House Majority Completes Focused Tax Agenda
The House tackled quite a Ways and Means agenda this year. From tax code updates to property tax transparency—it has been a busy session.
One of the early bills was Senate File 220. That bill provided section 179 expensing with a maximum deduction of $70,000 for corporations, financial institutions, and partnerships and limited liability companies taxed as corporations. The investment limitation in the bill is set at $280,000. With the passage of Senate File 220—these entities are allowed the same deductions and subject to the same limits as individuals.
Another piece of legislation handled this year was an omnibus bill. That bill did a myriad of things including:
- Extending the Targeted Jobs Withholding Tax Credit pilot for two years until June 30, 2021.
- Clarified the manufacturing exemption for manufacturers who engage in construction contracts.
- Provides the department with the authority to audit or examine all taxes collected or administered by the department.
Finally—a property tax transparency bill was passed. The legislation created a process that starts with a local government receiving the new assessments. Based on these new values—all levies are adjusted up or down to represent a rate that would bring in the same amount of tax revenue as the prior year. This is the “effective rate.” The local government can then decide if this is the correct amount of tax to levy or if more or less is necessary.
Next the local government needs to publish notice and have a hearing on what the levies will be. The hearing will then take place and a resolution on the new levies will be passed. If the proposed levies bring in tax revenue that constitutes an increase of two percent or less—a resolution by a majority must pass. If the proposed levies bring in tax revenue that constitute an increase of more than two percent—a resolution by 2/3 majority must pass. After the resolution on the new levies has passed—the local government needs to publish notice of the budget they intend to pass and have a hearing on that budget. They can then pass a resolution for their budget as they do in current law. All information from the notices needs to be published on all local government websites and social media presences. Because of the new process—the date to certify budgets is moved from March 15 to March 31.
There were concerns brought forward by constituents and legislators that somehow this bill would affect IPERS. The IPERS board, as a result of these concerns, released a statement regarding the property tax bill, SF634, “We have received many questions regarding recently passed property tax bill, Senate File 634. This bill does not alter the employers’ obligation to pay the employer portion of IPERS’ contributions as established annually under Iowa Code Section 97B.11. This bill does not affect a member’s or retiree’s pension.”
Empower Rural Iowa Legislation Encourages Rural Broadband and Housing
House File 772 passed the Iowa House this week. The legislation was in response to meetings that took place last year in Iowa’s small towns and rural counties.
The bill is divided into two parts—broadband grants and workforce housing tax credits. Current law requires the Office of the Chief Information Officer (OCIO) to administer a broadband grant program to make awards to communications service providers that reduce or eliminate targeted service areas by installing broadband infrastructure at specific minimum speeds. House File 772 repeals the specific download/upload speeds and instead references the federal telecommunications act for applicable speeds. The bill also provides that the competitive grants awarded by the OCIO should be awarded based on the following new considerations in addition to those in current law:
- Need in the particular area (including whether it is rural).
- Applicant’s total budget, including local or federal match, any funding obligations shared between public and private entities, and the percentage of funding provided directly from the applicant.
- Relative download and upload speeds of proposed projects for all applicants.
- Specific product attributes.
The bill specifically states that of all considerations for grant awards (both current and new), the most weight is to be given to the first three listed above. The bill extends the sunset of the OCIO broadband grant program from July 1, 2020 to July 1, 2025.
The second part of House File 772 relates to the workforce housing tax credit program administered by the Economic Development Authority already in current law. The bill increases the program cap from $20.0 million to $25.0 million per fiscal year. This money is directed to increase the incentive for small cities $5.0 million to $10 million. Current law states that the authority may accept applications on a continuous basis. The bill changes the process to require the authority to review and score the applications on a competitive basis. House File 772 provides that for fiscal year 2020, all money allocated to this program will be used to clear the waiting list for small cities.
News from House District 96
We are working hard to wrap up in Des Moines. It has been a busy session for me serving my first year as Chairman of the Ways and Means Committee. We had to work in bipartisan ways to move Iowa forward in the right direction. There were also times when we had to make a strong stand for what we believed in.
The Ways and Means committee was able to support young farmers, provide transparency to local property tax payers, and make needed tweaks to last year’s tax reform. I look forward to next session to continue this important work.
I look forward to visiting with people from across the district about their thoughts and concerns. It has been an honor to be the voice for the constituents of Iowa House District 96 this session.