Line-Item Vetoed by the Governor & Vetoed by the Governor

Line-Item Vetoed by the Governor

HF 718 - Economic Development Budget
Appropriates a total of $21.7 million to the Department of Economic Development, $7.2 million to the Board of Regents, and $5.9 million to Iowa Workforce Development. Most of the reductions represent a 6% across-the-board cut to all divisions and programs. The bill makes unspecified decreases in several DED divisions, including $56,540 (3%) from the Administrative Services Division and $336,426 (6%) from the Business Development Division. The bill allocates $3.5 million to the Strategic Investment Fund, a 6% ($223,648) reduction. The Value-Added Agricultural Products and Financial Assistance Program (VAAPFAP) is no longer funded by the Strategic Investment Fund, but through a stand-alone general fund appropriation. VAAPFAP received $3 million in FY01 and will receive $2.85 million for FY02, a $150,000 decrease. The net effect is a $2,776,352 increase in general fund dollars for the Strategic Investment Fund. The bill allows up to 6% of VAAPFAP funds to be used for administration. DED is required under this bill to report to the Legislature on the progress made toward making CEBA self-sufficient by January 14, 2002. The bill permits DED to allocate up to $90,240 from the Strategic Investment Fund to the Microbusiness Rural Enterprise Assistance Program (6% or $5,760 reduction). The bill allocates $285,000 for the World Food Prize, of which $50,000 is designated for the World Food Prize Youth Institute; reduces the appropriation to the Iowa Manufacturing Technology Center by $372,000 ($400,000 total); cuts the appropriation to the Workforce Recruitment Initiative by $2,074 (6% decrease, for a total of $377,156); decreases community assistance programs by $49,309 (6%, for a total of $772,516); appropriates $49,161 for the Mainstreet/Rural Mainstreet Program ($26,117, or 6%, reduction); and designates $853,284 for the Community Development Program, a decrease of $57,070 for fewer community level projects focusing on leadership development, diversity training, and planning. The CDBG and HOME program state appropriation is decreased by $25,279 (6%, for a total of $396,035) over FY01 dollars. International Trade Operations are decreased by $139,844 (total $2.19 million); $235,000 is designated for the Taste of Iowa program (a $15,000 decrease); $100,000 decrease for the Export Trade Assistance Program (total $308,000), resulting in five to twelve fewer projects being funded (so far in FY01, 96 projects have been funded), $1.45 million decrease in Tourism Operations for decreased advertising (offset by CAT Fund advertising set aside), and closing the Waukee and Victor welcome centers. The bill decreases the SBDC appropriation by $73,225 (6%, for a total of $1.15 million) and reduces ISU's appropriation for the Institute for Physical Research and Technology by $268,446. The bill specifies that the Legislature will focus this program on industrial sectors and seek private sector donations to match dollars ($1 for every $3 in state funds for small businesses, $1 for every $1 for larger businesses, industrial foundations, and trade organizations). The University of Northern Iowa Institute for Decision Making receives a 6% cut ($45,426), for a total appropriation of $711,672. The bill also makes several unspecified reductions in Iowa Workforce Development, including $210,028 reduction from Labor Services ($3.29 million), $142,671 reduction in Worker's Compensation ($2.24 million); and $7,577 from the state's regional workforce development boards ($118,700). The bill requires DED to work with the SBDCs to eliminate duplication and maintains FY01 funding levels for the Councils of Governments ($150,000); Immigration Service Centers ($160,000); Labor Market Surveys ($67,078); and Rural Development Program ($370,000). The bill permits DED to use up to $1.2 million from the CAT Fund for advertising (language that was eliminated last year) and adds language that prohibits most of the program funds from reverting at the end of the year. The bill reduces the cap on the Workforce Development Fund Account from $8 million to $4 million and changes the Workforce Development Fund allocation for workforce training programs, specifically using $3 million for community college business training programs and $1 million for High Technology Apprenticeship Program offered in community colleges. New language was added this year to allow community colleges to use Workforce Development Funds for entrepreneur development and support activities. Under this legislation, the New Employment Opportunity Fund will be reduced by $248,730 (49.75%), for a total appropriation of $251,270. This fund was used to creatively and flexibly address the needs of untapped workforce populations, including persons with disabilities, the elderly, and immigrants. It is estimated that FY01 dollars will not be expended, so these dollars are protected from reversion and when combined represent total ($500,000) funding for the program. The bill also eliminates the $3 million transfer form the Waste Tire Management Fund to the Road Use Tax Fund, and instead dumps the dollars into the state's general fund. Finally, the bill appropriates $35,000 for the School to Career Program, which has been funded previously with a $500,000 appropriation. This loss in funds is due to a lack of program participation. Veto Message: The Governor vetoed $500,000 that would have gone to the Housing Development and Shelter Assistance Fund ($500,000).
Effective 7-1-01

