Proposed legislationbudgetThe agenda

Pay As You Go Act

An Act relating to state fiscal matters, including a scorecard requiring new general fund spending to be offset, a payment required to keep the sales and use tax exemptions for data centers and web search portals, an Iowa future fund, the renewable fuel infrastructure fund, the offices of the governor and lieutenant governor, and the sports wagering receipts fund, making appropriations, and including effective date and applicability provisions.

Page one

The short version

What's broken, what the bill does, and what it costs, in plain English. If you read one thing, read this.

Every bill in this series has to answer one question: how do you pay for it? My answer is a law, not a promise.

This year's state budget spends about $1.2 billion more than Iowa expects to collect. The difference comes out of savings. I won't add to that. I'm an engineer, and you don't sign off on a design until the numbers close.

The rule. The Pay As You Go Act has the nonpartisan Legislative Services Agency keep a scorecard every year. Every bill in this agenda that adds new spending or a tax credit signs up. New spending goes on one side, the savings that pay for it on the other. If the savings come up short, the new spending gets trimmed. Money that shows up once can only pay for things that cost once. Borrowed money and reserves don't count.

Where the money comes from.

Vouchers. The OPEN Act limits vouchers to families earning up to about $99,000 for a family of four, then phases them out. That saves an estimated $151 million to $218 million in the limit's first year and $350 million to $459 million a year once vouchers end. It's set aside for the HELP Act, the PACE Act and Tools for Schools.
Data centers. Big data centers pay no sales tax on their equipment or power. Under this bill, a center keeps those breaks only by paying $10 a megawatt-hour on the power it buys, rising with inflation. Otherwise it pays sales tax like anyone else. Part of each payment goes into a new Iowa Future Fund that keeps its principal and pays the budget a share yearly. Zach Lahn, the Republican nominee for governor, says these companies should "pay your fair share." I agree. Until the state estimates it, I count it as zero. It's set aside for water, conservation and health care, like STREAM and CARE.
One-time money for one-time costs. The sports betting fund is projected to have about $31.6 million left. With the trims below, it pays for STREAM's conservation equipment loan fund, a year of FAIR Act money, CARE's first-year grants, and the DEED Act's fund for landowners' mineral rights and legal bills.
Small trims. Skip the $5 million fuel-pump grant deposit one more year. Roll the governor's office budget back to before it went up in 2023.

Does it add up? In 2027-28, about $37.2 million comes in and $35.5 million goes out, and the rest is a cushion. Then voucher savings most likely cover the three school bills. STREAM and CARE depend on the data center payments. The biggest unknown is inflation, because the PACE Act's school aid floor rises with prices.

That's the whole bill in brief. The rest of this page is the detail behind it, for anyone who wants to dig in.

See where it goes

Where the money for each bill comes from

How to read this Money starts on the left and flows right along the streams; the moving dots show which way. A thicker stream carries more. Point at or tap a box or a stream to see the amounts.

Ranges from our model, which anyone can re-run. In the first year only one-time money is booked, so only one-time costs are paid, and what's left stays in the general fund. The stream into STREAM and CARE shows what those bills cost, not money we've counted. It has to come from the data center payments, which count as zero here until the state estimates them, or from voucher savings the school bills don't use. If neither covers it, the scorecard trims those bills. The data center payments are set aside for water, soil conservation and health care bills like STREAM and CARE, and the first payments aren't due until the second budget year.

The same numbers, side by side

First budget year

Loan fund, a year of FAIR Act money, CARE awards and training, and the DEED Act fundOne-time money to STREAM loan fund, a year of FAIR Act money, CARE first-year grants and the DEED Act fund (one time)
$35.5 million

Voucher limit starts

The three school billsVoucher savings (OPEN Act) to HELP, PACE and Tools for Schools
$92 million to $234 million
STREAM and CARE, trimmed if neither source covers themData center payments (not counted yet) or voucher savings the school bills don't use to STREAM yearly parts and CARE
$69 million to $122 million

Vouchers ended

The three school billsVoucher savings (OPEN Act) to HELP, PACE and Tools for Schools
$202 million to $509 million
STREAM and CARE, trimmed if neither source covers themData center payments (not counted yet) or voucher savings the school bills don't use to STREAM yearly parts and CARE
$76 million to $124 million

The analysis

What it costs, and what we don't know yet

For anyone who wants the costs and the tradeoffs. Every figure is a range where the future is uncertain, and every one links back to where it came from.

The math

What it costs and who pays

This bill doesn't spend money. It brings money in, and it sets the rule that every bill in the agenda adding new spending or a tax credit signs up to live under.

What it brings in:

The sports betting balance. About $31.6 million, the Legislative Services Agency's estimate of what will sit unappropriated in the sports wagering receipts fund on June 30, 2027. The agency calls its receipts for that year illustrative, so the real number won't be known until that day, and lawmakers could spend some of it first in the session that starts in January 2027. One time only.
The fuel-pump grant deposit. $5 million, for the budget year that starts July 1, 2027, and that year only.
The governor's office. About $550,000, the difference between this year's general office appropriation, $2,864,932, and $2,315,344, what the office got in each of the three budget years before the increase. The bill sets that one year's appropriation. Keeping it there takes the same choice in each later budget. Because current law sets no appropriation for that year yet, the Legislative Services Agency might not score this as a saving at all; the first year still balances without it.
The data center payments. Unknown. A center that pays keeps its breaks, so what comes in is the payments, plus sales tax from any center that chooses not to pay. Nobody has estimated either. The Department of Revenue already has the number it would take: the electricity each center reports buying each year. The first payments are due January 31, 2029, on power bought in 2028, so none land in the first budget year. Until the Legislative Services Agency or the Department of Revenue estimates them, the tables below count them as zero.

Running the scorecard is staff work for the Legislative Services Agency, which already writes a fiscal note for every bill. We haven't estimated that cost.

The ledger below puts every bill in the agenda on one page: what it costs in each budget year our model checks, which money pays for it, and what happens if that money comes up short.

Who pays for what, bill by bill

One-time money
Voucher savings
Data center payments
Leftover voucher savings

Bill	First budget yearFrom July 1, 2027	Second budget yearFrom July 1, 2028	After the last vouchersFrom July 1, 2031	If the money comes up short
Bills that cost money
HELP ActArea Education Agency services	Waits for the voucher savings	$34 million to $36 millionVoucher savings	$36 million to $39 millionVoucher savings	Trimmed by the same share as the other two school bills
PACE ActSchool aid that keeps up with prices	Waits for the voucher savings	$52 million to $194 millionVoucher savings	$159 million to $468 millionVoucher savings	Trimmed by the same share as the other two school bills
Tools for SchoolsShop and career classes, for four years	Waits for the voucher savings	$5 millionVoucher savings	$5 millionVoucher savings	Trimmed by the same share as the other two school bills
STREAM ActWater quality and conservation	$20 millionThe loan fund, onceOne-time money	$37 million to $88 millionWetlands, water testing and the per-acre paymentsData center paymentsLeftover voucher savings	$37 million to $88 millionWetlands, water testing and the per-acre paymentsData center paymentsLeftover voucher savings	The loan fund is trimmed if the one-time money comes in low. The yearly parts are trimmed if data center money and leftover voucher savings don't cover them
FAIR ActFair farm markets and local meat processing	$6 millionOne year of moneyOne-time money	Nothing new	Nothing new	Trimmed if the one-time money comes in low
CARE ActRural clinics, ambulances and hospitals	$8 millionRural awards and training grants, onceOne-time money	$22 million to $43 millionThe payment floor, EMS workforce grants and county ambulance grantsData center paymentsLeftover voucher savings	$31 million to $44 millionThe payment floor, EMS workforce grants and county ambulance grantsData center paymentsLeftover voucher savings	The first year's grants are trimmed if the one-time money comes in low. The rest is trimmed if data center money and leftover voucher savings don't cover it
DEED ActMineral rights for landowners	$1.5 millionThe restitution fund, onceOne-time money	Nothing new	Nothing new	Trimmed if the one-time money comes in low, and every legal fee claim is cut by the same share
Bills that bring the money in
OPEN ActLimits school vouchers, then phases them out	No savings yet	$151 million to $218 millionVoucher savings	$350 million to $459 millionVoucher savings	If the savings come in low, the school bills are trimmed to match
Pay As You Go ActThe scorecard, the data center payment and the one-time money	about $37.2 millionSports betting balance, fuel-pump grant skip and governor's office trimOne-time money	Not counted until the state estimates itData center payments	Not counted until the state estimates itData center payments	If the sports betting balance comes in low, the one-time costs are trimmed
Bills off the scorecard
LABOR ActBargaining rights for public workers	Spends no state money directly. Any added payroll cost is covered in the budget like any other.			Nothing for the scorecard to trim
FUEL ActA farm diversification fund for after the fuel credits end	Costs the general fund nothing new. Starting the second budget year, it splits the yearly fuel-pump grant deposit between the new fund and testing fuel at the pump.			Nothing for the scorecard to trim
RAISE ActThe minimum wage	Spends no state money directly. What a higher minimum costs state and local governments, as employers and through state contracts and Medicaid payments for care workers, hasn't been estimated. That cost is unknown, not zero.			Nothing for the scorecard to trim

