State agencies face $52 million in spending cuts

Adjustments needed to erase projected budget shortfall

(File photo) The Iowa State Capitol building in Des Moines, photographed on Tuesday, June 10, 2014. (Liz Martin/The Gazette)
(File photo) The Iowa State Capitol building in Des Moines, photographed on Tuesday, June 10, 2014. (Liz Martin/The Gazette)

DES MOINES — Senate Republicans on Thursday proposed $52 million in spending cuts for the current fiscal year to address a projected revenue shortfall that will mean further belt-tightening for state universities and community colleges, Iowa courts and economic development efforts.

Sen. Charles Schneider, R-West Des Moines, chairman of the Senate Appropriations Committee, said the midyear adjustments would not affect K-12 schools, Medicaid or public safety programs, but would impact other budget areas being squeezed so the state will end the year June 30 with a $35 million cushion. Overall, the plan would cut spending by $52 million and scoop $7 million in unobligated economic growth funds, while supplementing nearly $2 million in utility and indigent defense costs and leaving untouched any state benefits from the federal tax cuts.

“We want to make sure that we’re being fiscally responsible with taxpayer money,” said Schneider in discussing proposed cuts that go deeper than Gov. Kim Reynolds has recommended but are fairly in line with levels advocated by majority Republicans in the Iowa House.

“We’re very close,” said House Speaker Linda Upmeyer. “We’re probably going to cut a little more than the governor.”

In her first state budget presentation last month, Reynolds proposed paring back current-year funding by $34.7 million via a mix of cuts and adjustments to erase a projected shortfall created by state revenues growing at a slower rate than projected. But legislative Republicans were looking at deeper spending cuts as they worked to balance the state ledger with five months left in the fiscal year.

“This is part of the process. This is how it works. I put my budget forward. We looked at everything. We thought this was the most fiscally responsible budget so we could still honor some of the commitments and fund some of the initiatives,” Reynolds said in an interview.

The governor sought to de-appropriate $19.4 million in selective cuts to various budget areas, while also making a $10 million adjustment in Medicaid spending and using about $11.2 million in revenue the state will gain when Iowans begin seeing lower federal wage withholdings in February that they will owe state tax on. She proposes plowing any future state gain from the federal tax changes into lower individual state income tax rates, eliminating federal deductibility and simplifying Iowa’s complicated tax system.

John McGlothlen / The Gazette

By contrast, the Senate de-appropriations bill to be considered later Thursday called for cutting higher education by $27.3 million, human services (excluding Medicaid) by $11.77 million, justice systems (excluding the Iowa State Patrol and law enforcement training academy) by $7.7 million and economic development programs by $1.12 million.

Sen. Joe Bolkcom, D-Iowa City, ranking member on the Senate Appropriations Committee, said college students likely would face tuition increases with an additional $19.2 million cut from at regent universities and $5.4 million from community colleges.

“The real news today is the Republican budget crisis has gotten worse in the last three weeks,” Bolkcom said. “When you have people who don’t like government running government, here’s what the results look like, and it’s not pretty.”

However, Senate Majority Leader Bill Dix, R-Shell Rock, said Senate Republicans for years had opposed state spending that outpaced growth by using surplus money that they contended was not sustainable and eventually would cause a day of budgetary reckoning that has now arrived.

“This is what it looks like. We’re going to fix that,” Dix said. “We want to make sure that we do this as quickly as possible, the sooner the better. It gives everybody more time to find a way to accommodate the services that Iowans expect and do it in a manner that gives Iowans a better deal.”

Reynolds administration officials had warned state agency directors last fall that midyear budget adjustments could be needed, so many have prepared for the likelihood of making additional spending cuts, Upmeyer noted.

“We were expecting it to come so we were not naive to this,” said Debi Durham, director of the state Economic Development Authority.

“For the last six months we’ve been figuring out how we could adjust to a new normal,” added Durham. “They keep expecting us to do more with less so I guess we’ll continue to deliver. We’ve been able to lean down the institution and we’ll continue to do it but we’ll have to prioritize.”

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