Reynolds defends budget-balancing action House GOP leader says 'spirit,' maybe not 'letter' of law was followed

State Rep. Pat Grassley, chairman of the Iowa House Appropriations Committee, speaks to reporters Thursday in Des Moines. The New Hartford Republican said he expects “a fairly difficult budget situation” in this year’s legislative session and expects lawmakers will have to cut $37 million from this year’s budget because tax revenues have not met expectations. (Photo by Rod Boshart/Gazette Des Moines Bureau)
State Rep. Pat Grassley, chairman of the Iowa House Appropriations Committee, speaks to reporters Thursday in Des Moines. The New Hartford Republican said he expects “a fairly difficult budget situation” in this year’s legislative session and expects lawmakers will have to cut $37 million from this year’s budget because tax revenues have not met expectations. (Photo by Rod Boshart/Gazette Des Moines Bureau)

DES MOINES — Gov. Kim Reynolds said Thursday she followed state law when she used emergency reserves to offset a fiscal 2017 budget shortfall, but a top legislative Republican framed the governor’s action as in line with the “spirit” but “perhaps not” the letter of the Iowa code.

“I feel that we operated within the intent of the law,” Reynolds told reporters during a forum sponsored by the Associated Press when asked about a $13 million transfer from an emergency reserve fund last September.

The money was used to balance the state’s budget, an action that is now the subject of a legal challenge by Rep. Chris Hall, D-Sioux City. In filing his lawsuit, Hall claimed the governor’s move was illegal and she should have called legislators back into special session to fix the budget.

Reynolds told reporters the state law dealing with withdrawals from the state’s economic emergency fund is “outdated” and she considered Hall’s lawsuit to be “election-year grandstanding.”

House Speaker Linda Upmeyer, R-Clear Lake, said she expects the GOP-run Legislature will consider updating the code section once the 2018 session convenes Monday.

“I do believe that Gov. Reynolds was entirely complying with the spirit of the law,” Upmeyer told reporters during a separate panel at the AP forum. She said the governor’s action “was, perhaps, not the letter of the law, so we will be happy to change that.”

During the discussion, House Democratic Leader Mark Smith of Marshalltown said the governor’s action constituted “an illegal transfer” that put legislators of both political parties “in a box” by acting on her own, adding that “the governor should not be above the law here.”

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The governor’s action was required due to state tax collections that did not meet growth expectations.

Rep. Pat Grassley, R-New Hartford, chairman of the House Appropriations Committee, said legislators are facing a similar problem again this fiscal year that will require at least $37 million in adjustments to balance the fiscal 2018 ledger by June 30.

Also, Grassley said the fiscal 2019 budget that lawmakers will assemble during the upcoming session will be “a fairly difficult budget situation,” given they have $214 million in new state revenue to work with but commitments and requests already well exceed that growth estimate.

“Every year putting a budget together should be a challenge. We shouldn’t come in here and think this is ever an easy project,” Grassley said during an afternoon news conference.

“While it’s going to be a difficult budget process, I don’t think that it’s something that’s overwhelming or should be overwhelming to the Legislature,” he said. “We’re just going to have to prioritize and make tough decisions.”

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