Ways & Means – All-Bill Summary 2020

July 10, 2020 Senate Staff Blog, Votes, Ways & Means Committee 0

SF 620 – Disposal of city utilities by sale

SF 620 would remove the appraisal requirement prior to the sale of a public utility in limited situations. Previous law required the appraisal of a public utility before it was disposed of through a sale to make sure the public receives fair market value for the utility when it is sold to a private entity. This bill facilitates the sale of a telecommunications utility in Hawarden. The city has had difficulty finding a qualified appraiser for their type of utility, and the cost of performing the appraisal would be have been prohibitive.
[4/23/19: 50-0]

SF 2403 – Fuel excise tax for ethanol- and biodiesel-blended motor fuels

SF 2403 would extend the current preferential excise tax rates for ethanol- or biodiesel-blended motor fuels. Currently:

The bill changes the structure of the preferential excise tax rates for higher blends of ethanol-blended fuel by focusing on E-15. The bill:

The ethanol and biodiesel excise tax rates are projected to divert fewer dollars from the Road Use Tax Fund and are meant to promote higher blends of renewable fuels.

The new rates will end after June 30, 2026. The report that is used to determine the distribution percentage will instead determine the discounted fuel excise tax rate. The rates are determined based on the distribution of blended fuels delivered from a motor fuel terminal. That report shows much lower distribution rates than what is declared by retailers on the reports they submit to the Department of Revenue. The retailer reports include blending that is done after the fuel leaves the motor fuel terminal.
[6/3: 49-0 (Absent: Hogg)]

SF 2413 – Agriculture departmental bill 

SF 2413 makes various changes to the operations of the Iowa Department of Agriculture and Land Stewardship (IDALS):

  • Animal Health: Details the seizure and disposition of diseased animals. If animal owners do not follow the steps to help contain a disease, civil penalties will be incurred. These new steps are supported by all the animal commodity groups.
  • Feral Swine:
    • Defines feral swine as any swine that is running at large.
    • Gives IDALS the authority to destroy feral swine if the owner can’t be determined.
    • Allows IDALS to conduct disease testing on feral swine. This will help protect against foreign animal diseases.
  • Food Operation Trespass:
    • Enhances the trespass charge to an aggravated misdemeanor for first offense and Class “D” felony for subsequent offenses. 
    • Food operations are defined as a location where an animal is kept, including but not limited to a fair, exhibition, farmer’s market, dairy processing and egg processing facilities, and aquaculture.
      [Floor 6/5: 34-11 (No: Bolkcom, Celsi, Giddens, Hogg, Jochum, Mathis, Petersen, Quirmbach, Ragan, T. Taylor, Wahls; Absent: Lykam, Segebart, J. Smith, Sweeney, Zumbach]

HF 760 – Exemption from hotel/motel taxes for rental of lodging

HF 760 establishes a new threshold for determining the length of stays that qualify for an exemption from state and local hotel/motel taxes. Currently, the costs for stays at rented lodging that exceed 30 days are exempt from paying the state and local hotel/motel tax. The bill would extend the minimum length of a stay at a hotel/motel to qualify for the exemption only on the portion of the stay exceeding 90 days. For rentals where there is a tenant relationship (apartments/manufactured housing), the minimum length of stay to qualify for the exemption would remain at 31 days.

The bill also creates an exemption from the state and local hotel/motel tax for the sales price of lodging furnished by a nonprofit lodging provider renting to the friends and family of a hospital patient. This applies to stays at the Ronald McDonald House and similar facilities. Previously, hotel/motel tax is owed on the payment/donation given to the nonprofit by the family/friends who stay at the facility. There isn’t a fixed charge, but families can donate to the organization to cover their costs of stay. Because this is considered a payment for lodging (and thus a sale) under a Department of Revenue declaratory order, the hotel/motel tax is owed.
[6/13: 47-2 (No: Chapman, R. Taylor; Absent: Hogg)]

HF 2627—Professional Licensing

HF 2627 narrows the ability of licensing and professional boards to disqualify individuals holding certain licenses because of a criminal conviction. In addition, the bill addresses the issuing of licenses, certifications or registrations without exams to those who have licenses in other states when they establish residency in Iowa.

