Fiscal Note
Fiscal Services Division
HF 830 – Social Media, Censorship (LSB2352HV)
Staff Contact: Eric Richardson (515.281.6767) eric.richardson@legis.iowa.gov
Fiscal Note Version – New
Description
House File 830 relates to the ability of elected officials to access and utilize certain Internet
websites. The Bill creates new Iowa Code chapter 554E, and prohibits a technology company
from intentionally affecting the ability of an elected official to access or utilize numerous
technology company websites.
The Bill tasks the Iowa Department of Revenue (IDR) or the Iowa Economic Development
Authority (IEDA) to determine that a company violates Iowa Code chapter 554E, which shall
prohibit the company from receiving tax credits or other economic benefits from State or local
governmental entities until the State determines the company is no longer in violation of Iowa
Code chapter 554E.
The Bill requires the Department and the Authority to make available on their Internet sites a
system to allow elected officials to report potential violations of Iowa Code chapter 554E.
The Bill takes effect upon enactment and applies to tax credits and financial assistance
approved before, on, or after the effective date of the Bill that have not yet been claimed by a
company in violation of Iowa Code chapter 554E.
Background
The IEDA administers State tax credits, with a statutory cap of $155.0 million in FY 2021. The
IEDA has the authority through Iowa Code section 15.333 to award Investment Tax Credits.
Businesses may claim a tax credit on corporate, income, and insurance premium taxes equal to
a percentage of the new investments directly related to new jobs created or retained by a
project. Eligible investments include the cost of machinery and equipment purchased for use in
the operation of the business, the purchase price of real property and any buildings and
structures located on the property, the cost of improvements made to the property, and base
rent paid by a business to a third-party developer. Since 2007, the IEDA has awarded $45.7
million in Investment Tax Credits to four technology firms for four projects totaling $2.800 billion
in investments that involve 203 new and retained jobs. Most of these credits are from IEDA’s
High Quality Jobs Program (HQJP), which provides tax benefits to eligible companies that
create high-paying jobs and make capital investments. The HQJP has a statutory cap of $105.0
million per year to use in tax credits. In FY 2020, IEDA awarded $26.0 million in HQJP tax
credits to 24 projects. Tax credits can be claimed for five years in most cases.
The IEDA is also authorized to provide sales and use tax exemptions to eligible businesses,
including contractors and subcontractors on a project after construction is completed, as part of
the HQJP. In FY 2019, $28.3 million was claimed in State sales and use taxes, $24.6 million
due to the HQJP. Since 2007, the IEDA has awarded $84.1 million in sales and use tax
exemptions to three technology corporations for eight projects totaling $4.9 billion in
investments that involve 391 new and retained jobs. Sales and use tax exemptions to eligible
businesses can also affect the Local Option Sales Tax (LOST) in jurisdictions with local sales
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and use taxes.
Local governments also have the authority to award eligible businesses property tax credits and
economic incentives in conjunction with IEDA’s tax credit programs, including the HQJP. Since
2007, four technology companies have received full or partial property tax exemptions in
conjunction with IEDA’s tax credit programs for six projects totaling $2.700 billion. Tax-
increment financing (TIF) and infrastructure improvements have also been awarded by local
governments to technology corporations for five projects. Iowa Code section 427.1 allows
property tax exemptions for web search portal businesses and data center businesses. In 2020,
there was $766.9 million in assessed value derived from these exemptions.
Assessed property evaluations within a school district affect the amount of State General Fund
dollars sent to each school district. The State, by operation of the State School Foundation Aid
Formula, funds school districts up to 87.0% of total funding after a uniform levy of $5.40 is
assessed on all property within a district. Beyond 87.0%, an additional levy is assessed on all
property within a district to reach 100.0% of per pupil funding for a school district.
Assumptions
• There are no potential legal decisions over the next two years that would cause the State to
recoup any previously awarded benefits until FY 2024 at the earliest.
• The Legislative Services Agency (LSA) cannot assume the result of theoretical legal
proceedings. For purposes of this fiscal note, however, the LSA will illustrate the fiscal
impact if one taxpayer that has signed contracts with the State of Iowa and local government
jurisdictions, and has been operational in the State since 2019, is found in court to have
violated provisions of the Bill prohibiting online censorship.
