TFI Capitol Report - March 4, 2018

State Capitol Report

Issue 1 |

March 4, 2018

TFI's Bill Tracker Upcoming Legislative Forums

Legislative Alert
DRAM Reform Needs Your Help!

The DRAM Shop Reform Bill (SF 2169/HF 2391) that is being pushed by the Iowa Restaurant Association and is supported by TFI passed the Senate on February 21 with a bipartisan 29-20 vote, but has stalled in the House. Iowa Trial Attorneys are urging legislators kill the bill because they don't like caps that would bring down the cost of DRAM insurance for Iowa's restaurants.


	Senator Breitbach manages the floor debate on DRAM Shop Reform legislation.

Please take a moment to contact your House member in support of DRAM Shop legislation! Also, register your favorable opinion of this bill with the Governor's office.

To find out who your legislators are, click HERE

To find a list of the Representatives, click HERE

To Register Your Opinion with the Governor's Office, click HERE
For More Information about DRAM, go to the Iowa Restaurant Association's DRAM Toolkit HERE.

The DRAM Shop Reform bill passing the Iowa Senate.

Legislative Session Update

We are heading into crunch time at the Capitol, with lots of policy discussions, the budget debate continuing to simmer, and tax reform beginning to move. Monday, March 5th will mark Session Day 57 for a session originally, and technically still, scheduled for 100 days. The deappropriations bill reduced that to 90-, then 85-days, however the deappropriations bill has not yet been enacted.

Deappropriations

The deappropriations bill has been a major point of discussion since before session began. The goal was to make cuts to the current fiscal year (2018, ends June 30) as quickly as possible in order to allow state agencies maximum time to work in the cuts. The Governor made her proposal, the Senate made their proposal and passed it over to the House. The House took action on that Senate bill in committee, but has not yet debated the deappropriations bill on the floor. Many speculate that they are waiting for the Revenue Estimating Conference (REC) meeting...

REC

The Revenue Estimating Conference (REC) has scheduled their March meeting for Friday the 9th. They meet every December and every March and make revenue projections at those meetings which the Governor and Legislature use to construct their budget. They are required to use the lower of the two estimates in putting together their FY 2019 budget.

In addition to FY 2019, the REC will also give an update on what is happening with FY 2018 - whether revenues are coming in higher or lower than forecasted and whether expenditures are staying in line. If revenues are considerably higher - and they look like they are, due to the federal tax cuts - then the Governor and Legislature may determine they have cut enough out of FY 2018 to alleviate any concern about the books being balanced at the end of the fiscal year. After the REC meeting, we expect that legislators will start assembling the FY 2019 budget framework right away.

Second Funnel Coming

On the policy front, we have the second funnel deadline coming up on Friday, March 16th. By that date, any non-tax or spending bills (basically ALL policy bills) have to have been passed out of committee in BOTH chambers in order to stay alive for the year. That means right now we have a flurry of activity in both chambers to try to get bills from one chamber to the other so they have time to be considered by committee in the second chamber.

Tax Reform

With all that swirling around, the Governor and Legislature are also beginning to move forward now on tax reform legislation. In the last issue, we mentioned the Governor proposed her plan which has been introduced in both chambers (HSB 671/SSB 3195). The best public summary of her bill is the press announcement she released HERE.

The Senate released their own tax bill (SF 2383) a few days later on February 21st and held a subcommittee and full Ways & Means committee meeting on it the next day. They then moved it through the Senate this past Wednesday night after the official Fiscal Analysis on the bill was completed and released to the public (link HERE).

A packed room watches as the Senate Ways & Means Committee approves major income and corporate tax reform legislation.

The biggest difference between the bills is that the Senate addresses corporate tax issues - corporate tax rate cuts, elimination of corporate federal deductibility, and a phase-out and/or reduction for tax credit programs. Both bills eliminate federal deductibility for personal income taxes and cut personal income tax rates, both bills expand the sales tax base to cover digital purchases, and several other issues are tackled by both bills. The Governor's bill is predicted to reduce revenues/provide tax cuts totaling $1.7 billion over five years. The Senate bill is predicted to reduce revenues/provide tax cuts starting at $200 million in FY 2019 and ratcheting up to $1.16 billion per year once the bill is fully phased in in FY 2023.

The ball is now in the House's court. This week, the House had a subcommittee meeting on the Governor's bill, HSB 671, to hear input. They will likely start to assemble their own package, based on the Governor's bill, the Senate bill and other ideas floating around among their members. We expect to see many discussions about this until after the Second Funnel when the House will probably start to move something forward.

Property Tax Backfill
to Local Governments

Neither of the two tax reform packages being discussed in the House contain provisions that would negatively affect the backfill. However, the backfill elimination discussion IS happening separately. Senate File 2081 (Link) was introduced early in the session and would phase the backfill out over three years (really two years - going to two-thirds, one-third and then gone in Year 3).

After its January introduction, SF 2081 simply sat in the Senate Appropriations Committee until suddenly on February 22nd it was assigned to a subcommittee consisting of Senators Charles Schneider (R-West Des Moines), Mark Chelgren (R-Ottumwa), and Joe Bolkcom (D-Iowa City). They scheduled and held a subcommittee this past Tuesday. All of the speakers at the subcommittee spoke against the bill, making the case that city budgets are required to be certified by March 15, so any effort to wind down the backfill should include a longer timeframe (ideally five years or more) AND NOT BEGIN this year.

At the end of the testimony, Senator Schneider stated that, while he recognizes the concerns about starting a phase out immediately, he wanted to move the bill forward out of subcommittee because he wants to advance the discussion. Senators Schneider and Chelgren voted to advance the bill to the full Senate Appropriations Committee where it is eligible for consideration at any time.

Advocates for the backfill need to be sure they are vocal about the issue, and ESPECIALLY about not affecting the upcoming year, because the bill currently does just that. The bill itself may or may not advance, but the concept of phasing out the backfill is likely to be considered for inclusion somewhere else in the legislative process, perhaps in a FY 2019 budget bill.

The Iowa League of Cities has a one-page explanation to help you with reaching out to legislators in support of the backfill. You can download it HERE. Additionally, you can find a table showing how all the backfill dollars are distributed by going HERE.

Bills Being Tracked for TFI

This is a list of the bills being tracked for TFI. The online bill list is updated constantly, just go to http://www.ialobby.com/billtracker/tfi/

HF2038

Nonreversion/Reallocation of State Funds