Ways & Means Committee Report – week 14, 2017

SF 501 – Increasing certain fees collected by the county sheriff
SF 502 – Consumer Credit Code update
SF 503 – Deferral of unpaid installments on certain consumer credit loans
SF 504 – County mental health and developmental disability property taxes
SF 505First-time Homebuyer Savings Accounts
HF 607Alcohol policy omnibus
HF 608DOR technical bill – IRC clarifications and flood mitigation fix
HF 617IDALS code clean-up
HF 625 – Eliminating requirement to indicate health coverage for children on tax return
HF 626Long-term-care insurance filing fee elimination



SF 501 increases a number of fees charged by county sheriffs for services they are required to provide by law. Many of these services involve private parties for civil processes, including serving notices, warrants and subpoenas; and making and executing bills of sale and certificates or deeds for land sold. Fees were last increased in 2001.

Sheriffs asked the Legislature in 2015 for an increase in fees. The Legislature requested that sheriffs provide additional information on the cost of providing services and how much the counties subsidize them through property taxes. In December, the sheriffs detailed this information in a report. SF 501 will increase the fees to make them more closely match the cost of services so that the cost of civil services is shifted to the private parties involved, and off the backs of county property taxpayers.
[Floor: 4/12: 48-1 (Bisignano “no”; Bertrand absent); Committee: 4/6: short form]


SF 502 updates the Iowa Consumer Credit Code. The bill, as amended unanimously by the Committee, represents an agreement among the Iowa Attorney General, Iowa Bankers Association and Iowa Credit Union League to modernize the Iowa Consumer Credit Code. Many of these fees for creditors and remedy awards for debtors have not been adjusted since the Code was passed in 1974.

The legislation:

  • Allows the Attorney General greater latitude to declare supervised loans void when made by parties who do not have proper authorization to make them.
  • Provides for a credit reporting charge, a $30 charge for returned checks and over-limit violations on credit cards.
  • Increases the allowable late-payment charge cap from $15 to $30 on all consumer credit and changes the rebate rules for deposit-taking lenders, which will make it easier to provide smaller consumer loans.
  • Raises the remedy award for a consumer’s private right of action for violations of the consumer credit code along with violations of disclosure provisions from a minimum of $100 to $200 and from a maximum of $1,000 to $2,000. It also raises the civil remedy for the Attorney General to bring an action against a creditor from no more than $5,000 to no more than $10,000.
  • Raises the annual notification fee for credit sellers and debt collectors from $10 to $50, and increases the allowable charge for late filing by these credit sellers and debt collectors from $20 to $75.
    [Floor: 4/12: 49-0 (Bertrand absent); Committee: 4/6: short form]


SF 503 clarifies the Iowa Consumer Credit Code related to deferred payment on a closed-end, simple interest loan. Currently, the parties to a pre-computed consumer credit transaction may agree in writing to a partial or full deferral of any unpaid installments and the creditor may receive a deferral charge. The bill adds deferrals with respect to interest-bearing consumer credit transactions that are not pursuant to open-end credit arrangements, and other than consumer lease or consumer rental purchase agreements. The parties may agree in writing to a partial or full deferral of any unpaid installments in addition to any interest accrued, pursuant to the terms of the transaction. The creditor may receive a deferral charge not to exceed $20 per deferred installment. An amendment in committee increased the fee amount to $30 to match other fees currently in place.
[Floor: 4/12: 49-0 (Bertrand absent); Committee: 4/6: short form]



HF 625 eliminates the requirement that taxpayers indicate on their tax returns whether their dependent children have health insurance coverage. This requirement started with tax year 2010 to help identify those eligible for hawk-i or Medicaid. After the Department of Revenue (DOR) compiles the information, it is sent to the Department of Human Services (DHS) to identify those eligible to apply for health insurance coverage for their children. The cost per new enrollee of DHS outreach has declined significantly. Recent information on the number of new enrollees under this program is not available because of changes in the application for hawk-i and Medicaid that removed a question on how the individual heard about the program.
[4/11: 29-19 party-line (D. Johnson “no”; Allen, McCoy absent)]


HF 626 is a recommendation by the Iowa Insurance Division (IID) to eliminate a $25 filing fee for independent review of a benefit trigger determination under a long-term-care insurance policy. Current law gives the Insurance Commissioner the authority to waive this fee. This has been the practice 100 percent of the time for the past five years, when the IID stopped charging fees for health insurance appeals. The IID routinely helps Iowans with insurance issues without charging a fee, and removing the provision will eliminate confusion.
[4/11: 49-0 (Allen absent)]



SF 504 aims to address inequities on property taxes within regions and allow for increases in regional expenditures on mental health and developmental disability services. The bill also establishes a procedure for enforcing the 25 percent limit on operating reserves held by counties.

The bill has five main points:

  • It equalizes the per capita levy rate among all counties within a region. Counties would no longer be restricted by the base year expenditure, so such counties as Johnson and Scott will be allowed to increase their contribution to the region’s expenditure level and reduce the contribution by other counties that are contributing at a higher per-capita level to meet the region’s expenditure needs. Also, population numbers used for determining per-capita spending is based on the most recent federal census or population estimate by the federal government. This provision does not allow for more spending on services in a region.
  • The bill establishes an annual inflation factor for regional mental health expenditures. The inflation factor will be 1 percent for FY19, 1 percent for FY20, 2 percent for FY21 and 2 percent for FY22. Beginning FY23, the inflation factor is frozen at zero.
  • The statewide per-capita cap will remain at $47.28. The inflation factor will not be allowed if the increase would put expenditures above the per-capita spending cap.
  • Allows Polk County to use funds from the county hospital levy to supplement its county services fund up to the $47.28 per-capita expenditure cap. This would allow Polk County to use up to $7 million from their county hospital levy to meet their service expenditures.
  • The bill would also establish a process for amounts in the county services fund that are in excess of the 25 percent reserve allowed under law. The county would reduce its mental health levy rate to expend funds in reserve until the 25 percent limit is reached. This process cannot be used to exceed regional expenditure limitations.