HF 742 - Infrastructure Bill
Appropriates $85 million for FY02, including $50 million from the Rebuild Iowa Infrastructure Fund (RIIF) and $35 million from the Environment First Fund (EFF). The bill also appropriates $27.2 million in FY03, $11 million in FY04, and $2.5 million in FY05 from RIIF. The bill makes the following appropriations from RIIF: $1 million for the Historical Site Preservation Grant Program in the Department of Cultural Affairs ($1.5 million decrease) to acquire, repair, rehabilitate, and develop historical sites (these funds are awarded on a competitive grant basis, applicants are required to provide at least 50% of the project cost, and the grants are not to exceed $100,000 per project, with no more than two grants being awarded in any one county); $2.5 million to DED for vertical infrastructure improvements at community colleges associated with implementing the Accelerated Career Education (ACE) program ($2.8 million decrease); $500,000 to the State Fair Foundation for vertical infrastructure improvements at the State Fairgrounds; $1 million for costs associated with the development of a destination state park; $1 million to the Department of Transportation for vertical infrastructure improvements at Iowa's ten commercial service airports (Burlington, Cedar Rapids, Des Moines, Dubuque, Fort Dodge, Mason City, Ottumwa, Sioux City, Spencer & Waterloo), with $500,000 of the funds to be allocated equally between each of the ten airports, $400,000 to be appropriated based on the percentage of enplaned passengers during the previous fiscal year, and $100,000 to be allocated based on each airport's proportion of air cargo tonnage during the previous fiscal year; $500,000 appropriation to the Aviation Hangar Revolving Loan Fund to fund improvements to and construction of hangars at general aviation airports; and $1 million for the Recreational Trails Program, of which $50,000 is to be used for planning and developing Iowa's portion of the Mississippi River Trail and $500,000 is to be used to fund completed trail connections between existing trails and parks within the state trail system (and requires these funds to be matched 25% with local funds). The bill makes the following appropriations from EFF: Appropriates $2 million to the Brownfield Redevelopment Program, a decrease of $1 million to provide technical and financial assistance for the acquisition, remediation, or redevelopment of Brownfield sites; designates $10 million to the Resources Enhancement And Protection (REAP) Fund, a $500,000 decrease from FY00 and FY01 levels; allows moneys from the Community Attraction and Tourism (CAT) Fund to be used to buy down debt or refinance an existing loan on projects that meet the eligibility requirements of the program; requires public bidding in Vision Iowa projects; and requires the interest and earnings currently deposited in the Economic Emergency Fund and the Cash Reserve Fund instead be credited to the general fund for FY02, moving an estimated $31 million from the RIIF to the general fund. The bill also appropriates $750,000 to the Loess Hills Development and Conservation Fund to be used for streambed stabilization projects. In FY01, $2 million was appropriated, of which $1.5 million was allocated to the Hungry Canyons Account and $500,000 to the Loess Hills Alliance. This year, $500,000 is allocated to the Hungry Canyons Account and $250,000 is allocated to the Loess Hills Alliance.
Effective 7-1-01

HF 755 - Standings Bill
Standing appropriations are those authorized by law and made automatically. This bill reduces FY02 standing appropriations by $34.1 million, which is $33.8 million below the FY01 level for standing appropriations. The bill reduces the standing appropriations for the legislative branch by $1.5 million (5.9% reduction, for an overall appropriation of $26.5 million); appropriates $300,000 to the Department of Education for the Jobs to America's Graduates Program ($150,000, a decrease of $183,000) and Americorps After-School Initiative ($150,000, a $29,000 increase); and reduces the FY02 standing appropriation for public transit assistance by $660,000 (total $11 million originally budgeted, this reduces the total appropriation to $10.3 million). The bill also reduces the annual dollar amount of job credits that may be allocated to the ACE Program from $6 million to $3 million for FY02 and subsequent fiscal years. ACE job credits are funded through a diversion from the general fund of employee withholding tax payments, so this change will increase state general fund revenues by $3 million beginning in FY02. Veto Message: The Governor vetoed language which would have authorized the Iowa Finance Authority to transfer $121,000 for community-based housing for homeless persons with mental illness.
Effective 7-1-01

SF 535 - Education Budget
Appropriates $923.4 million for various K-12, continuing learning and higher education programs around the state for FY02, a decrease of $56.6 million compared to the current fiscal year. The bill reduces funding for Community Cultural Grants by $41,469 (to $649,680 total appropriation); decreases funding for Historic Sites by $41,000 (for a $560,293 total appropriation); reduces the statewide school-to-work implementation to connect education and workforce development by $12,600 (total $197,400); and cuts community college appropriations by $4.85 million (3.29% across-the-board general reduction). The bill also reduces the Accelerated Career Education (ACE) grant program by $15,000 ($235,000 total appropriation). In FY01, the program provided an average award of $2,000 to 125 recipients studying in designated technical shortage areas. The FY02 level of funding would reduce the average award by$120 for each of the 125 recipients (to $1,880). The bill also reduces the University of Northern Iowa's Recycle and Reuse Center by $15,105 (total $236,649). Finally, the bill reduces funding for the School Ready Grant Program (Community Empowerment Funds) by $936,000 for a total $14.7 million appropriation. The bill reduces grants awarded prior to FY02 by 6%, and requires a 25.815% reduction for grant recipients that received funding for the first time in FY01 (because they only received partial funding for the year). The bill specifies that a maximum $200,000 can be used for the Community Empowerment Office and other technical assistance services; states the Legislature's intent for regional technical assistance teams to be established and include staff from various agencies, including the AEAs, community colleges, and ISU Extension Service; and requires the State Empowerment Board to direct staff to work with the Advisory Council to inventory technical assistance needs. Veto Message: The Governor vetoed the decrease in the standing appropriation to the Vocational-Technical Tuition Grant Program by $148,944 (to $2,333,456). This reduction would have decreased the average grant from $423 to $397 for 5,875 students (assuming the same number of students participate as in FY01).
Effective 7-1-01

