Iowa lawmakers set state budget at $7.351 billion for next fiscal year

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DES MOINES — Top legislators said Thursday they have agreed that the size of the fiscal 2017 state budget will be $7.351 billion, a figure that will frame the negotiations on specific spending areas.

Rep. Pat Grassley, R-New Hartford, chairman of the House Appropriations Committee, said the spending target by House Republicans, Senate Democrats and Gov. Terry Branstad represents about $176.7 million in increased spending authority over the current state budget. However, he said lawmakers also are looking at supplementing current funding by about $70 million to cover a Medicaid shortfall and other spending needs.

“I would say for the most part all the pieces are pretty much in place so that we can get started on the budget,” Grassley said. “School funding, I think, is something that’s a big issue that’s hanging out there.

Leaders of the split-control Legislature said they expected an agreement on increased state aid to schools for next fiscal year should be hammered out and would move through the process next week. House Republicans favor a 2 percent increase, Branstad has proposed 2.45 percent and Senate Democrats support 4 percent, but expectations were negotiators would settle somewhere near the governor’s number.

“I think we’ll come together fairly quickly,” said Rep. Ron Jorgensen, R-Sioux City, chairman of the House Education Committee and co-leader of a House-Senate conference committee on the school funding issue. “My anticipation is we’ll have something next week.”

While K-12 schools will be in line for some of the revenue growth, he noted that higher education and justice system budget areas likely would share in some of the increased revenue beyond the initial House GOP targets.

The fiscal 2017 spending target included revenue adjustments, previously enacted commitments made for school reform and property tax relief, and an ending-balance transfer of about $45.5 million, according to a House GOP staff analysis.

Sen. Bob Dvorsky, D-Coralville, chairman of the Senate Appropriations Committee, said talks began Thursday on joint spending targets with much of the new money going to education and Medicaid funding. “We’re working away,” said Dvorsky, who was facing the task of shaving spending by about $58 million from the spending levels Senate Democrats initially proposed.

“Our overall target is now lower and we have to make adjustments as the law requires,” said Senate Majority Leader Mike Gronstal, D-Council Bluffs.

House Speaker Linda Upmeyer, R-Clear Lake, said she was confident Branstad would sign a compromise bill passed by both the House and Senate to address “coupling” of federal tax changes with Iowa’s income tax code and expand state sales tax exemptions for some “consumable” manufacturing inputs.

Upmeyer said she expected compromises would start to be hammered out with a K-12 funding resolution moving forward “without much fuss” next week.

After that, Grassley said he hoped budget work could proceed to resolution within a framework that could complete 2016 session work within the 100-day adjournment target of April 19.

“I sure hope so,” Grassley said, “we’ve got field work coming up with weather like this.”

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