORRECTIVE PROVISION 21 Sec. 64. Section 15.491, subsection 1A, if enacted by 2024 22 Iowa Acts, Senate File 574, section 3, is amended to read as 23 follows: 24 1A. Agricultural land means the same as defined in section 25 91.1 9I.1 . 26 EXPLANATION 27 The inclusion of this explanation does not constitute agreement with 28 the explanations substance by the members of the general assembly. 29 This bill modifies the individual and alternate income 30 tax rates, withholding credits, franchise tax deductions, 31 adjustments to city and county tax levy rates, and property 32 tax assessment limitations and procedures, changes methods of 33 determining compensation of county officials, makes contingent 34 transfers from the taxpayer relief fund, and makes corrections. 35 -38- LSB 6382HV (1) 90 jm/jh 38/ 49
H.F. 2705 DIVISION I INDIVIDUAL AND ALTERNATE INCOME TAX RATES 1 BEGINNING IN TAX YEAR 2025. The bill moves up the future 2 individual single rate from tax years beginning on or after 3 January 1, 2026, to tax years beginning on or after January 1, 4 2025, and decreases the future rate from 3.90 percent to 3.80 5 percent. 6 The bill likewise moves up the corresponding alternate 7 individual income tax rate from tax years beginning on or after 8 January 1, 2026, to tax years beginning on or after January 1, 9 2025, and decreases the future alternate rate from 4.40 percent 10 to 4.30 percent. The alternate income tax rate is available 11 for a taxpayer whose income marginally exceeds the individual 12 income tax filing thresholds in Code sections 422.5(2) and (3), 13 and is used to calculate income tax owed. 14 The bill strikes references to calculating the latest 15 cumulative inflation factor in Code section 422.5(6) and Code 16 section 422.21(5) due to removing income tax brackets. The 17 bill also makes conforming changes due to having a single 18 individual income tax rate. 19 The bill specifies any rate of withholding shall not be 20 higher than the rate in Code section 422.5, as amended by the 21 bill. 22 The division takes effect January 1, 2025, and applies to tax 23 years beginning on or after that date. 24 DIVISION II TARGETED JOBS WITHHOLDING CREDIT. The bill 25 makes changes to the targeted jobs withholding credit. The 26 targeted jobs withholding credit is between a pilot project 27 city located in a county bordering another state, the economic 28 development authority, and an employer, where the employer 29 receives a credit based upon a percentage of gross wages paid 30 after retaining or creating jobs, or making an investment in 31 the pilot project city. Under current law, a targeted jobs 32 withholding credit agreement must create or retain 10 jobs or 33 an employer entering such an agreement must make a qualifying 34 investment of $500,000 within the pilot project city. The 35 -39- LSB 6382HV (1) 90 jm/jh 39/ 49
H.F. 2705 bill changes the employers qualifying investment amount in 1 the pilot project city from $500,000 to $1 million. The bill 2 extends the ability of the economic development authority to 3 enter into a targeted jobs withholding agreement from June 30, 4 2024, to June 30, 2027. The bill changes the annual compliance 5 reporting to the economic development authority about the 6 targeted jobs withholding agreement from the pilot project city 7 to the employer. 8 DIVISION III FRANCHISE TAX INVESTMENT SUBSIDIARIES. 9 Under current law, for purposes of the franchise tax, a 10 deduction is not allowed for investments in investment 11 subsidiaries of financial institutions. However, the bill 12 allows the portion of the financial institutions expenses 13 which are allocable to an investment in an investment 14 subsidiary as a deduction if the financial institution elects 15 to include the income and expenses of the investment subsidiary 16 on the franchise tax return of the financial institution. 17 For purposes of apportioning income under the bill, if an 18 election is made to include the investment subsidiary on the 19 financial institutions franchise tax return, the commercial 20 domicile of an investment subsidiary included on the return of 21 the financial institution pursuant to the election shall be 22 that of the financial institution rather than the investment 23 subsidiary. The bill requires the inclusion of the income 24 and expenses of the investment subsidiary on all subsequent 25 returns of the financial institution so long as the investment 26 subsidiary remains a subsidiary of the financial institution. 27 If the financial institution requests the filing of separate 28 returns and the director determines the filing of separate 29 returns will more clearly disclose the taxable income of the 30 investment subsidiary or financial institution, the financial 31 institution may file a separate return from the investment 32 subsidiary. 33 The division takes effect on January 1, 2025, and applies to 34 tax years beginning on or after that date. 35 -40- LSB 6382HV (1) 90 jm/jh 40/ 49
