DES MOINES — On the 99th day of a scheduled 100-day legislative session, the House Appropriations Committee on Monday released its $7.489 billion proposal for the fiscal 2019 budget that envisions a 3.2 percent spending increase.
The House Republican plan comes as talks continue on closing the differences on state income tax cuts among the House, Senate and Gov. Kim Reynolds — a key piece of the budget puzzle still unresolved.
“I’m confident that we’re going to get something done. It’s just a matter of working through the process, and we’re making progress,” Reynolds said at her weekly news conference.
The House budget plan is not an attempt to force the hand of Senate Republicans or the governor, according to House Appropriations Committee Chairman Pat Grassley, R-New Hartford.
“It’s just getting down to the point in the session that we need to get things moving,” he said Monday after releasing a budget plan that calls for a $235 million increase in spending. That’s based on the current revised $7.254 billion budget, which reflects a midyear cut of $25 million and a $10 million adjustment.
The $235 million increase includes the $32 million extra in state aid to schools and $2.9 million in school equity funds approved earlier this session. The House plan also calls for repaying $111 million borrowed from reserve funds to balance previous budgets.
Senate President Charles Schneider, R-West Des Moines, called it “a good thing” the House released its plan.
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“Once we reach final agreement, it will just mean we’ll be able to speed things along that much more quickly,” said Schneider, who also is chair of the Senate Appropriations Committee.
“We’re still having conversations with one another about where we’ll end up on targets. At the end of the day, I’m confident we’ll have an agreement on budget bills once they start passing through the chambers,” Schneider added.
For several weeks, Grassley has been reporting “productive negotiations” between House and Senate Republican leaders, but Senate Majority Leader Jack Whitver, R-Ankeny, said Monday “we don’t have joint targets yet.”
“We’re making progress,” Whitver added. “Hopefully, in the next few days, we can come to some agreement on taxes and then we’ll get moving on the budget.”
Grassley said the House can move forward on a budget plan while leaders work with the governor on tax changes.
In short, the House budget plan calls for increases of about $1.4 million for administration and regulation; $900,000 for agriculture and natural resources; $700,000 for economic development; $15.7 million for education; $72 million for health and human services; $16 million for justice systems and the judicial branch; and $128 million in state aid to schools and standing appropriations.
The plan calls for spending 98.1 percent of the $7.633 billion of revenue projected to be available in the budget year beginning July 1, Grassley said. It would leave a $149 million ending balance June 30, 2019.
Grassley defended not spending some of that to prevent tuition increases at the three state universities and on other priorities. Republicans instead want to avoid a third year of midyear budgets cuts if revenues do not meet expectations.
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“It’s easier to be responsible up front than having to come back through halfway through the year and having to do deappropriations,” he said.
Republicans insist they can cut taxes and also avoid a budget gap next year. The House, Senate and governor’s plans incorporate some of the same measures, but disagree on how much tax relief the state can afford and how it should be delivered.
Reynolds told reporters she does not plan to dictate which components of her recommended tax plan must be included in the final plan but stressed the need to eliminate federal deductibility to modernize and simplify Iowa’s tax code.
“What I said from the word ‘go’ is that I want to make sure that it’s comprehensive, it’s significant but it’s sustainable,” the governor said. “We want to make sure that we can sustain it and that we can still honor priorities like education and Medicaid. So it has to fit within that, but I think there is an opportunity to do both.”
Sen. Joe Bolkcom, D-Iowa City, ranking member of the Senate Appropriations Committee, doesn’t think state government could afford the GOP-envisioned tax cuts at this time given the economic conditions and state budget history.
“We just de-appropriated $35 million. This state is flat broke and the idea that we can give up several hundred million dollars of state revenue is irresponsible,” he said. “If we’re going to cut taxes and cut state revenue, I think the majority party has a responsibility to tell us where they’re going to make those cuts.”
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