On April 21, 2011, the Governor signed Senate File 209 into law. The most important element of that bill was the creation of the Taxpayers Trust Fund (TTF).
When House Republicans unveiled House File 45, the Taxpayers First Act, it contained a new Tax Relief Fund. The fund captured the entire ending balance from the previous year and required it be used for tax relief measures. Unfortunately this language was stripped out of HF 45 before it made its way to the Governor. Because of that, the language was added to SF 209, the tax coupling and supplemental bill.
In the final compromise with the Senate and Governor Branstad, the language directs the first $60 million in revenue above the original revenue estimate into the Taxpayers Trust Fund for tax relief measures.
Fiscal Year 2013 is the first year of the TTF. Under current revenue estimates, the fund is expected to have $46.2 million after the books close on FY 2012. If the March estimate were to go up by at least $14 million, the TTF would reach the limit of $60 million. This is likely to happen because actual revenue has been well above the REC estimate. If revenue growth continues to be strong due to the ag economy, it is likely the TTF will receive another $60 million after the books close on FY 2013.
There is no requirement that the money in the fund must be used. Therefore, if there is no agreement between the House, Senate and Governor on the use of the funds, the money will remain in the TTF. It should be noted however, that had this fund not been created last session, the money in the fund would be available to be spent instead of being specifically designated for tax relief.
House Republicans believe that the creation of the Taxpayers Trust Fund was the first step in giving taxpayers a seat at the table and that continued efforts to reduce the tax burden on hardworking Iowans is needed in order to create an environment that will lead to private sector job growth.