Ranges come from our model and from each bill's own. The model's ranges cover nine in ten of its runs. They don't add up down a column, because a costly year for one bill isn't always a costly year for another. The year-by-year chart below has the totals.

Year by year

Our model, published with the bill, checks three budget years. It books the voucher savings from the OPEN Act's own model, draw for draw, and the cost of each bill from that bill's own model or its fixed amounts. It books nothing from the data center payments.

Budget year	Money in	Bills paid for	Left over
First year (from July 1, 2027)	about $37.2 million, all of it one-time: the sports betting balance, the fuel-pump grant skip and the governor's office trim	$35.5 million, all one-time: the STREAM loan fund, a year of FAIR Act money, the CARE Act's one-year rural awards and training grants, and the DEED Act's one-time fund to help landowners buy mineral rights sold at tax sale and repay their legal bills	about $1.7 million, kept as a cushion in case the sports betting balance comes in lower
From July 1, 2028, the voucher limit's first year	$151 million to $218 million in voucher savings	$92 million to $234 million for HELP, PACE and Tools for Schools. $69 million to $122 million more for STREAM's yearly parts and CARE	After the school bills: anywhere from $59 million short to $105 million to spare. After everything: anywhere from $158 million short to $15 million to spare
From July 1, 2031, after the last vouchers	$350 million to $459 million in voucher savings	$202 million to $509 million for HELP, PACE and Tools for Schools. $76 million to $124 million for STREAM and CARE	After the school bills: anywhere from $122 million short to $217 million to spare. After everything: anywhere from $224 million short to $118 million to spare

Read the last column this way. In 2028-29 the voucher savings cover the three school bills in most of the model's runs, but not all of them. STREAM and CARE need the data center payments, up to $114 million of them in all but the worst twentieth of the runs, or they start smaller. Once vouchers end, the savings again cover the school bills in most runs, and in fewer than half the runs they cover STREAM and CARE too. Where they don't, the data center payments have to fill STREAM and CARE's share of the gap, up to $118 million in all but the worst twentieth of the runs, or those bills get trimmed. Where there's money left over, it stays in the general fund and shrinks the gap between what Iowa spends and what it collects.

Two years aren't in the table: the school year that starts in July 2029, and the one after. In those years fewer vouchers are renewed, so the savings climb, and the PACE floor's cost climbs too. The scorecard checks every year, including those two.

The two charts below show the same years as bars, and how often the voucher savings cover the bills across every future the model ran.

Money in and money out, year by year

One-time money
Voucher savings
Data center payments
Leftover voucher savings

Every bar starts at zero and all of them share one scale, across every year. A hatched band is a range that covers nine in ten of the model's runs. A dashed, empty track is money we haven't counted, not money that isn't there.

First budget yearFrom July 1, 2027

Money in

Sports betting balance, fuel-pump grant skip and governor's office trim
about $37.2 million

Money out

The STREAM loan fund, a year of FAIR Act money, CARE's first-year grants and the DEED Act fund
$35.5 million

Left over, kept as a cushion: about $1.7 million

Second budget yearFrom July 1, 2028

Money in

Voucher savings
$151 million to $218 million
Data center payments
Not counted yet

Money out

HELP, PACE and Tools for Schools
$92 million to $234 million
STREAM's yearly parts and CARE
$69 million to $122 million

After the school bills: anywhere from $59 million short to $105 million to spare
After every bill: anywhere from $158 million short to $15 million to spare

After the last vouchersFrom July 1, 2031

Money in

Voucher savings
$350 million to $459 million
Data center payments
Not counted yet

Money out

HELP, PACE and Tools for Schools
$202 million to $509 million
STREAM's yearly parts and CARE
$76 million to $124 million

After the school bills: anywhere from $122 million short to $217 million to spare
After every bill: anywhere from $224 million short to $118 million to spare

Money out is colored by the money set aside to pay it. STREAM and CARE are drawn at what they cost, not at money we've counted. They're paid from the data center payments, which count as zero until the state estimates them, or from voucher savings the school bills don't use. No data center payment is due in the first budget year.

How often the voucher savings cover the bills

Second budget year

HELP, PACE and Tools for SchoolsAbout 7 in 1072 percent
Those three plus STREAM and CAREAbout 1 in 1010 percent

After the last vouchers

HELP, PACE and Tools for SchoolsAbout 7 in 1069 percent
Those three plus STREAM and CAREAbout 3 in 1033 percent

Each bar is the share of the futures we modeled in which voucher savings alone pay the whole cost, with nothing trimmed. Data center payments count as zero here. They go first to STREAM and CARE, so once the state estimates them, the second bar in each year can only grow.

What starts when

A bill the scorecard can't pay for in a given year is trimmed, down to nothing if no savings are counted against it. So the start dates in each bill's own text give way to this schedule:

July 2027: the STREAM Act's loan fund, a year of FAIR Act money, the CARE Act's one-year rural awards and training grants, and the DEED Act's one-time fund to help landowners buy mineral rights sold at tax sale and repay their legal bills, all one-time costs paid with one-time money. No data center payment lands this year: the first ones are due January 31, 2029.
July 2028: the HELP Act, the PACE Act and Tools for Schools, paid with the voucher savings the OPEN Act sets aside for them. STREAM's yearly parts and the rest of the CARE Act (the payment floor, the EMS workforce grants and the county ambulance grants), as far as the data center payments set aside for them, and any voucher savings the school bills don't use, reach.

That means the HELP Act's fix for the AEAs and the PACE Act's floor wait a year past the dates in their own text, and Tools for Schools now runs its four years from July 2028. We'd rather the school bills didn't wait. Starting them sooner would take recurring savings estimated by July 2027, and the only candidate, the data center money, is set aside for water, soil conservation and health care, and its first payments don't come until January 31, 2029.

The biggest swing: inflation

The PACE Act sets school aid growth no lower than the rise in prices the year before. When prices rise faster than lawmakers would have raised school aid anyway, that costs money, and each year's difference stays in the base. Here we let prices rise anywhere from 2 percent to 3.7 percent a year, and we let the raise lawmakers would have given anyway vary the same way the OPEN Act's model does. The PACE Act then costs $52 million to $194 million in 2028-29, its first year under this schedule, and $159 million to $468 million by school year 2031-32, its fixed programs included. That range is most of the uncertainty in the table. If prices run hot for years while lawmakers would have held school aid flat, the PACE floor alone could use up most of the voucher savings, and the scorecard would trim it.

