Ways & Means – Week of April 21, 2011

STAFF CONTACT:  Kris Bell

SF 209 – Supplemental Appropriations, EITC Increase, Bonus Depreciation, Taxpayers Trust Fund

SF 300 – Wind and other renewable energy production tax credits

SF 526 — Gaming

FLOOR ACTION:

SF 209 is an FY11 supplemental bill that also contains a number of tax provisions. These are the highlights of the Conference Committee report.�
** Bonus Depreciation: Couples with the federal government for bonus depreciation (Senate version). Costs: FY11 – $26.4M; FY12 – $99.2M; FY13 – $21.8M.
** Earned Income Tax Credit: Increases the Earned Income Tax Credit for working families from 7 percent to 10 percent (refundable), benefitting 240,000 low-income Iowa working families. Costs: $100K – FY11, $14.7M – FY12, $13.7M – FY13.
** FY11 Supplemental Appropriations TOTAL: $45,777,115
Community Colleges: $5,948,736
DOC – Ft Madison: $1,920,083
DOC – Anamosa: $1,293,060
DOC – Oakdale: $2,385,141
DOC – Newton: $1,101,460
DOC – Mt Pleasant: $1,359,865
DOC – Rockwell City: $412,008
DOC – Clarinda: $1,180,617                                    �
DOC – Mitchellville: $504,674
DOC – Ft Dodge: $1,162,060
DOC – General Admin: $110,202
CBCs/Judicial Districts: $2,772,513
DIA Indigent Defense: $18,551,500
Dept. of Public Safety: $2,955,000
Dept. of Public Health: $1,212,551
Dept. of Human Services – Mental Health Institutions: $2,644,316
Dept. of Administrative Services – Terrace Hill (Corrective)    : $263,329
** Dept. of Revenue – allows Dept. of Revenue to use $300,000, which was appropriated for a debt coordinator for the administrative costs associated with tax processing.
** Terrace Hill – Corrective language regarding FY11 appropriation.
** ICN – Language regarding contracts with federal broadband technology opportunities program.
** County Mental Health and Disability Services -Provides a one-time appropriation (FY11) of $20 million from the general fund to the Department of Human Services for the County Mental Health funding. Distribution of the $20 million to be decided later by the General Assembly. Eligible payments include, but are not limited to, county waiting lists. Sunsets the current mental health services delivery system on July 1, 2013.  �
**Taxpayers Trust Fund – Creates a new Taxpayers Trust Fund. Acts like a “third bucket” after the Cash Reserve Fund and Economic Emergency Fund. Moneys in the Taxpayers Trust Fund shall only be used as pursuant to appropriations made by the General Assembly for tax relief. After supplementals, the Taxpayers Trust Fund would receive a maximum (per fiscal year) of $60 million of unexpected revenue growth. The unexpected revenue growth is based on the Revenue Estimating Conference’s December projections vs. actuals when the state’s books close in September. The Taxpayers Trust Fund receives the first $60 million of the unexpected revenue growth. This would only happen after the Cash Reserve Fund and Economic Emergency Funds are full. The remainder of excess funds would flow into and be part of the General Fund.  Taxpayers Trust Fund amounts would be calculated for the fiscal year beginning July 1, 2012 (FY 13). The 2013 Legislature would be the first to appropriate from the Taxpayers Trust Fund. [4/18: 49-0 (Chelgren excused)]

FLOOR AND COMMITTEE ACTION:

SF 526 makes numerous changes to Iowa’s gaming laws. As passed by the Ways & Means Committee highlights include:
Horses:
** Allows gambling games at pari-mutuel facilities to be used to supplement racing purses in perpetuity;
** Prescribes distribution of horse racing purses:  No less than 20 percent of all net purse moneys distributed to each breed must be designated for purposes to foster growth of the Iowa horse breeding industry.  Seventy-six percent of purse funds are for thoroughbred races, 15.25 percent of purse funds for quarter horse races, and 8.75 percent of purse funds are designated for standardbred races.�
** Date for changing the purse structure is moved up from July 2012 to January 2012.
** Harness racing may occur at any approved racetrack, not just a county fair.
** Defines where purse moneys are paid to for standard bred racing, thoroughbred racing and quarter horse racing. The funds may be used for operating expenses of the organization and for the promotion and marketing of Iowa-bred horses.  Each of the three groups is required to complete an annual audit and accounting of the funds.�
** Clarifies that only quarter horse and thoroughbred racing shall be allowed at the horse racetrack located in Polk County.
** Permits advanced deposit wagering for pari-mutuel licensees. Includes additional language regarding advanced deposit wagering licenses.  Defines net revenue to mean after all taxes and expenses directly related to account deposit wagering. Before granting an advanced deposit wagering operator license to an entity other than Prairie Meadows, the Racing & Gaming Commission is required to enter into an agreement with Prairie Meadows, the Iowa Horsemen’s Benevolent and Protective Association, and the prospective advanced deposit wagering operator for the purpose of determining the payment of statewide source market fees and the host fees to be paid on all races subject to advanced deposit wagering.  An advanced deposit wagering operator licensee is required to accept wagers on live races conducted at Prairie Meadows from all of its account holders, if it accepts wagers from any residents of Iowa. Penalty is a class D felony.�
** Standardbred racing shall not be featured at Prairie Meadows, but purse moneys for standardbred racing shall be included in calculating the total annual purses required to be paid.
Referendum
** A license to conduct gambling shall only be issued if approval is received from the county electorate.�
** If a gaming referendum is approved, the County Supervisors are required to resubmit the referendum to the county electorate in eight years.  However, if a gaming proposition is approved by a majority of the county electorate in two successive elections, another vote is not required. (Initial vote, vote eight years later).�
** After a referendum has been held which approved or defeated a gaming proposal, another referendum on a gaming proposal shall not be held until the eighth calendar year thereafter.
** County supervisors are required to hold a referendum if they receive a valid petition. The amendment states that a referendum due to a petition can only be held the eighth calendar year after the last referendum. Currently, the election from a petition would be at the next valid election (39.2(4). A valid petition is 10 percent of votes cast in the last presidential or gubernatorial general election.�
** The referendum division is effective upon enactment and retroactive to elections occurring on or after Jan. 1, 1994.
Internet Poker Report
** Requires the Racing & Gaming Commission to prepare a report due to the General Assembly no later than Dec. 1, 2011. The report is regarding the creation of a framework for the state regulation of intrastate internet poker.�
** The report shall consider the current state of unregulated Internet poker in Iowa, consumer protection, and responsible gaming measures that can be implemented through regulation, licensing structures, regulatory recommendations, and affiliations with licensees regulated under 99F, and the collection of wagering taxes. The Racing and Gaming Administrator may consult with licensees regulated under 99F, with potential Internet poker hub operators, and with any other interested parties in the preparation of the report.
** The administrator shall not be required within the report to make specific recommendations regarding the legalization of intrastate Internet poker in Iowa.
** The Senate adopted an amendment requiring the administrator  to consult with tribes that have entered into an agreement or compact with the state. The Director of Public Health is required to prepare a report and deliver it to the Administrator of the Racing and Gaming Commission by Oct. 1, 2011, regarding the impact of Internet poker on society. [4/20: 38-12 (Anderson, Behn, Boettger, Bolkcom, Dandekar, Feenstra, Hamerlinck, Hogg, Kettering, McKinley, Smith, Zaun “no”) ][4/14: 9-6 (Anderson, Bolkcom, Feenstra, Hogg, Smith, Zaun “no”)]