Iowa Legislature approved $554 million in state spending hikes for fiscal 2013

State still expected to end fiscal year with $647 million surplus

State lawmakers ended up authorizing $554 million in increased one-time and ongoing spending from the state’s general fund for the current fiscal year that ends June 30.

Action taken by the politically divided Legislature that precipitated the half-billion dollar jump spanned two legislative sessions and included about $275 million in one-time commitments from the surplus ending balance for pensions, education and a host of other projects and programs.

According to the nonpartisan Legislative Services Agency, about $215 million of the higher spending was enacted during the 2012 session and about $339 million in mostly one-time funding was approved in the 130-day session that concluded last month.

Final negotiations in the session’s closing days on more than $61 million in supplemental funds needed to finish out the state’s fiscal 2013 budget year resulted in a $6.289 billion spending plan that matched ongoing expenses with ongoing revenue to balance the ledger.

The split-control Legislature – where Republicans lead the Iowa House and Democrats guide the Iowa Senate – also authorized about $275 million in one-time spending for this fiscal year and beyond from the state’s surplus ending balance for things like bolstering the police and judicial retirement funds, school aid, water quality projects, regent universities, mental health stabilization and the Mitchellville women’s prison upgrade.

In the end, LSA budget projections show total general fund appropriations increased from nearly $6.013 billion in fiscal 2012 to nearly $6.567 billion this fiscal year – a year-to-year change that reflects a 9.2 percent rise in overall state expenditures pending action by Gov. Terry Branstad, who has item-veto power over budget bills. The governor expects to complete action on lawmakers’ 2013 work product by June 22.

Rep. Chuck Soderberg, R-LeMars, chairman of the House Appropriations Committee, said using the surplus funds for non-recurring, one-time needs was like taking excess money from the state’s savings account, versus the ongoing expenditures coming from the state’s checking account that must be balanced within the spending limitation law and not exceed ongoing revenue coming in.

“I guess it’s the way you look at it,” said Soderberg, who noted that the fiscal 2014 state budget estimates ongoing spending at $6.485 billion which would be a 3 percent increase over current funding but below the $6.567 billion total for fiscal 2013 that was inflated by the inclusion of the one-time money.

Even with the higher spending, the state is projected to end the current fiscal year with a $647.1 million surplus ending balance with the cash reserve and economic emergency at the statutorily required amounts of $622.4 million.

Sen. Bob Dvorsky, D-Coralville, chairman of the Senate Appropriations Committee, said the state’s surplus financial position provided an opportunity for lawmakers to provide the largest tax cut in state history and still address some one-time needs that will provide long-term savings in some areas.

“The last two fiscal years we’ve underfunded a lot of the operations of state government and had a lot of needs out there and a lot of them were one time and we were able to deal with them with this so-called surplus and that’s what we did,” he said.

Dvorsky noted the state is projected to end the current fiscal year with a $647 million ending balance even after committing $554 million to ongoing and one-time spending. He said “there’s going to have to be a big discussion” in the 2014 session about what to do with the state surplus going forward.

Some of that already was committed to tax relief in future years and Branstad indicated last week he expects to come with a proposed income tax reduction when he delivers his 2014 Condition of the State and budget message to the split-control Legislature next January.

Table courtesy of the Waterloo-Cedar Falls Courier

Table: Supplemental appropriations for fiscal year 2013

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