How the scorecard works

A bill joins the scorecard by saying so. Every bill in this agenda that adds new spending or a tax credit says it's subject to the scorecard: the HELP Act, the PACE Act, Tools for Schools, and the STREAM, FAIR, CARE and DEED Acts. Three bills in the agenda don't. The LABOR Act, the labor bill, appropriates nothing and creates no tax credit, so the scorecard has nothing to trim. Any payroll cost would come through contracts in the regular budget. The RAISE Act, the minimum wage bill, is off too: it sets a wage for employers to pay and appropriates nothing. Cities, counties and schools pay any raise it means for their own workers from their own budgets, and the bill doesn't let them opt out. As for the FUEL Act, it moves an appropriation state law already makes each year, for fuel-pump grants, to a new use, so it adds no new general fund cost. The OPEN Act and this bill say they're offsetting Acts, the ones that bring the savings. The regular budget and the yearly school aid bill aren't on it unless lawmakers put them there.

After each session, the Legislative Services Agency lists each covered bill's cost to the general fund, including the cost of any tax credit, and each offsetting bill's savings. It uses its own fiscal notes, updated to the latest revenue estimate. Three rules decide what can pay for what:

Money that shows up once, like the sports betting balance, can only pay for a cost that happens once, like the STREAM loan fund.
Savings a bill sets aside go first to the costs they're set aside for. The OPEN Act sets its voucher savings aside for the costs of appropriations for school districts, AEAs and the Department of Education's elementary and secondary programs. This bill sets the data center money aside for water quality, soil conservation and health care: the budget's share of each payment, the Iowa Future Fund's yearly draw, and sales tax from any center that doesn't pay. In this agenda that means STREAM, CARE and the FAIR Act's grazing fence and water cost-share. The FAIR Act's money is paid from the first year's one-time money anyway, so after the first year the data center money goes to STREAM and CARE.
A transfer out of the state's reserve funds or the Taxpayer Relief Fund doesn't count as a saving, and neither does borrowed money.

If a covered bill's costs for a year aren't met, the Department of Management trims it, by the same percentage as every other covered bill in that spot, until they are. A tax credit is trimmed the same way. It can only trim what a covered bill added. A program that existed before doesn't get cut to pay for a new one.

Here's what a trim looks like in one lean year from our model, after the last vouchers.

After the last vouchers · From July 1, 2031

A lean year, worked through

One run from the low end of the model: only 10,000 of its 200,000 runs came out worse for the school bills.

Voucher savings that year: $417 million
What HELP, PACE and Tools for Schools would cost: $539 million
Short by: $122 million

So the scorecard trims each school bill by about 23 percent

HELP ActWould cost $37 millionGets $29 million
PACE ActWould cost $497 millionGets $385 million
Tools for SchoolsWould cost $5 millionGets $4 million

STREAM's yearly parts and CARE would cost $110 million

Voucher savings left over for them: none. So they wait on the data center payments. Until the state estimates those, the scorecard holds STREAM and CARE back that year.

In this run the voucher savings landed inside their usual range. What made the year lean was the PACE Act's floor: prices rose faster than lawmakers would have raised school aid anyway. That's why PACE costs more here than the top of its range in the ledger above: the ledger's ranges cover nine in ten runs, and this is one of the leanest. Amounts are rounded to the nearest million, so they may not add exactly.

The data center break

Iowa exempts from sales tax the computers, cooling systems, power equipment, racks and cabling a data center or web search portal buys, if it invests at least $200 million within six years and meets the other terms in section 423.3. It also exempts their electricity and backup generator fuel: with no end date for centers running before June 6, 2025, and for ten or fifteen years for newer buildings. The law sets no job count and no wage floor. The state's schedule for reviewing tax breaks (section 2.48) doesn't list it.

This bill doesn't repeal any of that. Starting in 2028, a center keeps all of those breaks at a location for a year only if it pays $10 for each megawatt-hour of electricity bought for that location that year. It pays the next January, with the annual report these centers already file with the Department of Revenue, Form 78-014, which asks for the kilowatt-hours bought at each location. The bill writes that report into the law for each location, adds the megawatt-hours to it, and has the department issue each location its own exemption certificate, good for a year from the start of February. The next certificate waits until the report is filed and the payment is in, so a center that pays late has no breaks until it pays. A new location gets its first certificate when it registers. Each location stands on its own, and a related company buying for a web search portal's site uses that site's certificate.

The power counted is what the electric meter shows. A center that leases space and gets its power through its landlord counts the power on the landlord's meter for its space. If the landlord doesn't meter that space separately, the tenant counts its share of the building's metered power, split by the computer power capacity each tenant contracted for, as the landlord certifies. Either way, a tenant can't keep the breaks for free because someone else pays the power bill.

New sites. A center pays on the power it buys in the same year, so a brand-new center's first payment comes the January after its first year running, on that year's power. A site still being built that buys no power owes nothing while it's built. But if it then skips the payment for either of its first two years running, it owes the sales tax on everything it bought tax-free while it was being built, from 2028 on, plus interest. Skipping a later year's payment costs that year's breaks, and the next year's certificate waits until the tax owed is paid. The equipment break during construction is part of the bargain, and reaching back over two years keeps a center from paying for a tiny first year and then walking away with it. A center that pays two years and then stops still keeps its construction break. That's a gap we'd accept: by then it has paid in, and it loses its breaks every year it doesn't pay.

When the power break has run out. A newer center's power break ends after ten or fifteen years. After that it pays sales tax on its power, and that tax goes to the energy loan fund, as described below. It still owes the payment on the same power if it wants to keep the equipment break. That's on purpose: the payment is the price of the equipment break too, and that break is large. If centers whose power break has ended start dropping the payment, what we'd do instead is charge them a lower rate.

The rate rises each year with prices, by the federal consumer price index the Bureau of Labor Statistics publishes, and the bill spells that out in its own words instead of borrowing a definition from the income tax law. The rate never goes down.

It's a choice, not a tax. A center can skip the payment, give up the breaks for that location that year, and pay sales tax like any other business. The bill says so in plain words, and there's no penalty or interest on a payment nobody has to make. The department can audit the power a center reports. A center that claims the breaks during a year and then doesn't pay gets sixty days after notice, and then owes the sales tax it skipped that year, with interest, and for its first two years running the tax from the years it was being built too. The department has three years from the payment's due date to bill that tax. A center that underpays gets sixty days after notice to pay the rest with interest, or it's treated the same as a center that didn't pay. Reports and payments are as confidential as tax returns, and the department publishes yearly totals without naming anyone.

Where the money goes. For power bought in 2028, 75 percent of each payment goes to the general fund, set aside through the scorecard for water quality, soil conservation and health care, and 25 percent goes to the new Iowa Future Fund. The budget's share drops by five percentage points a year until it's half, for power bought in 2033 and after.

The Iowa Future Fund. It sits with the state treasurer. It never spends its principal, meaning everything paid into it. Starting July 1, 2029, it sends the general fund 4 percent a year of its average value over the last five years, or fewer years while the fund is new, set aside for the same uses, but never so much that it drops below what was put in. It can pay the cost of investing and auditing it, only out of what it has earned above that, and the state auditor checks it every year. Nothing else can come out of it under this bill.

Where each data center payment goes, by the year the power was bought

The state budget, set aside for water, conservation and health care
The Iowa Future Fund

202875 percent25 percent
202970 percent30 percent
203065 percent35 percent
203160 percent40 percent
203255 percent45 percent
203350 percent50 percent

January 1, 2028Power bought from this day on counts toward the payment
January 31, 2029First payments due, with the yearly report
July 1, 2029The fund's first yearly payment to the budget
2033The split reaches half and half, for power bought this year and after

Payment per megawatt-hour in the first year, then rising with prices: $10
What the fund pays the budget each year, as a share of its average value: 4 percent
Years in that average, fewer while the fund is new: five

Shares, not dollars. Nobody has estimated what the payments would bring in, so this page counts them as zero until the state does. The fund never spends what was paid into it.