The bill allows (with certain exceptions) out-of-state individuals without licenses who relocate to Iowa to be issued a license without the required Iowa education and training requirements as long as they have three years of relevant work experience.

Division II of the bill includes many provisions that are not relevant to licensing. Some items in Division II are from bills the Senate passed and the House did not take up. Some items are related to COVID-19 and the Governor’s Proclamations.

Details of the bill:

DIVISION I

Disqualification provisions for criminal convictions

  • The bill eliminates certain subsections in Code chapters for electricians and plumbers regarding denying, revoking or suspending licenses based on certain crime convictions.
  • The bill narrows the ability of licensing and professional boards to disqualify individuals holding certain licenses because of a criminal conviction. For a conviction of a crime to serve as disqualification for a professional license, the offense must directly relate to the duties and responsibilities of the profession. “Offense directly relates to” means actions customarily performed within the scope of practice of a licensed profession or the circumstances under which an offense was committed are circumstances customary to a licensed profession. The Education Examiners can still deny a license due to a founded report of child abuse against the person.
  • A licensing board may grant an exception to disqualification for a license if the board determines by clear and convincing evidence that the applicant is rehabilitated and an appropriate candidate for licensure.
  • A person’s conviction of a crime maybe be grounds for a denial, revocation or suspension of a license only if unreasonable risk to public safety exists because the offense directly relates to the duties and responsibility of the profession and the appropriate license board or agency does not grant an exception. This applies to everyone under 272C (professional licensing—many different professional licenses fall under this chapter), but not to chapter 272 (educational examiners).
  • Petitions and new fee: Allows an applicant to petition the professional licensing board for a determination of whether the applicant’s criminal history results in the denial of a license before applying and allows the professional licensing board to charge a fee to the applicant for administrative work involving the petition. The fee cannot exceed $25.

Reciprocity of licenses and recognition of work experience

  • (Section 26) Licensure of persons licensed in other jurisdictions: Requires that a professional or occupational license, certificate or registration be issued to a person without an examination if:
    • That person establishes residency in Iowa, or is married to an active-duty military member and is accompanying them on an official permanent change of station to a military installation in Iowa.
    • Certain conditions must be met to allow for licensing, certification or registration without examination in Iowa. Those conditions include similar scope of practice in the other jurisdiction, having been licensed or registered in the other jurisdiction for least a year, the other jurisdiction imposed minimum education requirements (not substantially equivalent to Iowa), the person does not have discipline imposed on them from a regulating entity, etc. This applies to individuals who come from states that require a license, a certification or registration for their profession; and applies to a license, certification, or registration issued by the professional boards covered by Chapter 272C, as well as to the Board of Educational Examiners.
  • (Section 27) A person applying for a professional license, certificate or registration in Iowa who relocates from another state that did not require a professional occupational license, certificate or registration to practice their profession/occupation may be considered to have met education, training or work-experience requirements in Iowa if they have three or more years of related work experience with a substantially similar scope of practice within the four preceding years as determined by the professional licensing board. If Code or administrative rules require a person applying for a professional occupational license, certificate or registration in this state to pass an exam, the applicant must do so. This does not apply to a license, certificate or registration issued by the boards of medicine, nursing, dental, pharmacy or education examiners.

Fee Waiver

  • A licensing board must waive any fee for a license if the applicant’s household income does not exceed 200% of federal poverty guidelines, and it is the applicant’s first time applying in Iowa. 