Vetoed by the Governor

HF 103 - Right to Work Promotion
Requires all DED written materials (both electronic and printed) used for business promotion identify Iowa as a right to work state.
Sponsor: Committee on Labor & Industrial Relations; Status: Vetoed by Governor

HF 694 - Housing Trust Fund
Creates a Housing Trust Fund to be administered jointly by the Iowa Finance Authority and the Department of Economic Development and used for housing-related programs. Payments of interest, repayments of moneys loaned, and recaptures of grants and loans are to be deposited in the fund. The bill sets up a nine-member Housing Trust Commission to oversee the consolidation of all housing programs under one agency. The Commission is comprised of: a housing developer, an economic developer, a member of the public, a lender/mortgage expert, a person representing a non-profit organization working with low-income housing issues, and representatives of a city with a population less than 5,000, a city with 75,000 people or more, a county with less than 25,000 population and a county with more than 100,000 people. The bill also requires the Commission to submit an annual report to the Legislature that outlines any legislative recommendations. Sunsets June 30, 2004.
Sponsor: Committee on Economic Development; Status: Vetoed by Governor

HF 714 - Community Renewal Initiative
Establishes a community development program in the Department of Economic Development to provide tax incentives to businesses that provide child care to their employees or make contributions to community or neighborhood projects involving physical revitalization, economic development, job training or education for individuals, community services, or crime prevention. Community services projects include providing group and family counseling, mental health services and centers, child and adult care, senior citizen centers, recreation programs, sheltered workshops and substance abuse counseling. Community services projects must focus on self-help efforts, projects providing essential services to low-to-moderate income persons, or projects contributing to the development of lasting cooperation and partnership efforts of neighborhood organizations and businesses. Economic development projects are to be in distressed or blighted areas and may be used for retail, commercial, service, or manufacturing businesses. First, the bill establishes a community development tax credit for businesses that contribute to these types of projects and a child care tax credit for those businesses providing childcare to their employees. Under this legislation, the Community Development Tax Credit may be taken from individual or corporate income taxes. The amount of this tax credit is 50% of the contributions made by the business to the project, and increases to 75% in cities with 15,000 or less in population. The total tax credit is capped at $150,000 per project and $100,000 per business. The total amount of the tax credit allowed any given year is capped at $2 million. In order for a business to claim this tax credit, it must have the endorsement of the local government for the project area and the activities must be consistent with an overall community or neighborhood development plan adopted by the local government. Second, the bill establishes a Child Care Center Tax Credit that equals 25% of the costs of providing child care benefits to employees, with a maximum credit of $100,000. These tax credits are also limited to $2 million per year. Effective January 1, 2002. Companion to HSB 247. Successor to HSB 247.
Sponsor: Committee on Ways & Means; Status: Vetoed by Governor

SF 66 - 99% Spending Limitation
Requires the Governor to submit and the Legislature to pass a budget that does not exceed the 99% spending limitation. The bill also prohibits the use of reversions.
Sponsor: Committee on Appropriations; Status: Vetoed by Governor

SF 516 - Subchapter S Federal Deductibility
Allows for full federal deductibility (instead of 50%) for subchapter S corporation income. Companion to HF 708. Effective only if the revenue estimating conference estimates that, as a result of the enactment of federal income tax cuts prior to January 1, 2002, Iowa income tax receipts for FY01 will be increased by $7.9 million or more over the expected amount of Iowa income tax receipts prior to enactment of such federal income tax legislation. If this takes effect, this will apply retroactively to January 1, 2001.
Sponsor: Committee on Ways & Means; Status: Vetoed by Governor

SF 521 - New Economy Employment Initiative - Tax Credit
Establishes a 50% capitol gains individual income tax deduction for the sale or exchange of capitol stock that the taxpayer has acquired through employment, beginning in tax year 2002. For tax year 2001, the amount of the deduction is 25%. Spouses of employees may also take the deduction, as long as the employee and the spouse file a joint tax return and the stock options were offered to all employees. Employees/spouses must elect to take the deduction and can do so by filing a written statement with the taxpayer's income tax return. Taxpayers may use this deduction twice, from two different corporations, during their lifetimes. The bill caps the total number of refunds offered at $3 million per year. If more refunds are claimed, the refund claim is paid on a pro rata basis. The deduction is offered in lieu of a deduction offered in the Internal Revenue Code for sale or exchange of stock in a small business for five years. Retroactive to January 1, 2001. Companion to HF 710. Successor to SSB 1254.
Sponsor: Committee on Ways & Means; Status: Vetoed by Governor