For now it has to invest the way the treasurer invests other state money, under section 12B.10: mostly federal bonds, insured deposits and short-term notes, and never common stocks. The Iowa Constitution says the state can't become a stockholder in any corporation, and we didn't find a court ruling or Attorney General opinion on whether a state fund that buys stocks crosses that line. So we wrote a short companion joint resolution to amend the constitution. It would protect everything paid into the fund from being spent except by the yearly draw and the fund's own investing and audit costs, paid from earnings, and let the fund buy stocks. Under the Iowa Constitution, an amendment has to pass two general assemblies in a row, with an election in between, and then the voters. If lawmakers pass it in 2027, and the next legislature passes it again in 2029, voters would most likely decide it at the general election in 2030. The fund doesn't wait for it: the law starts it with the first payments.

The tax already earmarked. Under a law passed in 2025, when a newer center's ten- or fifteen-year electricity break runs out, the sales tax it starts paying goes to the energy infrastructure revolving loan fund (sections 423.2A and 423.43, and section 476.46A), not the general fund. This bill leaves that alone. Sales tax a center pays only because it skipped the payment goes to the general fund and is set aside like the payments. Tax it would have owed anyway, because its time ran out, still goes to the energy loan fund. That keeps the energy fund whole and keeps a center's choice from shifting tax from one fund to another.

Who backs the idea. Zach Lahn, the Republican nominee for governor, said data center companies should "pay your fair share," and Radio Iowa reported he might support a state law forbidding tax breaks for data centers. His own example was property tax abatements; this bill puts a price on a sales tax break. Rob Sand, the Democratic nominee, has promised to end these breaks. This bill keeps them for centers that pay, for the reasons below.

Sales tax collected from a center that doesn't pay also sends a share to school infrastructure and to local option sales taxes, the way all sales tax does.

The smaller trims

The fuel-pump grant deposit. Iowa law puts $5 million a year from the general fund into the fund that pays for higher-ethanol and biodiesel pumps at gas stations. Lawmakers already set that deposit at zero for this budget year, in Senate File 2484, which the governor signed. This bill does the same thing for one more year, using the same words. After that, the FUEL Act, another bill in this agenda, sends most of that yearly money to a new Iowa ag diversification fund for new crop markets and pasture, and the rest to motor fuel inspection. So under the full agenda, the pump fund gets no new general fund deposit. It keeps whatever balance it has. We didn't find a published figure for that balance.

The governor's office. The general office appropriation went from $2,315,344 to $2,810,502 in the budget lawmakers passed in 2023, and to $2,864,932 the year after. This bill sets it back to $2,315,344 for the first budget year. The law setting the governor's own salary was last changed in 2005. It's $130,000, and this bill doesn't touch it.

The sports betting balance. The law says the fund's money is used "as directed by the general assembly." This bill directs the balance left on June 30, 2027, to the general fund. The money that comes in after that keeps paying the standing amount for public safety equipment, and the top-up to the fund for volunteer firefighter and EMS service awards.

What we left out, and why

Ending the ethanol and biodiesel credits. They already end on January 1, 2028, under current law. "Sunsetting" them saves nothing the law doesn't already save. A bill to extend the biodiesel credit passed the House this year. What we'd do instead is let the credits end on schedule and oppose any extension.
Cutting the governor's salary. The law setting it was last changed in 2005. The increase was to the office's budget, which this bill rolls back.
Capping cabinet directors' pay. Much of that pay comes from federal money and fees, not the general fund, so it wouldn't help balance the budget. It's a fair question about who sets that pay, but it's a different bill.
The Taxpayer Relief Fund. State law lets that money go only to tax relief and to cover part of a budget shortfall. Spending it on new programs would mean changing that law, and drawing down a reserve to pay for something new is what this bill exists to stop.

Open questions

What we don't know yet

I can't say what the data center payments would bring in. Nobody has published a measured total of the electricity Iowa's data centers use. The estimates that exist are modeled. The Department of Revenue has each center's figure from the yearly reports and says it may release totals without naming anyone. Asking for that total is the first step. It's growing as new centers come online, and centers could also decide not to pay, or build elsewhere. A fiscal note from the Legislative Services Agency would settle it, and the scorecard won't count a dollar until there is one.

The newest state estimate I found of what these breaks cost is $128.2 million a year, for tax year 2020. It's six years old and assumes nobody changes what they buy. It's also mostly or entirely the equipment break: the Department of Revenue didn't estimate the data center electricity break separately. It counted it inside a statewide line for power and fuel used in processing. So it isn't what this bill raises, and it isn't the cost of the breaks plus the electricity. It's useful only to show the equipment break is large.

The payment counts electricity bought for a center, including power a landlord buys and meters for a tenant. Power a center makes for itself is only described, roughly, on the yearly report, so it isn't in the payment. If centers start making much of their own power, I'd ask the department to require metered reports of it and add it.

I didn't find a data center in our four counties. That is a failed search, not a confirmed absence. I also didn't find a list of registered data centers published by the Department of Revenue.

The voucher savings are measured against what the Legislative Services Agency projects vouchers would cost under current law. If that projection is off, the savings are too.

The table doesn't count the voucher money left in student accounts when the program ends. The OPEN Act returns it to the general fund in 2031, but nobody knows how much will be there.

Who gives something up

The tradeoffs

Paying centers keep the equipment break. It's a large break, and a center that pays keeps it. So this bill gives up a repeal, which might bring in more each year if it ever passed, for something smaller that I think is steadier: a payment that grows with inflation and with the power these centers use, and a fund that keeps paying after the buildings are done. If the payments turn out small next to the breaks, what I'd do instead is raise the rate. It's one number in the law.

Any center can say no. A center that would rather pay sales tax can drop the payment, and if the big ones do, the fund grows slowly. The budget isn't hurt: that sales tax is set aside for the same uses. What I'd do then is send part of that sales tax into the fund too.

Nobody else does it this way. I didn't find a state that makes a data center pay into a fund to keep a sales tax break. That's a failed search, not proof none exists, but it means this is untested. The closest is Virginia. In 2026, its budget began taxing data center electricity at $11 a megawatt-hour for two years, on top of every other tax, and it isn't the price of keeping a break. Before filing, I'd have the Legislature's lawyers check the bill, and I'd read the state's job-incentive agreements with these companies for any promise about sales tax.

Lawmakers of both parties voted for these data center breaks last year. House File 976 passed the House 84 to 0 and the Senate 45 to 0 in 2025. It extended the breaks to leased data centers, and it also put time limits on the electricity and fuel breaks for new buildings. A straight repeal would be a hard vote to win, and that's one reason this bill keeps the breaks and puts a price on them instead. It still asks lawmakers to put a price on breaks they just extended. If it can't pass, what I'd do instead is ask for what the state's other business incentives already ask: keep the break only for projects that meet job and wage standards.

The fund plays it safe until voters act. Section 12B.10 puts safety of principal first and return third, and the draw stops before it touches what was put in, so in a year of low returns the fund pays the budget less. What I'd do instead of waiting: pass the joint resolution in the first session, so voters can decide it as soon as the constitution allows.

Stations lose the fuel-pump deposit. This bill skips the yearly general fund deposit in 2027-28. From July 2028, the FUEL Act moves most of that money to farm diversification and the rest to fuel inspection. The pump fund keeps whatever balance it has, and I didn't find a published figure for it, so grants from it depend on that balance and on anything lawmakers add. That's a real loss for a station that was counting on a grant. If lawmakers don't pass the FUEL Act, what I'd do instead is bring the deposit back starting in July 2028, and not skip it again without a vote.

The governor's office cut is small, and it's arguable. About $550,000 is a rounding error in a state budget, and the office's budget counted for inflation is about where it was a decade ago. The office has also billed other agencies for staff, which could wipe out the savings if it keeps doing so. I'm doing it because a budget that asks schools and farmers to wait should ask the same of the governor's office first. What would make it more than a gesture: requiring the office to report what it bills other agencies, so the cut can't just move to another line.

