General Assembly: 76 (1995 Regular GA) - Chapter 186 - Local option sales and services tax


Published: 1995-05-22

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CH. 186 lAWS OF THE SEVENlY-SIXTH GA, 1995 SESSION

CHAPTER186 LOCAL OPTION SALES AND SERVICES TAX

S.F. 472

448

AN ACT relating to the local option sales and services tax by authorizing political subdivisions that will receive revenues from the tax to issue bonds in anticipation of the receipt of the revenues, by authorizing the imposition of the tax in certain cities located in two counties, and by setting the procedure for changing the use of revenues from the tax, and providing an effective date and a retroactive applicability date.

Be It Enacted by the General Assembly of the State of Iowa:

Section 1. Section 422B.1, subsection 1, Code 1995, is amended to read as follows: 1. A county may impose by ordinance of the board of supervisors local option taxes

authorized by this chapter, subject to this section and subject to the exception provided in subsection 1A

Sec. 2. Section 422B.1, Code 1995, is amended by adding the following new subsec- tion:

NEW SUBSECTION. 1A a. A city whose corporate boundaries include areas of two counties may impose by ordinance of its city council a local sales and services tax if all of the following apply:

(1) All the residents of the city live in one county. (2) The county in which the city residents reside has held an election on the question of

the imposition of a local sales and services tax and a majority of those voting on the ques- tion in the city favored its imposition.

(3) The city has entered into an agreement on the distribution of the sales and services tax revenues collected from the area where the city tax is imposed with the county where such area is located.

b. The city council of a city authorized to impose a local sales and services tax pursuant to paragraph "a" shall only do so subject to all of the following restrictions:

(1) The tax shall only be imposed in the area of the city located in the county where none of its residents reside.

(2) The tax shall be at the same rate and become effective at the same time as the county tax imposed in the other area of the city.

(3) The tax once imposed shall continue to be imposed until the county imposed tax is reduced or increased in rate or repealed, and then the city imposed tax shall also be re- duced or increased in rate or repealed in the same amount and be effective on the same date.

(4) The tax shall be imposed on the same basis as provided in section 422B.8 and noti- fication requirements in section 422B.9 apply.

(5) The city shall assist the department of revenue and finance to identify the busi- nesses in the area which are to collect the city imposed tax. The process shall be ongoing as long as the city tax is imposed.

c. The agreement on the distribution of the revenues collected from the city imposed tax shall provide that fifty percent of such revenues shall be remitted to the county in which the part of the city where the city tax is imposed is located.

d. The latest certified federal census preceding the election held by the county on the question of imposition of the local sales and services tax shall be used in determining if the city qualifies under paragraph "a", subparagraph (1) to impose its own tax and in deter- mining the area where the city tax may be imposed under paragraph "b", subparagraph (1).

e. A city is not authorized to impose a local sales and services tax under this subsection after January 1, 1998. A city that has imposed a local sales and services tax under this subsection on or before January 1, 1998, may continue to collect the tax until such time as

449 lAWS OF THE SEVENTY-SIXTH GA, 1995 SESSION CH. 186

the tax is repealed by the city and the fact that that area acquires residents after the tax is imposed shall not affect the imposition or collection of the tax.

Sec. 3. Section 422B.l, subsection 5, paragraph a, unnumbered paragraph 1, Code 1995, is amended to read as follows:

If a majority of those voting on the question of imposition of a local option tax favor imposition of a local option tax, the governing body of that county shall impose the tax at the rate specified for an unlimited period. However, in the case of a local sales and ser- vices tax, the county shall not impose the tax in any incorporated area or the unincorpo- rated area if the majority of those voting on the tax in that area did not favor its imposition. For purposes of the local sales and services tax, all cities contiguous to each other shall be treated as part of one incorporated area and the tax shall be imposed in each of those contiguous cities only if the majority of those voting on the tax in the total area covered by the contiguous cities favored its imposition. The local option tax may be repealed or the rate increased or decreased or the use thereof changed after an election at which a major- ity of those voting on the question of repeal or rate or use change favored the repeal or rate or use change. The election at which the question of repeal or rate or use change is offered shall be called and held in the same manner and under the same conditions as provided in subsections 3 and 4 for the election on the imposition of the local option tax. However, in the case of a local sales and services tax where the tax has not been imposed countywide, the question of repeal or imposition or rate or use change shall be voted on only by the qualified electors of the areas of the county where the tax has been imposed or has not been imposed, as appropriate. However. the governing body of the incorporated area or unincorporated area where the local sales and services tax is imposed may. upon its own motion. request the countv commissioner of elections to hold an election in the incorpo- rated or unincorporated area. as appropriate. on the question of the change in use of local sales and services tax revenues. The election may be held at any time but not sooner than sixtv days following publication of the ballot proposition. If a majoritv of those voting in the incorporated or unincorporated area on the change in use favor the change. the gov- erning body of that area shall change the use to which the revenues shall be used. The ballot proposition shall list the present use of the revenues. the proposed use, and the date after which revenues received will be used for the new use.

