The 2014 session of the Iowa Legislature kept moving last week, as the Agriculture and Natural Resources Appropriations bill, known as HF 2458, was passed on April 2 by the Iowa House of Representatives. This bill provides funding for numerous programs for the Iowa Department of Agriculture and the Iowa Department of Natural Resources, and included again this year, is funding for voluntary practices necessary for the Iowa water quality initiative: the Iowa Nutrient Reduction Strategy.
The bill provides $4.4 million for FY 2015 for voluntary water quality initiatives as well as $4 million for the Veterinary Diagnostic Laboratory, $1 million for the Conservation Reserve Enhancement Program (CREP), $1 million for supplementing the Conservation Reserve Program (CRP), $900,000 for watershed protection, and $2.9 million for Iowa's water quality monitoring (that's just for the program, not farmer cost-share funding).
The Iowa Corn Growers Association supports the Iowa Department of Agriculture & Land Stewardship's voluntary water quality initiative and supports as much funding as possible for IDALS to implement the plan, says Mindy Larsen Poldberg, government affairs director for ICGA.
Total $43.1 million funding bill now goes to Senate
The total budget that the Iowa House approved for the state's ag and environmental agency operations totals $43.1 million. The spending plan now moves to the Senate for further consideration. House File 2458 funds the agriculture department as well as the natural resources department, and a handful of programs in other agencies.
The combined $43.1 million appropriation for the fiscal year that begins July 1 represents a $2.2 million increase or 5.4% over last year. The bulk of that increase will fund a water quality initiative within the ag department. The bill passed 71-27 last week in the House, after a lengthy debate.
Iowa Senate passes state Ethanol Tax Credit Bill
Also last week, the Iowa Senate passed SF 2344 (formerly SF 2333) which would extend and enhance the current state retailer tax credits for ethanol. SF 2344 would enhance the E15+ retailer tax credit by continuing the current rate of 3 cents per gallon from September 16 to May 31 and boosting the rate to 10 cents per gallon from June 1 to September 15. The higher summer rate is designed to offset the increased cost required by federal regulations for Iowa retailers to blend and sell E15 as a registered fuel during the summer months. An amendment to the original bill was passed by the Senate to extend the state retailer tax credits from the year 2017 to 2019. If no action is taken, the rate of this tax credit drops to 2 cents per gallon from 2015-2017.
The bill would also extend the biodiesel production tax credit for five years at the rate of 2 cents per gallon. If no action is taken, this tax credit expires at the end of 2014. The ICGA supports an extension of current income tax credits and fuel tax differential for ethanol and biodiesel, and ICGA is registered in support of SF 2344.
This bill also defines biobutanol in the Iowa Code. ICGA supports tax incentives for all types of ethanol at the state level. There is no federal subsidy or tax credit for ethanol; the federal ethanol blender's tax credit expired in December of 2011. The bill currently moving through the Iowa Legislature was approved by the Iowa Senate April 2 by a vote of 48-0 and now goes to the House Ways & Means Committee.
U.S. Senate Finance Committee passes Tax Credit Extension Bill
On Thursday, April 3, the U.S. Senate Finance Committee in Washington D.C., passed a two year extension of federal tax credits which expired in 2013. This legislation retroactively applies these credits from January 1, 2014, until December 31, 2015.
Specific to ag interests, this federal legislation includes:
1) An extension of bonus deprecation for qualified property purchased and placed in service before January 1, 2016.
2) An extension of Section 179, which allows a taxpayer to expense up to $500,000 immediately, with a dollar for dollar phase-out of the maximum deductible amount for purchases in excess of $2 million.
3) An extension of the $1 per gallon tax credit for biodiesel
4) An extension of the cellulosic biofuel production tax credit of $1.01 per gallon
5) An extension of the 30% investment tax credit for alternative vehicle refueling property which includes fuel pumps for ethanol, biodiesel, liquefied hydrogen, and compressed or liquefied natural gas
6) An extension of the wind energy production tax credit
An amendment to increase the barge user fee from 20 cents per gallon to 29 cents was withdrawn because it was not considered germane, says Poldberg. The Iowa Corn Growers Association supported this amendment and will continue to work for its inclusion in other pieces of legislation. The bill now awaits action from the full U.S. Senate. It is unclear when the House Ways and Means Committee might mark up their version of the tax extenders bill.