The scorecard could hold back my own bills. If the voucher savings and the data center payments come in low, or prices run hot, the trim lands on the HELP, PACE, STREAM and CARE Acts and Tools for Schools, and in the first year on the FAIR and DEED Acts too if the sports betting balance comes in low, not on anything that existed before. In some of the model's runs that happens even to the school bills. That's the cost of the rule. What I'd do instead of borrowing or dipping into reserves is find the next saving, and the right long-term answer is to fund our schools, our water and our rural hospitals properly in the regular budget so a scorecard never has to choose between them.

One subject. Iowa's constitution allows one subject per bill. This bill touches a tax exemption, three funds and an office appropriation. I've titled it as state fiscal matters, a subject lawmakers use for budget bills, but a drafter could split it into separate bills that pass together.

The draft text

The draft bill language

For legislators, reporters and anyone who wants the legal wording. This is our draft, written the way Iowa bills are written, so you can see exactly what we mean. If I'm elected, the Legislature's nonpartisan drafting office, the Legislative Services Agency, writes the version that gets filed, and the wording will change. Page one and the costs above are the commitment.

Read the draft bill language

Proposed legislation

A BILL FOR

BE IT ENACTED BY THE GENERAL ASSEMBLY OF THE STATE OF IOWA:

Section 1. NEW SECTION. Pay-as-you-go scorecard. This section joins chapter 8.

1. For purposes of this section, unless the context otherwise requires:
a. “Cost” means an increase in expenditures from the general fund of the state, or a decrease in receipts to the general fund of the state from a tax credit, for a fiscal year, that the legislative services agency estimates will result from a covered Act.
b. “Covered Act” means an Act of the general assembly enacted on or after January 1, 2027, that states that it is subject to the pay-as-you-go scorecard.
c. “Dedicated saving” means a saving that the offsetting Act producing it dedicates to a class of costs of covered Acts described in that offsetting Act.
d. “Offsetting Act” means an Act of the general assembly enacted on or after January 1, 2027, that states that it is an offsetting Act under the pay-as-you-go scorecard.
e. “One-time” means a cost or saving that the legislative services agency estimates will occur in only one fiscal year.
f. “Saving” means a decrease in expenditures from, or an increase in receipts to, the general fund of the state for a fiscal year that the legislative services agency estimates will result from an offsetting Act. A saving does not include a transfer to the general fund of the state from the cash reserve fund, the Iowa economic emergency fund, or the taxpayer relief fund, or the proceeds of any borrowing.
2. The legislative services agency shall keep a scorecard for each fiscal year beginning on or after July 1, 2027. The scorecard shall list the cost of each covered Act and the saving of each offsetting Act for that fiscal year, showing one-time costs and savings and dedicated savings separately. The agency shall base each estimate on the final fiscal note for the Act, updated to the most recent estimate of the revenue estimating conference under section 8.22A.
3. A one-time saving may be counted only against a one-time cost.
4. A dedicated saving shall be counted first against the class of costs of covered Acts to which it is dedicated. Only the part of a dedicated saving that those costs do not use may be counted against other costs.
5. The legislative services agency shall publish the scorecard on its internet site within thirty days after the adjournment of each regular session of the general assembly, and shall update it within thirty days after each December estimate of the revenue estimating conference.
6. If the scorecard for a fiscal year shows that the costs of covered Acts are not met by the savings that may be counted against them under subsections 3 and 4, the department of management shall reduce those costs until they are met. The department shall apply this subsection separately to one-time costs and to other costs, and separately to the costs of each class of costs of covered Acts to which a saving is dedicated. A saving that is not dedicated, and the part of a dedicated saving released under subsection 4, shall be counted against unmet costs in proportion to those costs. Within each group, the department shall reduce each unmet cost, and each appropriation or credit making up that cost, by the same percentage. For a cost that is a decrease in receipts from a tax credit, the department of revenue shall reduce each credit allowed under the covered Act for the tax year whose credits the scorecard counted as that fiscal year’s cost, by the percentage the department of management certifies.
7. A reduction under this section applies only to the cost of a covered Act. This section does not authorize the department of management to reduce a cost below zero or to reduce any appropriation or tax credit that a covered Act did not create or increase.

Sec. 2. Section 423.3, Code 2026, is amended by adding the following new subsection:

NEW SUBSECTION. 111. a. For purposes of this subsection, unless the context otherwise requires:
(1) “Affiliate” and “control” mean the same as defined in subsection 92, paragraph “e”.
(2) “Business” means a web search portal business that claims an exemption under subsection 92 or 93, or a data center business that claims an exemption under subsection 95. A purchase for a location by an affiliate that claims an exemption under subsection 92, paragraph “c”, or subsection 93, paragraph “c”, is a purchase by the business for that location.
(3) “Certificate period” means the period from February 1 of a calendar year through January 31 of the following calendar year.
(4) “Exemptions” means the exemptions provided in paragraph “a” of subsections 92, 93, and 95, for computers and equipment, for backup power generation fuel, and for electricity.
(5) “Location” means a physical location in this state for which a business purchases property or electricity for which the exemptions are claimed. Buildings on contiguous land owned or leased by a business or its affiliates are one location. A location begins operating in the first calendar year for which its megawatt-hours are more than zero.
(6) “Megawatt-hours” means, for a location and a calendar year, the kilowatt-hours of electricity purchased in that calendar year for use at the location in the operation of the business’s web search portal or data center, divided by one thousand. Megawatt-hours include electricity purchased by the business, by its affiliate, or by a lessor that supplies the electricity to the business. Electricity is measured by the electric utility’s meter. Electricity a lessor supplies is measured by the lessor’s meter for the space the business leases or, if that space is not separately metered, is the electricity measured by the electric utility’s meter for the lessor’s building times the business’s share of the information technology power capacity that all tenants of the building have contracted for, as certified by the lessor. Megawatt-hours do not include electricity the business supplies to a lessee that files its own annual report under subsection 92, 93, or 95 for the space it leases. For purposes of this subsection, electricity is purchased on the last day of the billing period for which it is billed.
(7) “Payment rate” means $10 for each megawatt-hour for calendar year 2028. For each later calendar year, the payment rate is the payment rate for the preceding calendar year increased by the percentage, if any, by which the annual average of the consumer price index for all urban consumers, United States city average, all items, published by the bureau of labor statistics of the United States department of labor, for the preceding calendar year exceeds that annual average for the calendar year before that, with the resulting payment rate rounded to the nearest cent. If the bureau stops publishing that index, the payment rate for each later calendar year is the payment rate for the last calendar year for which the index was published. The payment rate for a calendar year shall not be less than the payment rate for the preceding calendar year. The department shall publish the payment rate for each calendar year on its internet site by March 1 of that calendar year.
b. A business may claim the exemptions for purchases for a location made on or after January 1, 2028, only under an exemption certificate for that location issued under paragraph “d” that is valid on the date of the purchase, and only on the condition that the business makes the Iowa future fund payment for that location for each calendar year in which it claims the exemptions for purchases for that location.
c. The Iowa future fund payment for a location for a calendar year in which a business claims the exemptions for purchases for that location equals the payment rate for that calendar year times the location’s megawatt-hours for that calendar year. The payment is due on or before January 31 of the following calendar year, with the annual report for that location.
d. (1) The department shall issue each exemption certificate for a location for a certificate period. A certificate is valid for purchases made from the first day of its certificate period, or from the date it is issued if that is later, through the last day of its certificate period. If a certificate is issued after the first day of its certificate period, the exemption for electricity under it applies only to electricity billed for a billing period that begins on or after the date it is issued.
(2) The department shall issue the certificate for a location for the certificate period that begins February 1 of a calendar year after the business files the annual report for that location due January 31 of that calendar year and pays the Iowa future fund payment for that location for the preceding calendar year, if one is due, or, if it did not pay it, the tax due under paragraph “e” for that location.
(3) For a location that has not been the subject of an annual report, the department shall issue the certificate when the business registers the location with the department. That certificate is valid from the date it is issued through the last day of the certificate period that includes that date.
(4) An exemption certificate issued to a business under subsection 92, 93, or 95, paragraph “b”, subparagraph (6), before January 1, 2028, is a certificate for each location of that business issued under this paragraph and is valid for purchases made through January 31, 2028.
e. If a business does not pay the Iowa future fund payment for a location for a calendar year by its due date, the department shall send the business notice. If the business does not pay it within sixty days after the date of the notice, all of the following apply:
(1) The exemptions do not apply to purchases for that location made during that calendar year.
(2) If that calendar year is the calendar year in which the location began operating or the calendar year after it, the exemptions also do not apply to purchases for that location made during any calendar year before the calendar year in which the location began operating, beginning on or after January 1, 2028.
(3) The business shall pay the sales and use tax that would have been due on the purchases described in subparagraphs (1) and (2) had the exemptions not been claimed, with interest under section 421.7 from the date the tax would have been due. The tax is due sixty days after the date of the department’s notice of the amount due, and if it is not paid by then, it is collected in the same manner as other delinquent sales and use taxes under this chapter and chapter 421.
(4) Notwithstanding section 423.37, the department may assess and determine the tax due under this paragraph within three years after the due date of the Iowa future fund payment that was not paid or, for a shortfall under paragraph “f”, within one year after the date of the notice of the shortfall, whichever is later.
f. The department may examine the records of a business and its affiliates to verify the megawatt-hours reported for a location. A business shall obtain and keep its lessor’s meter records, and any certification by its lessor under paragraph “a”, subparagraph (6), for electricity a lessor supplies to it. If the department determines, within three years after the due date of the Iowa future fund payment for a location for a calendar year, that the business paid less than the payment due, it shall send the business notice of the shortfall. If the business pays the shortfall, with interest under section 421.7 from the payment’s due date, within sixty days after the date of the notice, the payment is treated as paid when due. If it does not, paragraph “e”, subparagraphs (1) through (4), apply as if the payment had not been made, and the amount the business paid for that location for that calendar year is credited against the tax due.
g. This subsection does not impose a tax. A business is not required to make an Iowa future fund payment, and no penalty or interest applies to a payment that is not made. A business that does not make the payment for a location for a calendar year may not claim the exemptions for purchases for that location during that calendar year, and owes sales and use tax on those purchases as provided in paragraph “e”.
h. The annual report for a location, and information about a business’s Iowa future fund payments, are confidential in the same manner as returns and return information filed under this chapter.
i. The department shall deposit each Iowa future fund payment, and each shortfall and its interest paid under paragraph “f”, as follows: the general fund share for the calendar year for which the payment is made in the general fund of the state, and the remainder in the Iowa future fund. The general fund share is:
(1) For calendar year 2028, 75 percent.
(2) For each calendar year after 2028 and before 2033, the general fund share for the preceding calendar year reduced by five percentage points.
(3) For calendar year 2033 and each later calendar year, half.
j. Sales and use tax revenues collected because a business did not make a payment under this subsection, including tax due under paragraph “e”, shall be deposited in the general fund of the state and are not revenues attributable to the expiration of an exemption period for purposes of section 423.2A, subsection 2, paragraph “h”, or section 423.43, subsection 3. However, revenues that the business would have owed had it made the payment remain subject to those provisions.
k. By March 31 of each year, the department shall publish on its internet site, for the preceding calendar year, the number of locations for which payments were made, the total megawatt-hours on which they were made, the total of the payments, and the number of locations for which no payment was made. The department shall publish these figures only in the aggregate, and shall not publish a figure that would disclose information about an individual business.
l. The department shall adopt rules pursuant to chapter 17A to administer this subsection.