• The Bill would lead to the revocation of tax credits provided under Iowa Code section
15.335B, including tax credits awarded through the HQJP, including both Investment Tax
Credits and Sales and Use Tax Refunds, beginning in FY 2024.
• Prospective Investment Tax Credit and sales tax impacts would occur beginning FY 2024,
and prospective property tax impacts would begin with assessment year (AY) 2024 and
would affect property tax revenues beginning with FY 2026.
• The estimated timing of fiscal impacts resulting from the revocation of unclaimed tax credits
that have already been allocated or awarded reflects the projected timing of awarded claims
under current law, according to Iowa Department of Revenue (IDR).
• Estimates of the currently exempt sales made nonexempt by the proposal are based on an
Iowa IDR analysis of sales reported as exempt by taxpayers assumed to be affected by the
proposal. It is assumed that the share of currently exempt sales tax authorized by Iowa
Code section 423.3(92), (93), and (95) and made nonexempt by the proposal is
proportionate among all affected taxpayers.
• Estimates of property tax impacts are based on the value of commercial property receiving
web/data exemptions under Iowa Code section 427.1(35), (36), and (37). The estimates are
from the IDR abstracts of assessment. The value of commercial property receiving
web/data exemptions was $766.9 million in AY 2020. This fiscal note assumes that 20.0%
of the value will be affected by the Bill.
• Estimated property tax impacts assume a levy rate of $37.21430 per $1,000 of taxable
valuation and a commercial rollback rate of 90.0%.
• Property tax impacts would reduce expenditures from the General Fund for per pupil
payments based on the School Aid Formula.
• Growth in estimated impacts arising from the elimination of sales tax exemptions and
property tax exemptions and rebates reflects 2.0% annual inflation.
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• Changes to corporate income tax and sales and use tax liability as a result of the proposal
are estimated to lead to General Fund revenue increases. Changes to sales and use tax
liability also affect LOST assessed at 1.0%. Changes to property tax liability are assumed to
decrease expenditures from the General Fund by operation of the State School Foundation
Aid Formula; otherwise such changes will lead to revenue increases for affected local
jurisdictions.
• The fiscal note does not include the potential secondary impact that may result from
extensive litigation of a large corporation, taxpayer, and/or employer.
Fiscal Impact
If one taxpayer is adversely affected through a legal decision, the Bill is estimated to increase
General Fund revenue by $6.6 million beginning in FY 2024 before dropping to a $3.8 million
increase in FY 2025, and remaining relatively stable through FY 2030. The Bill increases
revenue to local jurisdictions by $0.6 million beginning in FY 2024 before dropping to a
$0.2 million positive impact in FY 2025, increasing to $4.8 million in FY 2026, and increasing
slightly through FY 2030. Table 1 below outlines the estimated fiscal impact of the Bill on the
State General Fund and local government jurisdictions.
Table 1: Estimated Tax Impact of House File 830
Estimated Local Jurisdiction
Estimated General Fund Increases ($ Millions)
Increases ($ Millions)
Revocation Total
Change in Elimination of Local
of Tax Total Impact
Fiscal State School Sales and General Property Options
Credits on Local
Year Foundation Use Tax Fund Tax Sales Tax
Allocated or Jurisdictions
Aid Exemptions Impact (LOST)
Awarded
FY 2022 $ - $ - $ - $ - $ - $ - $ -
FY 2023 - - - - - - -
FY 2024 3.1 - 3.5 6.6 - 0.6 0.6
FY 2025 2.4 - 1.5 3.8 - 0.2 0.2
FY 2026 2.0 0.9 1.5 4.4 4.6 0.2 4.8
FY 2027 3.4 0.9 1.5 5.8 4.7 0.3 4.9
FY 2028 1.9 0.9 1.5 4.3 4.8 0.3 5.0
FY 2029 1.2 0.9 1.6 3.7 4.9 0.3 5.1
FY 2030 1.7 1.0 1.6 4.3 5.0 0.3 5.2
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Sources
Iowa Economic Development Authority
Iowa Department of Revenue
Legislative Services Agency
/s/ Holly M. Lyons
March 22, 2021
Doc ID 1217277
The fiscal note for this Bill was prepared pursuant to Joint Rule 17 and the Iowa Code. Data used in
developing this fiscal note is available from the Fiscal Services Division of the Legislative Services
Agency upon request.
www.legis.iowa.gov
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