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[Author: Dave Adelman, Iowa Legislative Director, 05.2016 | Keywords: Transportation, Infrastructure, All-Terrain, Implements of Husbandry, Autocycle, Tax Coupling, Water Quality]

Traditionally with election year sessions, legislators tend to be risk-averse. However, the 2016 session of the Iowa General Assembly had a number of issues affecting Iowans and Iowa small businesses. Most notably discussed were education-funding, tax coupling with federal code, and an effort to improve water quality. Moreover, the Revenue Estimating Committee reported to the Legislature in March that they had to cut $46 million out of their overall budget number projected last December. This realization was bad news for any interest group wanting increased funding or hoping to create a new state program needing dollars.

The Legislature did find common ground on K-12 education funding by increasing the “per-pupil” amount spent by 2.25%. In addition, the Governor signed into law a bio-renewable chemical tax credit – a priority of his administration for the last three years.

Items specific to Iowa equipment dealers this year included:

Transportation & Infrastructure

Senate Study Bill 3051 was part of the Governor’s proposed budget plan. This study bill primarily focused on transportation and infrastructure and proposed using money raised from the road use tax fund and primary road fund to support the Department of Transportation. Some notable appropriations found in this bill for the road use tax fund included $1,406,000 “for automation, telecommunications, and related costs associated with county issuance of drivers licenses and vehicle registrations and titles;” $300,000 “for motor vehicle division field facility maintenance.” Appropriations in the primary road fund included operations ($41,252,919); highways ($249,013,967); inventory and equipment replacement ($5,366,000); and performance and technology ($3,184,459). The language was incorporated into the legislature’s transportation budget and was passed at the end of the session.

All-Terrain/Off-Road Utility Vehicles

House File 2098 bill would not require registration with the Department of Natural Resources for all-terrain vehicles and off-road utility vehicles primarily used as farm implements. Additionally, all-terrain vehicles that were property of the federal or state government (and subdivisions) would not need to be registered either. This bill did not make it out of the Natural Resources Committee.

Implements of Husbandry

House File 2356 amended Section 321.838, subsection 1, Code 2016. Originally, this portion of the
Iowa Code established that the movement of implements of husbandry on the roadway be subject to safety rules established by the Department of Transportation. This bill added an exception for implements of husbandry that can be towed in tandem and are not self-propelled. The Governor signed this bill into law March 23, 2016.


House File 2383/HF 2437 would provide a definition for an “autocycle.” An autocycle does not fit the definition of a motorcycle or motorized bicycle. Instead, it is a motor vehicle with two front wheels and one rear wheel with a steering wheel and at least one permanent seat. The foot pedals of this vehicle control the acceleration, brakes and clutch of the vehicle. In addition, this bill allows the owner of a vehicle salvaged in another state to trade that salvage certificate in for an Iowa salvage ticket and salvage theft examination certificate, as long as it’s executed within 30 days of the original salvage certificate. The language for an autocycle was defined and the bill passed the Senate on April 6, 2016.

Tax Coupling

The Iowa Legislature reached an agreement on tax coupling in HF 2433. This means portions of the Iowa tax code changed to match federal regulations. This agreement will prevent an estimated $95 million dollar tax increase for farmers, small business owners, teachers and others. The ultimate number of individuals impacted will be approximately 177,000 Iowans. The section 179 provision of this law allows farmers to expense equipment purchases up to $500,000 for the 2015 tax year. However, according to a number of CPAs, the wait on this bill delayed when a number of farmers could file their taxes since they had to determine whether they would be able to expense equipment up to that level. This bill passed the Senate with a vote of 50-0 and the House 79-18. The Governor signed this bill on March 21, 2016. Keep in mind that this is not a long-term solution since this tax coupling only impacts the 2015 tax year. There is currently no outlook for the 2016 tax year.

Water Quality

Hope is fading that the Iowa Legislature will reach an agreement on funding statewide water quality programs in the final days before the 2016 session adjourns. An Iowa Senate subcommittee approved a bill on April 14th that would raise the state sales tax by three-eighths of one cent and generate approximately $180 million starting next year. Almost 60 percent of that revenue would go toward cleaning up Iowa’s polluted waters. However, both Democrat and Republican Senators were quick to predict that a tax hike has virtually no chance of winning approval this year.

The focus on improving Iowa’s water quality sharpened in 2015 when Des Moines Water Works filed a federal lawsuit against drainage districts in three northwest Iowa counties. The lawsuit contends that the districts’ tile lines exacerbate pollution in drinking water by moving nutrients more quickly from farm fields to waterways, which cities like Des Moines must pay to remove.

State officials have said the water supplies of about 260 Iowa cities and towns are highly susceptible to contamination by nitrates and other pollutants. The state’s Nutrient Reduction Strategy, adopted in 2013, aims to reduce rural and urban nitrogen and phosphorous levels through a science- and technology-based framework.

A proposal by Gov. Terry Branstad to divert a portion of future sales tax revenue growth meant for school infrastructure toward programs to curb water pollution was rejected by the House. Instead, House Republicans have passed their own plan to generate nearly half a billion dollars for water quality efforts over 13 years by shifting money from state infrastructure projects and using revenue Iowans already pay on their water bills. On the other hand, the Senate has developed a plan to divert a portion of future state revenue surpluses to water quality initiatives, saying that estimates by the Legislative Services Agency show it would generate hundreds of millions of dollars over the next decade while avoiding a tax increase.

Once the Session adjourns, the focus will turn to the November election where control of the chambers hangs in the balance. The Iowa-Nebraska Equipment Dealers Association will track the elections and help elected officials who have championed our causes. Remember, it is important to be engaged in politics when determining the makeup of the legislature and throughout the legislative process as well.


About the Author

David Adelman

David has been lobbying on behalf of our Iowa members for four years. He feels that INEDA members have their pulse on the concerns, challenges and opportunities Iowans see in their communities and economy across the state and he takes pride in helping provide tools that can make their businesses thrive. Outside of work, David can be found coaching his three sons in multiple sports, traveling with his wife, playing golf and talking politics.