Sec. 3. Section 423.3, subsection 92, paragraph “b”, subparagraphs (5) and (6), Code 2026, are amended by striking the subparagraphs and inserting in lieu thereof the following:

(5) The web search portal business shall register with the department as a web search portal, and shall register with the department each location, as defined in subsection 111. To maintain its registration, the web search portal business shall file an annual report with the department for each location by January 31 of each year. The annual report for a location shall describe the backup power generation fuel and electricity purchased and used at that location in the previous calendar year for the purposes described in paragraph “a”, subparagraphs (2) and (3), shall state the location’s megawatt-hours, as defined in subsection 111, for the previous calendar year, and shall include any other information the department requires.

(6) When purchasing exempt property under paragraph “a” for a location, the web search portal business shall present to the retailer the exemption certificate for that location issued to the web search portal business under subsection 111, paragraph “d”. An affiliate claiming this exemption under paragraph “c” shall present the certificate issued to the web search portal business for the location for which the affiliate purchases the property. This exemption is subject to subsection 111.

Sec. 4. Section 423.3, subsection 93, paragraph “b”, subparagraphs (5) and (6), Code 2026, are amended by striking the subparagraphs and inserting in lieu thereof the following:

(5) The web search portal business shall register with the department as a web search portal business, and shall register with the department each location, as defined in subsection 111. To maintain its registration, the web search portal business shall file an annual report with the department for each location by January 31 of each year. The annual report for a location shall describe the backup power generation fuel and electricity purchased and used at that location in the previous calendar year for the purposes described in paragraph “a”, subparagraphs (2) and (3), shall state the location’s megawatt-hours, as defined in subsection 111, for the previous calendar year, and shall include any other information the department requires.

Sec. 5. Section 423.3, subsection 95, paragraph “b”, subparagraphs (5) and (6), Code 2026, are amended by striking the subparagraphs and inserting in lieu thereof the following:

(5) The data center business shall register with the department as a data center business, and shall register with the department each location, as defined in subsection 111. To maintain its registration, the data center business shall file an annual report with the department for each location by January 31 of each year. The annual report for a location shall describe the backup power generation fuel and electricity purchased for that location in the previous calendar year for the purposes described in paragraph “a”, subparagraphs (2) and (3), shall state the location’s megawatt-hours, as defined in subsection 111, for the previous calendar year, and shall include any other information the department requires.

(6) When purchasing exempt property under paragraph “a” for a location, the data center business shall present to the retailer the exemption certificate for that location issued to the data center business under subsection 111, paragraph “d”. This exemption is subject to subsection 111.

Sec. 6. NEW SECTION. Iowa future fund. This section joins chapter 12.

An Iowa future fund is created in the state treasury under the control of the treasurer of state. The fund consists of the Iowa future fund payments deposited in the fund under chapter 423, moneys appropriated or transferred to the fund, and the earnings on the fund.
The treasurer of state shall invest the moneys in the fund as provided in section 12B.10. Earnings on the fund shall be credited to the fund. Notwithstanding section 8.33, moneys in the fund that remain unencumbered or unobligated at the close of each fiscal year shall not revert but shall remain in the fund.
On July 1 of each fiscal year beginning on or after July 1, 2029, the treasurer of state shall transfer from the fund to the general fund of the state an amount equal to 4 percent of the average of the fund’s market value on June 30 of each of the five preceding fiscal years, or of each preceding fiscal year in which the fund held moneys, if fewer. A transfer shall not reduce the fund’s market value below the total of all moneys deposited in the fund other than its earnings.
The treasurer of state may pay from the fund the costs of investing the fund and of auditing it, but only to the extent the fund’s market value exceeds the total of all moneys deposited in the fund other than its earnings. The auditor of state shall audit the fund at least once each year.
Except for the transfer required by subsection 3 and the costs paid under subsection 4, moneys in the fund shall not be transferred, used, obligated, appropriated, or otherwise encumbered.
By October 1 of each year, the treasurer of state shall publish on the treasurer’s internet site the fund’s market value on the preceding June 30, the payments deposited in the fund, its earnings, the costs paid under subsection 4, and the transfer made under subsection 3, for the preceding fiscal year.

Sec. 7. STANDING APPROPRIATION —— FY 2027-2028. In lieu of the appropriation provided in section 159A.17, the appropriation for the fiscal year beginning July 1, 2027, and ending June 30, 2028, from the general fund of the state to the renewable fuel infrastructure fund created in section 159A.16 for the fiscal year is zero.