H.F. 2705 DIVISION IV PROPERTY TAX PROCEDURES. The bill changes 1 from March 15 to 4:00 p.m. on March 5 the deadline for 2 political subdivisions to file reports with the department 3 of management (DOM) containing all necessary information for 4 DOM to compile and calculate amounts required to be included 5 in the statements mailed to property owners and taxpayers in 6 the political subdivision. The bill limits the taxes levied by 7 counties and cities that fail to file all necessary information 8 with DOM by 4:00 p.m. on March 5 to the previous years budget 9 amount. 10 The bill requires county auditors to send to each property 11 owner or taxpayer within the county by regular mail an 12 individual statement containing information relating to 13 property taxes no later than March 15. Under current law, this 14 statement must be sent no later than March 20. 15 Under current law, property tax statements sent by a county 16 auditor to property owners and taxpayers must include an 17 example comparing the amount of property taxes on a residential 18 property and a commercial property with actual values of 19 $100,000 for the current fiscal year and the amount of proposed 20 property taxes on a residential property and a commercial 21 property with an actual value of $100,000 for the budget 22 year. For budgets for fiscal years beginning on or after July 23 1, 2025, the bill changes the amount used as an example for 24 commercial property for the current fiscal year from $100,000 25 to $300,000. The bill also changes the amount used as an 26 example for residential and commercial property in the budget 27 year to 110 percent of the value of the property used as the 28 current fiscal year example. 29 Under current law, when a statement makes a comparison 30 between the change in the amount of taxes from the current 31 fiscal year example to the budget year example, the statement 32 must state the percent difference between the two years. The 33 percent difference is always stated as an absolute value 34 regardless of whether the change is positive or negative. 35 -41- LSB 6382HV (1) 90 jm/jh 41/ 49
H.F. 2705 For statements created on or after January 1, 2024, the bill 1 instead requires statements to include the percent change 2 between the example amounts for the current fiscal year and the 3 budget year. 4 Retroactive to January 1, 2024, the bill requires the 5 property tax statements sent by a county auditor to property 6 owners and taxpayers to include a link to DOMs internet site 7 where the property owner or taxpayer may view an example of the 8 statement and a brief explanation of the information included 9 on the statement. 10 Under current law, each political subdivision must set 11 a time and place for a public hearing on the political 12 subdivisions proposed property tax amount for the budget year 13 and the political subdivisions information included in the 14 property tax statements sent to property owners and taxpayers 15 by the county auditor. The bill requires the hearing to be set 16 on a date on or after March 20 of the budget year immediately 17 preceding the budget year for which the tax is being proposed. 18 Under current law, notice of a political subdivisions 19 proposed property tax public hearing must be published in a 20 newspaper between 10 and 20 days prior to the public hearing. 21 Retroactive to January 1, 2024, the bill provides that failure 22 of a newspaper to publish a required notice will not be 23 considered a failure of a political subdivision to provide 24 required notice if notice of the public hearing was provided 25 to each property owner and each taxpayer within the political 26 subdivision in property tax statements sent by a county auditor 27 to property owners and taxpayers and the political subdivision 28 can demonstrate that to the county auditor that the political 29 subdivision provided sufficient time for the newspaper to 30 publish the notice. 31 Retroactive to January 1, 2024, the bill no longer requires a 32 political subdivision to maintain past property tax statements 33 on its internet site. 34 Retroactive to January 1, 2024, the bill requires a 35 -42- LSB 6382HV (1) 90 jm/jh 42/ 49