The bill represents an effort to make the regional system stable for the near future and address the need for more flexibility for Polk County to meet its needs for funding services. It does not address the long-term viability of the funding system for mental health and disability services. The bill requests a fiscal viability review of mental health and disability services funding by a legislative study committee during the 2020 legislative interim. This committee would consist of five members from the House and five from the Senate to develop a report and make recommendations for consideration during the 2021 legislative session.
[4/6: short form]


SF 505 creates a new state income tax exemption for qualified deposits to a First-time Homebuyer Savings Account. The assets of an account are to be used for the down payment and allowable closing costs associated with the purchase of a home. Withdrawals from the account are tax-free as long as the money is used for a down payment and closing costs for a single-family, owner-occupied home in Iowa. To set up an account, a person must submit a form to the Department of Revenue (DOR) designating the account as a First-time Homebuyer Savings Account. The person designated as the beneficiary will be able to access the fund to purchase their first home. The account holder may change the designated beneficiary at any time and/or may designate themselves as the beneficiary. Contributions to an account may be made by any person, in any amount. There is no cap on donations/contributions to the account. The account holder may withdraw funds from their account at any time.

The bill provides two individual income tax incentives relating to the accounts. First, an account holder may deduct the contributions made during the year from their income taxes. The deducted amount may not exceed $2,000 per year for an individual or $4,000 for married taxpayers. These amounts are adjusted for inflation each calendar year. Second, the bill exempts any interest or earnings received from the holder’s accounts. The total amount that may be deducted from one’s income tax for these two tax incentives cannot exceed an aggregate lifetime limit of 10 times the maximum deduction determined above for the applicable year ($20,000 for 2016), or double that amount for married taxpayers with a joint account ($40,000 for 2016).

The account holder can claim the tax incentives for 10 tax years from when they opened the account, or on the date when account funds are withdrawn, whichever comes first. Any amount remaining in the account after the 10th year must be added to net income of the account holder that tax year. Nonqualified withdrawals from the account will be added to net income and are subject to a 10 percent penalty unless the withdrawal was made because of death, disability or bankruptcy. The bill prohibits the amount of money from a First-time Homebuyer Savings Account used for funding the house/closing costs from being allowed as an itemized deduction on Iowa individual income taxes. The tax provisions will begin on or after January 1, 2018.

A previously introduced version of this bill had the new tax credit deferring state revenues up to $4.3 million annually after five years of implementation. An amendment suggested by the Bankers Association makes technical corrections to the setup of the fee structure of these accounts.
[4/6: short form (Bolkcom “no”)]

HF 607 is the Alcoholic Beverages Division omnibus bill, which contains a number of technical changes, as well as policy changes developed in stakeholder meetings. The technical changes include removing redundant language, clarifying current practices, and standardizing language regarding the contents of applications for liquor control licenses, wine permits and beer permits.

Policy changes standardize recent legislative action to promote Iowa beer, wine and distilled spirits. These include:

  • Streamlining licensing for beer manufacturers and wholesalers who had been governed by separate classes of permits.
  • Allowing brewpubs to sell their beer for consumption off premises in a growler without having to first have that beer pass through a wholesaler. This also places on the brewpub the responsibility for remitting the barrel tax for beer sold in a growler.
  • Allowing an Iowa brewery with a taproom to also sell wine by the glass for consumption on premises. Legislation passed in 2009 had allowed native wineries to sell beer for consumption on premises in addition to wine.
  • Changing the terminology for Iowa distilled spirits from “micro-distilleries” and “micro-distilled spirits” to “native distilleries” and “native distilled spirits.” This mirrors current terminology for Iowa-produced wines and beer.
  • Allowing native distilleries with production of 100,000 gallons or fewer annually to sell up to nine liters per day. Current law limits the sale of distilled spirits by native distilleries to 1.5 liters. A native distillery with production of more than 100,000 gallons annually would still be limited to 1.5 liters. Native distilleries with production of 100,000 gallons or fewer could also sell their product at retail for consumption on premises.
    [4/6: short form]


HF 608 is a Department of Revenue technical clean-up bill, which clarifies the applicability of a taxpayer to claim the Research Activities Credit (RAC). Because of the unique one-year-only IRC update/coupling legislation passed in 2016, some were concerned that the Research Activities Credit would not be available to them. The bill makes it clear that it is still available. The bill also fixes an issue regarding the flood mitigation program. In recent legislation, the amended Code section was cited as 432.2, but it is actually 423.2. The bill fixes that error. The committee adopted a technical amendment to remove unnecessary language from the bill regarding applicability of the legislation.
[4/12: short form (Petersen absent)]


HF 617 is the Code cleanup bill for the Department of Agriculture (IDALS). The bill makes a number of changes to IDALS functions, including:

  • Changing the name of the state soil conservation committee to the Soil Conservation & Water Quality Committee.
  • Excluding edge-of-field practices from the 50 percent limit on financial incentives under the cost-share program.
  • Clarifying that cover crops are an eligible practice under the cost-share program.
  • Providing for issuance of two-year licenses instead of annual licenses by the department.
  • Vaccination procedures and standards.
  • Registration requirements for fertilizers and soil conditioners.
  • Delivery ticket requirements for commodities sold in bulk.
  • Labeling requirements for ethanol-blended gasoline.
  • Use of automatic recorders on scales.
    [4/12: short form (Petersen absent)]