Sec. 8. GOVERNOR AND LIEUTENANT GOVERNOR —— APPROPRIATION. There is appropriated from the general fund of the state to the offices of the governor and the lieutenant governor for the fiscal year beginning July 1, 2027, and ending June 30, 2028, the following amount, or so much thereof as is necessary, to be used for the purposes designated, in lieu of any other appropriation from the general fund of the state for the general office for that fiscal year:

For the general office, for salaries, support, maintenance, and miscellaneous purposes, and for not more than the following full-time equivalent positions:

$2,315,344

FTEs 25.00

Sec. 9. SPORTS WAGERING RECEIPTS FUND —— TRANSFER. There is transferred from the sports wagering receipts fund created in section 8.57I to the general fund of the state for the fiscal year beginning July 1, 2027, and ending June 30, 2028, the unencumbered and unobligated balance in the sports wagering receipts fund on June 30, 2027.

Sec. 10. PAY-AS-YOU-GO SCORECARD. This Act is an offsetting Act under the pay-as-you-go scorecard. The savings of sections 2 and 6 of this Act, including the share of each Iowa future fund payment deposited in the general fund of the state, each transfer from the Iowa future fund to the general fund of the state, and sales and use tax revenues deposited in the general fund of the state under section 2 of this Act, are dedicated to the costs, under covered Acts, of appropriations for water quality, soil conservation, or health care.

Sec. 11. EFFECTIVE DATE. This Act, being deemed of immediate importance, takes effect upon enactment.

Sec. 12. APPLICABILITY. Section 1 of this Act applies to Acts enacted on or after January 1, 2027. Sections 2 through 5 of this Act apply to exemptions claimed for purchases made on or after January 1, 2028, and to annual reports due and exemption certificates issued on or after that date.

EXPLANATION

The inclusion of this explanation does not constitute agreement with the explanation’s substance by the members of the general assembly.

This bill relates to state fiscal matters.

PAY-AS-YOU-GO SCORECARD. The bill creates a new Code section in chapter 8 requiring the legislative services agency to keep a scorecard for each fiscal year beginning on or after July 1, 2027. It applies only to Acts enacted on or after January 1, 2027, that say they are subject to it (covered Acts) or that they offset its costs (offsetting Acts). The scorecard lists each covered Act’s estimated cost to the general fund, including the cost of a tax credit, and each offsetting Act’s estimated saving. A transfer from the state’s reserve funds or the taxpayer relief fund, or borrowed money, is not a saving. A saving that occurs in only one fiscal year may be counted only against a cost that occurs in only one fiscal year. An offsetting Act may dedicate its savings to a class of costs of covered Acts, and a dedicated saving is counted first against those costs. The agency publishes the scorecard after each regular session and updates it after each December revenue estimate. If covered Acts’ costs for a fiscal year are not met, the department of management reduces them until they are. It does so separately for one-time costs and other costs, and separately for each class of costs of covered Acts that savings are dedicated to. Savings that are not dedicated, and dedicated savings left over after the costs they're dedicated to, are shared among unmet costs in proportion to those costs, and within each group every unmet cost is reduced by the same percentage. A tax credit is reduced the same way, for the tax year whose credits were counted. A reduction reaches only the spending or credit a covered Act created or increased.

DATA CENTER AND WEB SEARCH PORTAL EXEMPTIONS. Under current law, a web search portal business or a data center business that meets the requirements of Code section 423.3 (exemptions) pays no sales or use tax on its computers and equipment, its backup power generation fuel, or its electricity, registers with the department of revenue, files an annual report on the electricity it bought the year before, and presents an exemption certificate the department issues each year after that report. The bill adds a new subsection to Code section 423.3. Beginning with calendar year 2028, a business may claim those exemptions for a location only under a certificate for that location, and only on the condition that it makes an Iowa future fund payment for that location for each calendar year in which it claims them. The payment is $10 per megawatt-hour of the electricity bought for use at that location that year, including electricity an affiliate or a landlord buys for it. A landlord’s electricity is measured by the landlord’s meter for the leased space or, if the space has no meter of its own, by the tenant’s share of the building’s metered electricity, based on the computer power capacity each tenant contracted for, as the landlord certifies. Electricity the business supplies to its own tenant that files its own report is not counted. The rate rises each later year by the prior year’s increase in the federal consumer price index for all urban consumers, and never goes down. The payment is due at the end of the following January, with the annual report. Each certificate runs for a year from the start of February, and the department issues the next one for a location after the business files that location’s report and makes its payment. A new location gets its first certificate when the business registers it. Certificates issued before 2028 stay valid through the end of January 2028. If a business does not pay within sixty days after notice, it loses the exemptions for that location for that year and pays the sales and use tax it did not pay, with interest. If the year it skipped is either of the first two years the location used electricity in operation, it also loses the exemptions for the years from 2028 on in which the location was being built. The department may determine that tax within three years after the payment was due, notwithstanding Code section 423.37 (limitation period). The department may audit the electricity reported, and a business must keep its landlord’s meter records and certifications. A business that underpays may pay the shortfall with interest within sixty days after notice, or it loses the exemptions for that year in the same way. The payment is not a tax and is not required, and no penalty or interest applies to a payment that is not made. Reports and payment information are confidential like tax returns, and the department publishes yearly totals in the aggregate. For payments for calendar year 2028, 75 percent goes to the general fund and the rest to the Iowa future fund. The general fund’s share falls by five percentage points for each later calendar year, to half for calendar year 2033 and after. Sales and use tax paid because a business did not make a payment stays in the general fund rather than going to the energy infrastructure revolving loan fund, except for tax the business would have owed anyway because an exemption period ended. The bill also strikes and rewrites the registration, annual report and certificate requirements in the three subsections of Code section 423.3 that grant these exemptions, so that a business registers each location, files a report for each location stating its megawatt-hours, and presents the certificate for the location where it buys, and so that an affiliate of a web search portal business uses that location’s certificate.

IOWA FUTURE FUND. The bill creates an Iowa future fund in chapter 12, under the treasurer of state, invested under Code section 12B.10. Beginning July 1, 2029, each year the treasurer transfers to the general fund 4 percent of the fund’s average market value over the prior five fiscal years, or fewer while the fund is new, but never so much that the fund falls below the total paid into it, not counting earnings. The fund may pay the costs of investing and auditing it, only out of value above that total. Nothing else may be taken from the fund. The auditor of state audits it each year, and the treasurer publishes the fund’s value, deposits, earnings, costs and transfer each year.

RENEWABLE FUEL INFRASTRUCTURE FUND. The bill sets the standing appropriation to the renewable fuel infrastructure fund under Code section 159A.17 at zero for the fiscal year beginning July 1, 2027, as Senate File 2484, enacted in 2026, did for the fiscal year before.

GOVERNOR AND LIEUTENANT GOVERNOR. The bill appropriates $2,315,344 for the general office of the governor and lieutenant governor for the fiscal year beginning July 1, 2027, in place of any other general fund appropriation for that office that year, the amount appropriated for that office for each fiscal year from July 1, 2020, through June 30, 2023.

SPORTS WAGERING RECEIPTS FUND. The bill transfers the balance left in the sports wagering receipts fund on June 30, 2027, to the general fund. Appropriations made from the fund’s receipts for later fiscal years, including the standing appropriation to the public safety equipment fund, are not affected.

The bill is an offsetting Act under the scorecard. The general fund’s share of the data center payments, the yearly transfer from the Iowa future fund, and sales and use tax paid by a business that does not make a payment are dedicated to the costs, under covered Acts, of appropriations for water quality, soil conservation or health care. The bill takes effect upon enactment. The scorecard applies to Acts enacted on or after January 1, 2027, and the data center payment applies to purchases made on or after January 1, 2028.

Sources

Where every number comes from

For anyone checking our work. Each figure with the site it came from and the day we checked it, and each law the bill cites.