H.F. 2705 political subdivision that maintains a social media account 1 to post notice of the proposed property tax public hearing on 2 the social media account on a date no later than the date of 3 publication of the notice. Under current law, notice posted 4 to social media needed to be posted on the same day as the 5 publication of the notice. 6 Retroactive to January 1, 2024, the bill requires, on or 7 before April 30 of each year, each extension council of each 8 extension district of the state to prepare annually a budget 9 for the next fiscal year and to hold a meeting to estimate the 10 amount of money required to be raised by taxation for financing 11 the county agricultural extension education program. Under 12 current law, the budget must be prepared and the meeting must 13 be held on or before March 15 of each year. 14 Retroactive to January 1, 2024, the bill requires 15 certification of a school board of directors intent to 16 participate in the instructional support program for a budget 17 year, the method of funding, and the amount to be raised to be 18 made to DOM no later than April 30 of the base year. Under 19 current law, certification must be made to DOM no later than 20 April 15 of the base year. 21 Retroactive to January 1, 2024, the bill requires, on or 22 before April 30 of each year, a county board of supervisors, 23 with the assistance of the county engineer, to adopt and submit 24 to the department of transportation for approval the county 25 secondary road budget for the next fiscal year. Under current 26 law, a county board of supervisors must adopt and submit the 27 county secondary road budget on or before April 15 of each 28 year. 29 The bill specifies that pursuant to the general grant of 30 home rule power conferred by the Constitution of the State 31 of Iowa and if not inconsistent with the laws of the general 32 assembly, a county that has designated more than one city to be 33 a county seat may consolidate or reduce the number of county 34 seats by ordinance. The bill also repeals 1848 Iowa Acts, 35 -43- LSB 6382HV (1) 90 jm/jh 43/ 49
H.F. 2705 First Extraordinary Session, chapter 52, which in part required 1 Lee County to maintain a district court at Fort Madison and the 2 city of Keokuk, required the clerk of district court to keep 3 an office at Fort Madison and the city of Keokuk, and required 4 the sheriff of Lee County to keep an office at Fort Madison and 5 the city of Keokuk. The provisions related to county seats are 6 effective upon enactment. 7 The bill allows a county to collect taxes for a fiscal year 8 for which no budget has been certified for the county, but 9 the bill prohibits the county from distributing any funds 10 collected until the county certifies its budget and transmits 11 the certified budget to the county auditor. The bill limits 12 taxes levied by a county whose budget is certified after April 13 30 to the taxes levied for the previous fiscal year subject to 14 applicable levy rate limits in Code chapter 331 (county home 15 rule implementation); however, the amount cannot exceed the 16 amount the county could collect based on property assessments 17 for the fiscal year for which the county failed to certify 18 property taxes. DOM may waive the limitation for a county 19 if DOM finds, after a showing of evidence by the county, 20 that failure to certify the budget by April 30 was caused by 21 any combination of a newspaper failing to publish a notice 22 of hearing after the county gave the newspaper sufficient 23 time to publish the notice; a verifiable public emergency or 24 weather-related event which forced the cancellation of a public 25 hearing; an illness or unexpected vacancy of one or more board 26 members causing a lack of a quorum necessary to hold a required 27 public hearing; or a failure of state software or a state 28 process. The bill creates similar provisions for a city that 29 does not certify its budget by April 30. The provisions in the 30 bill relating to a county or city failing to certify its budget 31 by April 30 are effective upon enactment. 32 Under current law, a homeowner is allowed a homestead 33 tax exemption if the property owner is 65 years of age or 34 older. The bill makes confidential, subject to exceptions 35 -44- LSB 6382HV (1) 90 jm/jh 44/ 49