Sec. 4. Section 422B.l, Code 1995, is amended by adding the following new subsec- tion:

NEW SUBSECTION. 9. Notwithstanding subsection 8 or any other contrary provision of this chapter, a local option sales and services tax shall not be repealed or reduced in rate if obligations are outstanding which are payable as provided in section 422B.l2, un- less funds sufficient to pay the principal, interest, and premium, if any, on the outstanding obligations at and prior to maturity have been properly set aside and pledged for that purpose.

Sec. 5. Section 422B.l0, subsection 1, Code 1995, is amended to read as follows: 1. The director shall credit the local sales and services tax receipts and interest and

penalties from a county imposed tax to the county's account in the local sales and services tax fund and from a city imposed tax under section 422B.l. subsection lA. to the city's account in the local sales and services tax fund. If the director is unable to determine from which county any of the receipts were collected, those receipts shall be allocated amengst among the possible counties based on allocation rules adopted by the director.

Sec. 6. Section 422B.l0, Code 1995, is amended by adding the following new subsec- tion:

NEW SUBSECTION. 4A. From each city's account, the percent of revenues agreed to be distributed to the county in the agreement entered into as provided in section 422B.l, subsection lA, paragraph "a", subparagraph (3) and paragraph "c", shall be deposited into

CH. 186 lAWS OF THE SEVEN1Y-SIXTH GA, 1995 SESSION 450

the appropriate county's account to be remitted as provided in subsections 3 and 4. The remaining revenues in the city's account shall be remitted to the city council. If a county does not have an account, its percent of the revenues shall be remitted directly to the county board of supervisors.

Sec. 7. NEW SECTION. 422B.12 ISSUANCE OF BONDS. 1. For purposes of this section unless the context otherwise requires: a. "Bond issuer" or "issuer" means a city, a county, or a secondary recipient. b. "Designated portion" means the portion of the local option sales and services tax

revenues which is authorized to be expended for one or a combination of purposes under an adopted public measure.

c. "Secondary recipient" means a political subdivision of the state which is to receive revenues from a local option sales and services tax over a period of years pursuant to the terms of a chapter 28E agreement with one or more cities or counties.

2. An issuer of public bonds which is a recipient of revenues from a local option sales and services tax imposed pursuant to this chapter may issue bonds in anticipation of the collection of one or more designated portions of the local option sales and services tax and may pledge irrevocably an amount of the revenue derived from the designated portions for each of the years the bonds remain outstanding to the payment of the bonds. Bonds may be issued only for one or more of the purposes set forth on the ballot proposition concerning the imposition of the local option sales and services tax, except bonds shall not be issued which are payable from that portion of tax revenues designated for property tax relief. The bonds may be issued in accordance with the procedures set forth in either subsection 3 or 4.

3. The governing body of an issuer may authorize the issuance of bonds which are payable from the designated portion of the revenues of the local option sales and services tax, and not from property tax, by following the authorization procedures set forth for cities in section 384.83. Bonds may be issued for the purpose of refunding outstanding and previously issued bonds under this subsection without otherwise complying with the pro- visions of this subsection.

4. To authorize the issuance of bonds payable as provided in this subsection, the gov- erning body of an issuer shall comply with all of the procedures as follows:

a. A bond issuer may institute proceedings for the issuance of bonds by causing a notice of the proposal to issue the bonds, including a statement of the amount and purpose of the bonds, together with the maximum rate of interest which the bonds are to bear, and the right to petition for an election, to be published at least once in a newspaper of general circulation within the political subdivision or unincorporated area at least ten days prior to the meeting at which it is proposed to take action for the issuance of the bonds.

