| 1 | 1 | | House Study Bill 303 - Introduced HOUSE FILE _____ BY (PROPOSED COMMITTEE ON WAYS AND MEANS BILL BY CHAIRPERSON KAUFMANN) A BILL FOR An Act creating the foundation property tax reduction fund, and 1 making appropriations and related transfers to the fund. 2 BE IT ENACTED BY THE GENERAL ASSEMBLY OF THE STATE OF IOWA: 3 TLSB 2947YC (2) 91 jm/md |
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| 3 | 3 | | H.F. _____ Section 1. Section 8.55, subsection 4, Code 2025, is amended 1 to read as follows: 2 4. Notwithstanding section 12C.7, subsection 2 , interest 3 or earnings on moneys deposited in the Iowa economic emergency 4 fund shall be credited to the rebuild Iowa infrastructure fund 5 foundation property tax reduction fund created in section 6 257.3A . 7 Sec. 2. Section 8.56, subsection 1, Code 2025, is amended 8 to read as follows: 9 1. A cash reserve fund is created in the state treasury. 10 The cash reserve fund shall be separate from the general fund 11 of the state and shall not be considered part of the general 12 fund of the state. The moneys in the cash reserve fund are 13 not subject to section 8.33 and shall not be transferred, 14 used, obligated, appropriated, or otherwise encumbered except 15 as provided in this section . Notwithstanding section 12C.7, 16 subsection 2 , interest or earnings on moneys deposited in 17 the cash reserve fund shall be credited to the rebuild Iowa 18 infrastructure fund created in section 8.57 foundation property 19 tax reduction fund created in section 257.3A . Moneys in the 20 cash reserve fund may be used for cash flow purposes during a 21 fiscal year provided that any moneys so allocated are returned 22 to the cash reserve fund by the end of that fiscal year. 23 Sec. 3. Section 8.57E, subsection 4, Code 2025, is amended 24 to read as follows: 25 4. Notwithstanding section 12C.7, subsection 2 , interest 26 or earnings on moneys deposited in the taxpayer relief fund 27 shall be credited to the foundation property tax reduction fund 28 created in section 257.3A . 29 Sec. 4. Section 12C.7, Code 2025, is amended by adding the 30 following new subsection: 31 NEW SUBSECTION . 3. Commencing with the fiscal year 32 beginning July 1, 2025, and every fiscal year thereafter, the 33 amount of interest or earnings deposited into the general fund 34 of the state during the fiscal year shall be deposited into 35 -1- LSB 2947YC (2) 91 jm/md 1/ 6 |
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| 5 | 5 | | H.F. _____ the foundation property tax reduction fund created in section 1 257.3A. 2 Sec. 5. Section 257.3, subsection 1, Code 2025, is amended 3 by adding the following new paragraph: 4 NEW PARAGRAPH . e. The amount paid to each school district 5 from the foundation property tax reduction fund shall be 6 regarded as property taxes. 7 Sec. 6. NEW SECTION . 257.3A Foundation property tax 8 reduction fund. 9 1. A foundation property tax reduction fund is created in 10 the state treasury under the authority of the department of 11 management. The fund shall be separate from the general fund 12 of the state and shall not be considered part of the general 13 fund of the state except in determining the cash position of 14 the state for payment of state obligations. 15 2. The fund shall consist of all moneys appropriated to 16 the fund, and moneys transferred from other funds including 17 transfers of interest or earnings from the Iowa economic 18 emergency fund, the cash reserve fund, the taxpayer relief 19 fund, and the general fund of the state. 20 3. Commencing with the fiscal year beginning July 1, 2026, 21 and each fiscal year thereafter, the balance of the fund on 22 July 1 is appropriated to and shall be used by the department 23 of management to lower the foundation property tax levy rate 24 under section 257.3, subsection 1, paragraph a , for the school 25 budget year beginning July 1 by making payments to each school 26 district to supplant funds that would have been collected under 27 section 257.3, subsection 1, paragraph a . 28 4. The moneys in the fund are not subject to the provisions 29 of section 8.33 and shall not be transferred, used, obligated, 30 appropriated, or otherwise encumbered except as provided in 31 this section. Notwithstanding section 12C.7, subsection 2, 32 interest or earnings on moneys deposited in the cash reserve 33 fund shall be credited to the fund. 34 5. Moneys in the fund may be used for cash flow purposes, 35 -2- LSB 2947YC (2) 91 jm/md 2/ 6 |
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| 7 | 7 | | H.F. _____ provided that any moneys so allocated are returned to the fund 1 by the end of each fiscal year. 2 Sec. 7. Section 425A.3, subsection 1, Code 2025, is amended 3 to read as follows: 4 1. The family farm tax credit fund shall be apportioned 5 each year in the manner provided in this chapter so as to give 6 a credit against the tax on each eligible tract of agricultural 7 land within the several school districts of the state in which 8 the levy for the general school fund exceeds five dollars and 9 forty cents per thousand dollars of assessed value the levy 10 rate under section 257.3, subsection 1, paragraph a . The 11 amount of the credit on each eligible tract of agricultural 12 land shall be the amount the tax levied for the general school 13 fund exceeds the amount of tax which would be levied on each 14 eligible tract of agricultural land were the levy for the 15 general school fund five dollars and forty cents per thousand 16 dollars of assessed value the levy rate under section 257.3, 17 subsection 1, paragraph a , for the previous year. However, 18 in the case of a deficiency in the family farm tax credit fund 19 to pay the credits in full, the credit on each eligible tract 20 of agricultural land in the state shall be proportionate and 21 applied as provided in this chapter . 22 Sec. 8. Section 425A.5, Code 2025, is amended to read as 23 follows: 24 425A.5 Computation by county auditor. 25 The family farm tax credit allowed each year shall be 26 computed as follows: On or before April 1, the county auditor 27 shall list by school districts all tracts of agricultural 28 land which are entitled to credit, the taxable value for the 29 previous year, the budget from each school district for the 30 previous year, and the tax rate determined for the general 31 fund of the school district in the manner prescribed in 32 section 444.3 for the previous year, and if the tax rate is in 33 excess of five dollars and forty cents per thousand dollars of 34 assessed value the levy rate under section 257.3, subsection 35 -3- LSB 2947YC (2) 91 jm/md 3/ 6 |
