Bill Summary – FastDemocracy

Fiscal Note
                                        Fiscal Services Division
SF 394 – Sales Tax Exemption, Goods Purchased by Hotels (LSB2263XS)
Staff Contact: Maria Wagenhofer (515.281.5270) maria.wagenhofer@legis.iowa.gov
Fiscal Note Version – New
Description
Senate File 394 exempts lodging supplies sold to a lodging provider from sales and use tax if
the lodging supplies are consumed or used by customers.
The definition of “lodging supplies” includes toilet tissue, facial tissue, shampoo, conditioner,
complimentary toiletries, running water, electrical service provided to a guest room, bottled
water, towels, sheets, blankets, pillows, wrapped glasses, coffee cups, Internet service,
television service, pens, paper, phone service, and cleaning supplies.
Background
According to the Iowa Hotel and Lodging Association website, there are 714 hotel properties in
the State with more than 51,000 guest rooms.
According to the Energy Star Hotels: An Overview of Energy Use and Energy Efficiency
Opportunities report, hotels spend approximately $2,000 per available room each year on
energy costs.
Assumptions
• The Bill is effective July 1, 2023 (FY 2024).
• Based on Department of Revenue research, lodging supplies as defined in the Bill comprise
   approximately 10.0% of sales reported on tax returns by hotels and motels.
• Growth trends in future fiscal years are based on the Consumer Price Index (CPI-U) less
   food and energy average estimated increases of 2.0% from FY 2024 to FY 2028.
Fiscal Impact
Senate File 394 would reduce revenues to the General Fund, Secure an Advanced Vision for
Education (SAVE) Fund, and local option sales tax (LOST) by the estimated amounts listed
below.
                               Table 1 — Fiscal Impact of SF 394
                                             (in millions)
                             General Fund          SAVE                 LOST
                      2024   $        -6.0    $              -1.2   $          -1.2
                      2025            -6.1                   -1.2              -1.2
                      2026            -6.2                   -1.2              -1.2
                      2027            -6.4                   -1.3              -1.2
                      2028            -6.5                   -1.3              -1.3
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Source
Department of Revenue
                                                                               /s/ Jennifer Acton
                                                                                 April 13, 2023
Doc ID 1371678
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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Statutes affected: 
Introduced: 423.3