DIVISION II

  • Public records – allows for electronic examination in lieu of in-person.
  • Allows record request in writing, by telephone or electronic means – and cost accordingly.
  • Private security business does not include bails bond businesses.  This was a non-con part of SF 2372, a bill that was passed out of State Government but not taken up on floor.
  • Allows the Elevator Safety Board to reduce elevator fees for nonprofit associations. This was a non-con part of SF 2372, a bill that was passed out of State Government but not taken up on floor.
  • Eliminates the Hospital Licensing Board. This is SF 2327, which passed the Senate 49-0, but was not taken up in the House.
  • Amends the substance abuse treatment Code Chapter by allowing meetings with counsel or family and friends to be telephonically or electronically.
  • Allows personnel certified by BOEE to provide continuing education requirements online, if available.
  • Deer hunting licensing for out-of-state hunters – SF 2201, which passed the Senate 48-2 but wasn’t taken up in the House.
  • Allows real estate appraisers to complete contact hours under supervision in a bordering state, not to exceed 50% of the state requirement.
  • Architect exam flexibility – don’t have to retake modals they’ve already passed.
  • (Section 44) Repeals Travel Agent registration with Secretary of State requirement. This was SF 2133, which passed the Senate 32-17, but was not taken up by the House.
  • Covid Impact: Pushed back repeal of old immunization law. In 2018, a bill was passed that added Iowa Code 155A.46, allowing pharmacists to independently order and administer immunizations. Rules were needed from Medicaid to ensure pharmacists could bill for the immunizations. Rules were noticed this spring, but were delayed because of COVID-19. Pushing back the repeal of the old immunization law for one more year will provide time for education and to enroll with Medicaid, as well as to ensure there is no gap in coverage for Medicaid members who get immunizations at a pharmacy.
  • Covid Impact: School Physicals – extension on requirement for athletics until Dec. 31, 2020.
  • Covid Impact: Shareholder Meeting – allows tele meetings through Dec. 31, 2020.
    [6/13: 32-17, party-line (No: Democrats; Excused: Hogg)]

HF 2623 – Establishes set off procedures for gambling winnings

HF 2623 makes everyone subject to the setoff if winnings must be reported on Internal Revenue Service form W-2G for gambling winnings. The requirements to file the form depend on the amount of winnings and the type of wager: $1,200 on bingo or slots; $1,500 on keno (reduced by wager); $5,000 on poker tournament (reduced by wager); and $600 on other gambling winnings when the payout is at least 300 times the amount of the wager.

The bill also amends provisions relating to qualified sponsoring organizations (QSO) licensed to operate gambling games. Members of the board of directors of a QSO must be residents of the state and the board must include a member of the county board of supervisors and city council of each county and city that has a licensed facility as ex officio nonvoting members. Selection of nonvoting members is at the option of the county or city, and the ex officio members are not be required to enter into a nondisclosure agreement. The QSO and an organization that receives contributions from the QSO to distribute grants must conduct and submit to the Iowa Racing and Gaming Commission an audit on the organization’s activities.

The bill clarifies that credit cards cannot be used for gambling in the fantasy sports and sports betting games that the Legislature established in 2019. Credit cards are not allowed for any other gambling opportunity in Iowa.
[6/5: 48-0 (Absent: Zaun, Zumbach)]

HF 2641 – Omnibus Tax Policy bill and DOR updates

HF 2641 is a large tax policy bill that was built on a Department of Revenue proposal. As signed into law, provisions include:

  • Department of Revenue policy updates, largely non-controversial.
  • Setoff procedures: This corrects an issue with updates to setoff procedures under SF 2328 and HF 2565. It ensures the existing rules for the setoff programs remain in effect until the Department of Revenue files adopted rules to enact the new legislation.
  • Pro Rata Share of Entity-Level Income Tax Paid by Shareholders or Beneficiaries: Ensures that resident shareholders and beneficiaries can claim the out-of-state tax credit paid in another state for their share of the state taxes paid by that entity by establishing a new process for the resident shareholder/beneficiary to prove taxes paid by the pass-through entity in another state and their share of the entity (as well as taxes paid).
  • Business Interest Expense Deduction and Global Intangible Low Tax Income: Changes the treatment on Global Intangible Low Tax Income (GILTI) for Iowa corporate income tax purposes. This had been treated as income and was apportioned as such. Federal tax changes in the 2018 TCJA adopted a “territorial” tax system to discourage companies from using intellectual property to shift profits out of the United States by treating it as income. The bill allows companies to deduct GILTI from their Iowa taxable income. This will reduce taxes on companies that might otherwise shift profits out of the U.S. to lower tax jurisdictions.
  • Lifts the cap on the business interest expense deduction under 163(j) of the federal tax code to further lower corporate tax liability.
  • Iowa Reinvestment Act: Reauthorizes a time frame for applications from July 1, 2020, to July 1, 2025, to approve additional districts, and revises the size and makeup parameters of eligible districts to allow for projects that include area in more than one city.
  • Local Assessors: Adds accountability for assessors by addressing concerns over conflicts of interest regarding the assessment of property owned by assessor or family members of the assessor.
  • School Tuition Organization Tax Credit: Allows the total amount of tax credits eligible to be issued for contributions to an STO to increase to $25 million from the current $15 million cap.
  • Paycheck Protection Program: Creates an income tax exemption for forgiven loans issued under the Paycheck Protection Program of the federal CARES Act. Generally, loan forgiveness is treated as income and is taxable.
  • Bonus Depreciation/Section 179 Expensing: Allows the amount expended under Section 179 to match what is allowed by any updated federal tax changes.
  • Innocent Spouse provisions: Reflects current interpretation that Iowa relief from joint and several liability is available under all circumstances when such relief would be granted under IRC section 6015 for federal purposes.
  • Iowa Educational Savings Plan (529 Plans): Couples Iowa’s eligible educational expenses to match federal changes that allow certain apprenticeship program-related expenses or qualified education loan repayments.
  • Iowa Educational Savings Account and First-Time Homebuyer Account Extensions: Extends to July 31, 2020, the deadline for contributions to be designated as having been made in 2019.
  • Qualifying Personal Protective Equipment (PPE) – Donation: Adds a new use tax exemption for production of personal protective equipment (PPE) assembled and donated in connection with a governor’s disaster proclamation. Effective January 1, 2020. The exemption covers both PPE and materials used to make PPE if it’s donated during the six months after the Governor declares a disaster emergency.
  • Short-term Rental Properties: Prohibits counties and cities from enacting ordinances that prohibit short-term rental properties. These properties will be classified as residential property. Cities and counties can enact ordinances relating to short-term rental properties for protection of public health, residential use and zoning purposes, limitation or prohibition of use of property to house sex offenders, to manufacture, exhibit, distribute, or sell illegal drugs, liquor, pornography, or obscenity, or to operate an adult-oriented entertainment establishment as described in section 239B.5, or to provide the county with an emergency contact for a short-term rental property.
  • Rural Improvement Zones: Ensures that the Lake Panorama Rural Improvement Zone continues to meet the standards to qualify as a RIZ. This change, based on discussions with bond attorneys, was promoted by RIZs in response to a Supreme Court decision involving a drunk driving arrest by a DNR officer at Lake Panorama.
  • Sales tax exemption/rules rescission – Computer peripherals used in business operations: Changes the definitions used by DOR and aligns to the Streamlined Sales and Use Tax Agreement. It is projected to have minimal if any fiscal impact.
  • Changes to food operations trespass: Removes food establishments and famers markets from food operations trespass locations.
  • Iowa Small Business Relief Grant Program: Ensures grants received by businesses from the Economic Development Authority are exempt from income tax.
  • Broadband infrastructure grant income tax exemption: $300K FY 20/$1.5M future years
  • 529 Plan Recontribution: Codifies DOR position that it will allow participants to redeposit returned college funds for room and board to their 529 plans under set conditions. This issue arose when some students received refunds from colleges and universities under the CARES Act.
  • Housing enterprise zone tax credits and transferability (SF 606): Makes changes to filing dates for requesting transferability for tax credits issued under the former Housing Enterprise Zone (HEZ) incentive program. The HEZ program was replaced by the Workforce Housing tax credit program in 2014. HEZ projects were required to request transferability of credits by July 1, 2014. Generally, a project under the HEZ program would request transferability for their credits upon completion of the project. Some developers were not made aware of the new deadline. When they made the request after the July 1, 2014, it was denied. This provides an exception from the deadline to request transferability for a project located in Des Moines County or in Woodbury County.
  • Fly Our Colors Special Registration Plate (HF 2620): Allows the Department of Transportation to issue flying our colors special registration plates with navy along the top, red along the bottom, and an image of a bald eagle behind the plate’s letters and numbers. The fee for the plate is $35. An additional $25 fee is charged for personalized plates. Until July 1, 2023, the state treasurer must credit monthly from the statutory allocations fund to the flood mitigation fund the amount of the special fees for flying our colors plates.
    [6/13: 45-2 (No: Bolkcom, Quirmbach; Absent: Greene, Hogg, Lykam)]