Show every source

Figures

$1.2 billionThis year's state budget spends about $1.2 billion more than Iowa expects to collect.legis.iowa.govchecked 2026-10-01
$99,000Vouchers. The OPEN Act limits vouchers to families earning up to about $99,000 for a family of four, then phases them out.govinfo.govchecked 2026-09-27
$128.2 millionThe Department of Revenue's 2020 estimate of what the data center and web search portal sales tax exemptions cost the general fund in a year. It is mostly or entirely the equipment exemption: the department did not estimate the data center electricity exemption in it.revenue.iowa.govchecked 2026-10-02
$11 a megawatt-hourVirginia's 2026 tax on the electricity data centers use, per megawatt-hour.budget.lis.virginia.govchecked 2026-10-02
a stockholder in any corporationWhat the Iowa Constitution (article VIII, section 3) says the state may not become.legis.iowa.govchecked 2026-10-02
Form 78-014The Department of Revenue's annual report form for data centers and web search portals, which asks for the kilowatt-hours of electricity bought at each location.revenue.iowa.govchecked 2026-10-02
$200 millionThe minimum investment a data center must make in Iowa to get the sales tax exemption.legis.iowa.govchecked 2026-10-01
$31.6 millionOne-time money for one-time costs. The sports betting fund is projected to have about $31.6 million left.legis.iowa.govchecked 2026-10-01
$5 millionSmall trims. Skip the $5 million fuel-pump grant deposit one more year.legis.iowa.govchecked 2026-10-01
$550,000The yearly saving from setting the governor's general office back to its level before the 2023 increase.legis.iowa.govchecked 2026-10-01
$2,864,932This year's appropriation for the governor's and lieutenant governor's general office.legis.iowa.govchecked 2026-10-01
$2,810,502The governor's office. The general office appropriation went from $2,315,344 to $2,810,502 in the budget lawmakers passed in 2023, and to $2,864,932 the year after.legis.iowa.govchecked 2026-10-01
$130,000It's $130,000, and this bill doesn't touch it.legis.iowa.govchecked 2026-10-01
84 to 0The Iowa House vote on House File 976, the 2025 bill that extended the data center breaks.legis.iowa.govchecked 2026-10-01
45 to 0The Iowa Senate vote on House File 976.legis.iowa.govchecked 2026-10-01
pay your fair shareZach Lahn, the Republican nominee for governor, on data centers: "Pay your fair share."radioiowa.comchecked 2026-10-02
As governor, I will end these tax breaksRob Sand, the Democratic nominee for governor, on data center tax breaks.robsand.comchecked 2026-10-02

Laws cited

chapter 8Department of management, including the budget and financial control act. Section 1 of the bill joins it. legis.iowa.gov
8.22AThe revenue estimating conference, which estimates state revenue each December and spring.legis.iowa.gov
8.57IThe sports wagering receipts fund. Subsection 3(a): its money "shall be used as directed by the general assembly". Subsection 3(b): eight million dollars a year to the public safety equipment fund. Subsection 4: a top-up of the length of service award program grant fund to one million five hundred thousand dollars, repealed July 1, 2030. legis.iowa.gov
chapter 423Streamlined sales and use tax act. Section 2 of the bill adds a new subsection to section 423.3 in it.legis.iowa.gov
423.3Sales and use tax exemptions. Subsections 92 and 93 (web search portals) and 95 (data center businesses): paragraph "a", subparagraph (1) exempts computers, equipment and related cooling, power, racking and cabling infrastructure; subparagraphs (2) and (3) exempt backup power generation fuel and electricity, without limit for facilities operating before June 6, 2025, and for ten or fifteen years for new construction or additions after that date. Paragraph "b", subparagraph (5) requires an annual report to the department by each January 31 describing the backup fuel and electricity bought the year before, and subparagraph (6) an exemption certificate issued each year after that report. Both are written per business, not per location (re-read 2026-10-02); only DOR form 78-014 asks for a separate report per location. The bill (Secs. 3 to 5) strikes and rewrites (b)(5) and (b)(6) in each of 92, 93 and 95 so the report and the certificate are per location by statute. Paragraph "c" of 92 and 93 extends those two exemptions to affiliates, and paragraph "e" of each defines "affiliate" and "control" for that subsection only, so the bill's new subsection borrows them by reference. The last subsection in Code 2026 is 110, so the bill (Sec. 2) adds the payment as new subsection 111 (CONVENTIONS row 35: the next free number, which a 2026 Act not yet codified, or another bill, could take first; LSA renumbers on enactment). legis.iowa.gov
423.2ADeposit and transfer of sales tax revenues. Subsection 2, paragraph "h", added in 2025: from July 1, 2025, the sales tax revenue attributable to the expiration of the time-limited electricity and backup fuel exemptions for data centers and web search portals goes to the energy infrastructure revolving loan fund. legis.iowa.gov
423.43Deposit of use tax revenues. Subsection 3 sends use tax attributable to the expiration of the same time-limited exemptions to the energy infrastructure revolving loan fund. legis.iowa.gov
423.37Sales and use tax assessment and its limitation period. Subsection 1, paragraph "a": the department may "assess and determine the tax due" within three years after the return is filed. The bill lets the department assess the tax owed when a center skips a payment, notwithstanding this section, within three years after that payment was due, so tax on construction-year purchases is not cut off by the three years running from the returns for those years. legis.iowa.gov
476.46AThe energy infrastructure revolving loan fund, which lends for energy generation, transmission, storage and distribution projects.legis.iowa.gov
421.7The interest rate on interest-bearing obligations arising under Title X (the tax title, which includes chapter 423): two percentage points over the average prime rate for the twelve months ending September 30 of the year before. The bill charges this interest on sales tax owed when a center keeps the breaks for a year and then skips that year's payment, and on an underpayment a center cures within sixty days. It charges no interest on a payment that is never made. legis.iowa.gov
2.48Review of tax incentive programs. Subsection 3 lists the tax expenditures the departments must review and when. Re-read 2026-10-02: the list does not include the data center or web search portal exemptions in section 423.3, subsections 92, 93 and 95. The analysis's "the state's schedule for reviewing tax breaks doesn't list it" rests on this reading. legis.iowa.gov
chapter 421The department of revenue's general powers, including tax assessment, collection, penalties, interest and the confidentiality of returns.legis.iowa.gov
chapter 12The treasurer of state, who holds and invests state funds. Section 6 of the bill joins it.legis.iowa.gov
12B.10Public funds investment standards. Subsection 2: safety of principal comes first, then liquidity, then return. Subsection 4, paragraph "a": the treasurer may invest only in federal government obligations, insured deposits, short-term bankers' acceptances and commercial paper, repurchase agreements, money market funds, Iowa finance authority obligations, and the investments allowed IPERS under section 97B.7A "except that investment in common stocks is not permitted" (re-read 2026-10-02, round 4 NIT). Hence "mostly federal bonds, insured deposits and short-term notes, and never common stocks". legis.iowa.gov
8.33Unspent appropriations revert at the end of the fiscal year unless the law says otherwise. The Iowa future fund is exempted.legis.iowa.gov
chapter 17AThe Iowa administrative procedure act, under which the department of revenue adopts rules.legis.iowa.gov
159A.16The renewable fuel infrastructure fund, which pays for E15, E85 and biodiesel equipment grants.legis.iowa.gov
159A.17The standing appropriation of five million dollars a year from the general fund to the renewable fuel infrastructure fund.legis.iowa.gov
SF 24842026 enrolled bill. Division IV, Sec. 12 set the FY 2027 appropriation to the renewable fuel infrastructure fund at zero, in the words Sec. 7 of this bill repeats for FY 2028. legis.iowa.gov
HF 9762025 enrolled bill. Division XII extended the data center exemptions to leased data centers, limited the electricity and backup fuel exemptions to ten or fifteen years for new construction, and added the annual report and certificate. legis.iowa.gov