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| 9 | 9 | | H.F. _____ 1, paragraph a , the auditor shall multiply the tax levy which 1 is in excess of five dollars and forty cents per thousand 2 dollars of assessed value the levy rate under section 257.3, 3 subsection 1, paragraph a , by the total taxable value of the 4 agricultural land entitled to credit in the school district, 5 and on or before April 1, certify the total amount of credit 6 and the total number of acres entitled to the credit to the 7 department of revenue. 8 Sec. 9. Section 426.3, Code 2025, is amended to read as 9 follows: 10 426.3 Where credit given. 11 The agricultural land credit fund shall be apportioned each 12 year in the manner hereinafter provided so as to give a credit 13 against the tax on each tract of agricultural lands within the 14 several school districts of the state in which the levy for 15 the general school fund exceeds five dollars and forty cents 16 per thousand dollars of assessed value the levy rate under 17 section 257.3, subsection 1, paragraph a ; the amount of such 18 credit on each tract of such lands shall be the amount the tax 19 levied for the general school fund exceeds the amount of tax 20 which would be levied on said tract of such lands were the 21 levy for the general school fund five dollars and forty cents 22 per thousand dollars of assessed value the levy rate under 23 section 257.3, subsection 1, paragraph a , for the previous 24 year, except in the case of a deficiency in the agricultural 25 land credit fund to pay said credits in full, in which case the 26 credit on each eligible tract of such lands in the state shall 27 be proportionate and shall be applied as hereinafter provided. 28 Sec. 10. Section 426.6, subsection 1, Code 2025, is amended 29 to read as follows: 30 1. The agricultural land tax credit allowed each year 31 shall be computed as follows: On or before April 1, the 32 county auditor shall list by school districts all tracts of 33 agricultural lands which are entitled to credit, together with 34 the taxable value for the previous year, together with the 35 -4- LSB 2947YC (2) 91 jm/md 4/ 6 |
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| 11 | 11 | | H.F. _____ budget from each school district for the previous year, and the 1 tax rate determined for the general fund of the district in 2 the manner prescribed in section 444.3 for the previous year, 3 and if such tax rate is in excess of five dollars and forty 4 cents per thousand dollars of assessed value the levy rate 5 under section 257.3, subsection 1, paragraph a , the auditor 6 shall multiply the tax levy which is in excess of five dollars 7 and forty cents per thousand dollars of assessed value the 8 levy rate under section 257.3, subsection 1, paragraph a , by 9 the total taxable value of the agricultural lands entitled to 10 credit in the district, and on or before April 1, certify the 11 amount to the department of revenue. 12 EXPLANATION 13 The inclusion of this explanation does not constitute agreement with 14 the explanations substance by the members of the general assembly. 15 This bill creates a foundation property tax reduction 16 fund (fund) in the state treasury under the authority of the 17 department of management (DOM). The fund shall consist of any 18 appropriations made to the fund, and moneys transferred from 19 other funds including transfers of interest or earnings from 20 the Iowa economic emergency fund, the cash reserve fund, the 21 taxpayer relief fund, and the general fund of the state. 22 Commencing with the fiscal year beginning July 1, 2026, and 23 each fiscal year thereafter, the balance of the fund on July 1 24 shall be appropriated to DOM to lower the foundation property 25 tax levy rate under Code section 257.3(1)(a) for the school 26 budget year beginning July 1 through payments to each school 27 district to supplant funds that would have been collected as 28 property taxes under Code section 257.3(1)(a). 29 In Code chapters 425A (family farm tax credit) and 426 30 (agricultural land tax credit), the bill replaces references 31 to the school foundation property tax levy rate ($5.40) with 32 citations to the appropriate provision of the Code section 33 establishing the foundation property tax rate. 34 The bill specifies the fund shall be separate from the 35 -5- LSB 2947YC (2) 91 jm/md 5/ 6 |
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| 13 | 13 | | H.F. _____ general fund of the state and shall not be considered part of 1 the general fund of the state except in determining the cash 2 position of the state for payment of state obligations. The 3 moneys in the fund at the close of the fiscal year do not revert 4 and remain available for the purpose described in the bill. 5 Interest or earnings on investments in the fund also do not 6 revert to the general fund. Moneys in the fund may be used for 7 cash flow purposes, provided that any moneys are returned to 8 the fund by the end of each fiscal year. 9 -6- LSB 2947YC (2) 91 jm/md 6/ 6 |
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