H.F. 2705 detailed in the bill, the names, addresses, and dates of birth 1 of individuals allowed a homestead tax exemption that are 2 maintained by a county recorder, county treasurer, county 3 assessor, city assessor, or other governmental body if the 4 information was obtained for purposes of allowing a homestead 5 tax exemption. 6 Each fiscal year, county auditors are required to make a 7 report to DOM, on forms provided by DOM, of the valuation by 8 class of property for each taxing district in the auditors 9 respective county using data transmitted to the auditor by 10 assessors on an abstract of real property. The bill requires 11 assessors to transmit and maintain data in the abstract of 12 real property in a manner that is compatible with software 13 used by the county auditor and that allows the county auditor 14 to use the data to file valuation reports to DOM. The bill 15 also requires county auditors to report the valuations and 16 revaluations as instructed by DOM. 17 The bill allows a city to levy at a rate not to exceed 18 $8.10 per $1,000 of assessed valuation for its general fund 19 levy if the citys actual levy rate for the current fiscal 20 year is $0 per $1,000 of assessed value and the total assessed 21 value used to calculate taxes for the budget year exceeds 22 102.75 percent. The provisions in the bill allowing a city 23 to increase its general fund levy rate to $8.10 per $1,000 of 24 assessed valuation are effective upon enactment. 25 Under current law, a municipality with a population equal to 26 or greater than 15,000 that is using the division of taxes from 27 tax increment financing for the purpose of public improvements 28 related to housing is limited to tax collections for that 29 purpose for a maximum of 10 fiscal years. The bill allows a 30 municipality of any size to extend such tax collections for 31 an additional three years if the project for which revenue is 32 being divided began before January 1, 2018, and all governing 33 bodies of taxing districts affected by the division of revenue 34 approve the extension. This provision takes effect upon 35 -45- LSB 6382HV (1) 90 jm/jh 45/ 49
H.F. 2705 enactment. 1 2023 Iowa Acts, chapter 71, requires the director of DOM to 2 annually prepare and file with the general assembly by December 3 1 a report specifying the updated population thresholds and 4 detailing the use of certain bond issuance procedures including 5 the usage of such procedures by counties and cities based on 6 the population-based limitations and the amount of bonds issued 7 for each such usage. This requirement takes effect on July 1, 8 2024. The bill changes the date for the DOM director to file 9 the report to January 1. 10 DIVISION V COMPENSATION OF ELECTED COUNTY OFFICIALS. 11 Under current law, each county has a county compensation board 12 that prepares a recommended compensation schedule for elected 13 county officers that the county board of supervisors then 14 reviews. Current law provides procedures and limitations that 15 both the county compensation board and board of supervisors 16 must adhere to in determining the final compensation schedule. 17 The bill allows a board of supervisors to vote to establish 18 a county compensation board. The county compensation board 19 shall be composed as provided under current law. The board of 20 supervisors may also vote to dissolve a county compensation 21 board. The board of supervisors shall carry out the duties as 22 the county compensation board if the board of supervisors has 23 not established or has dissolved a county compensation board. 24 In setting the salary of the county sheriff, the bill 25 requires the board of supervisors to set the sheriffs salary 26 so that it is comparable to salaries paid to professional law 27 enforcement administrators and command officers of state public 28 safety officers and city chiefs of police employed by cities of 29 similar populations to the county. 30 The bill requires the county compensation board to provide 31 documentation to the board of supervisors demonstrating how 32 the county compensation board determined the recommended 33 compensation schedule. The bill strikes provisions that 34 prohibit the board of supervisors from exceeding the 35 -46- LSB 6382HV (1) 90 jm/jh 46/ 49
H.F. 2705 compensation schedule recommended by the county compensation 1 board or from reducing the amount of the recommended 2 compensation schedule unless the amount of salary increase 3 proposed for each elected county officer is reduced by an equal 4 percentage. The bill allows the board of supervisors to set 5 compensation lower than the compensation set forth in the 6 current compensation schedule, but provides that the proposed 7 compensation for a position may be reduced when the position is 8 reduced to part-time. The bill makes conforming changes. 