If at any time before the date fixed for taking action for the issuance of the bonds, a petition signed by three percent of the registered voters of the bond issuer is filed, asking that the question of issuing the bonds be submitted to the registered voters, the governing body shall either by resolution declare the proposal to issue the bonds to have been aban- doned or shall direct the county commissioner of elections to call a special election upon the question of issuing the bonds. The proposition of issuing bonds under this subsection is not approved unless the vote in favor of the proposition is equal to at least sixty percent of the vote cast. If a petition is not filed, or if a petition is filed and the proposition of issuing the bonds is approved at an election, the governing body acting on behalf of the issuer may proceed with the authorization and issuance of the bonds. Bonds may be issued for the purpose of refunding outstanding and previously issued bonds under this subsec- tion without otherwise complying with the provisions of this subsection.

b. The provisions of chapter 76 apply to the bonds payable as provided in this subsec- tion, except that the mandatory levy to be assessed pursuant to section 76.2 shall be at a rate to generate an amount which together with the receipts from the pledged designated portion of the local option sales and services tax is sufficient to pay the interest and principal

451 lAWS OF THE SEVEN1Y-SIXTH GA, 1995 SESSION CH. 186

on the bonds. All amounts collected as a result of the levy assessed pursuant to section 76.2 and paid out in the first instance for bond principal and interest shall be repaid to the bond issuer which levied the tax from the first available designated portion of local option sales and services tax collections received in excess of the requirement for the payment of the principal and interest of the bonds and when repaid shall be applied in reduction of prop- erty taxes. The amount of bonds which may be issued under section 76.3 shall be the amount which could be retired from the actual collections of the designated portions of the local option sales and services tax for the last four calendar quarters, as certified by the director of revenue and finance. The amount of tax revenues pledged jointly by other cities or counties may be considered for the purpose of determining the amount of bonds which may be issued. If the local option sales and services tax has been in effect for less than four calendar quarters, the tax collected within the shorter period may be adjusted to project the collections of the designated portion for the full year for the purpose of deter- mining the amount of the bonds which may be issued. The provisions of this section con- stitute separate authorization for the issuance of bonds and shall prevail in the event of conflict with any other provision of the Code limiting the amount of bonds which may be issued or the source of payment of the bonds. Bonds issued under this section shall not limit or restrict the authority of the bond issuer to issue bonds under other provisions of the Code.

5. A city or county, jointly with one or more other political subdivisions as provided in chapter 28E, may pledge irrevocably any amount derived from the designated portions of the revenues of the local option sales and services tax to the support or payment of bonds of an issuer, issued for one or more purposes set forth on the ballot proposition concerning the imposition of the local option sales and services tax or a political subdivision may apply the proceeds of its bonds to the support of any such purpose.

6. Bonds issued pursuant to this section shall not constitute an indebtedness within the meaning of any constitutional or statutory debt limitation or restriction, and shall not be subject to the provisions of any other law or charter relating to the authorization, issuance, or sale of bonds. Bonds issued pursuant to this section are declared to be issued for an essential public and governmental purpose. Bonds issued pursuant to this section shall be authorized by resolution of the governing body and may be issued in one or more series and shall bear the date or dates, be payable on demand or mature at the time or times, bear interest at the rate or rates not exceeding that permitted by chapter 7 4A, be in the denomi- nation or denominations, be in the form, have the rank or priority, be executed in the manner, be payable in the medium of payment, at the place or places, be subject to the terms of redemption, with or without premium, be secured in the manner, and have the other characteristics, as may be provided by the resolution authorizing their issuance. The bonds may be sold at public or private sale at a price as may be determined by the govern- ing body.

Sec. 8. EFFECTIVE DATE. This Act, being deemed of immediate importance, takes effect upon enactment.

Sec. 9. RETROACTIVE APPUCABIU1Y DATE. This Act applies retroactively to lo- cal option sales and services taxes approved on or after July 1, 1994. Statutory procedures required for local option sales and services tax elections held on or after July 1, 1994, and before the effective date of this Act shall be deemed to fulfill the notice, proceedings, and election requirements contained in section 7 of this Act.

Approved May 22, 1995