9 DIVISION VI COUNTY AND CITY PROPERTY TAXES. Under 10 current law, a citys adjusted city general fund levy rate will 11 either be a default levy rate of $8.10 per $1,000 of assessed 12 property value or a levy rate calculated based on the citys 13 actual property tax dollars certified for levy for the current 14 fiscal year, the total assessed valuation of property in the 15 city, and the amount of growth in the total assessed valuation 16 of property in the city from the current fiscal year to the 17 upcoming fiscal year. If a city had 3 percent growth or less 18 from the previous year, then the levy rate is the same as the 19 previous years levy rate or the default levy rate of $8.10 20 per $1,000 of assessed property value, whichever is greater. 21 If the citys growth exceeds 3 percent, but is less than 6 22 percent, then the levy rate is the citys levy rate for the 23 previous year divided by 103 percent and then multiplied by 24 1,000. If the citys growth is equal to or exceeds 6 percent, 25 then the levy rate is the citys levy rate for the previous 26 year divided by 103 percent and then multiplied by 1,000. 27 County tax levies are determined in a similar manner, except 28 the default levy rate is either $3.50 per $1,000 of assessed 29 property value or a calculated levy rate for general county 30 services and a default levy rate of $3.95 per $1,000 of 31 assessed property value or a calculated levy rate for rural 32 county services. 33 The bill adjusts the levy rates for cities and counties so 34 cities and counties use the greater of last years levy rate 35 -47- LSB 6382HV (1) 90 jm/jh 47/ 49
H.F. 2705 or the default levy rate if growth is equal to or less than 1 2.75 percent, or have a calculated levy rate equal to 1,000 2 multiplied by the quotient of the previous years levy rate 3 divided by the following: 101 percent if growth exceeds 2.75 4 percent but is less than 4 percent; 102 percent if growth is 5 equal to or exceeds 4 percent but is less than 6 percent; or 103 6 percent if growth is equal to or exceeds 6 percent. 7 This division of the bill applies to taxes and budgets for 8 fiscal years beginning on or after July 1, 2025. 9 DIVISION VII PROPERTY TAX ASSESSMENT LIMITATIONS. Public 10 utility companies operating under Code chapter 428 and pipeline 11 companies operating under Code chapter 438 are assessed by 12 the department of revenue (IDOR) for property tax purposes 13 on all property, real and personal, owned by the company and 14 used in the operation of the companys specified utility. The 15 valuation determined by IDOR is then reported and apportioned 16 to the local taxing districts and the value is taxed in the 17 same manner as other property within the applicable taxing 18 districts. 19 The bill removes public utility company property assessed 20 under Code chapter 428 and pipeline company property assessed 21 under Code chapter 438 from the calculation of the assessment 22 limitation for other centrally assessed utility company 23 property. The bill also reduces the percentage of actual value 24 at which property valued by IDOR pursuant to Code chapters 428 25 and 438 is assessed by 2 percent each year until January 1, 26 2029. For assessments on or after January 1, 2029, property 27 valued by IDOR pursuant to Code chapters 428 and 438 will be 28 assessed at 90 percent. 29 The division applies to assessment years beginning on or 30 after January 1, 2025. 31 DIVISION VIII TAXPAYER RELIEF FUND. Under current law, 32 if the actual net revenue for the general fund of the state 33 (GF) for a fiscal year plus the GF surplus, if any, is less 34 than 103.5 percent of the actual net revenue for the GF for 35 -48- LSB 6382HV (1) 90 jm/jh 48/ 49
H.F. 2705 the prior fiscal year, there is transferred from the taxpayer 1 relief fund (TRF) to the GF an amount equal to the difference, 2 not to exceed an amount necessary to increase the GF ending 3 balance for the fiscal year to 1 percent of the adjusted 4 revenue estimate, as defined for purposes of the GF expenditure 5 limitation. 6 The bill strikes this provision, and instead provides that 7 if the actual net revenue for the GF for a fiscal year is 8 less than the net GF appropriation for the fiscal year, as 9 defined in the bill, there is transferred from the TRF to the 10 GF an amount equal to 50 percent of the difference. The GF 11 expenditure limitation amount is not readjusted to include 12 the anticipated transfer (Code section 8.54(5)(b)). These 13 provisions are repealed July 1, 2029. 14 DIVISION IX CORRECTIVE PROVISION. The bill makes a 15 technical correction to 2024 Iowa Acts, Senate File 574, if 16 enacted, by striking a reference to Code section 91.1 in new 17 Code section 15.491 and inserting Code section 9I.1. 18 -49- LSB 6382HV (1) 90 jm/jh 49/ 49