Iowa Gov. Branstad opens fiscal 2015 budget hearings

DES MOINES – Gov. Terry Branstad opened a new round of fiscal 2015 budget hearings Friday with a cautionary note to state agencies and legislators that the next round of spending talks won't be easy despite the state treasury's surplus position.

“We put together a five-year projection and we have made commitments for property tax relief and for our teacher leadership program. We've got to make sure that that is covered,” the governor said.

“We don't want to go back into the bad spending practices of the past. We're not going to let that happen,” Branstad added. “We're going to try to meet the needs of the state, but do it in a very fiscally responsible way.”

So far, so good, with department leaders for the Iowa Board of Parole, the Law Enforcement Training Academy, the Public Defender's office and Veterans Affairs each proposing status-quo spending for the fiscal year that begins next July 1.

However, David Roederer, director of the state Department of Management, noted that won't hold long because the state faces an extra $90 million match requirement in Medicaid funding for next fiscal year and Branstad said he wants to bump of funding for veterans' housing as part of a new Home Base Iowa effort to recruit military veterans to live in Iowa and to match them with available jobs.

Corn prices now about $4, last year in $7 range. Decide how that will affect the income of the agricultural sector.

“Every year, budgeting is a challenge and it should be a challenge because we're dealing with taxpayers' money,” said Roederer, who noted that Iowa's economy is improving given the unanticipated change in the Medicaid funding tied to income and other factors but that grain prices have slumped and other pressures are at play.

“The economy is still doing well. It's not doing as great as we'd like it to, but it's OK,” the state management director said.

State government closed its fiscal 2013 budget year with a $927.8 million surplus and the newly revised estimate for the current fiscal year projects  the state to post a $895.1 million ending balance next June 30 after cash reserves and emergency funds are full, according to the state Department of Management.

However, Branstad and the split-control Legislature are entering a new budgeting cycle where they have made multi-year commitments to reduce property and income tax burdens. They also promised a 4 percent boost in state aid along with money for education reforms and – items that were included in a fiscal 2015 “wish list” from state agencies that would boost current spending by 7.9 percent if fully funded.

Under Iowa's new biennial budgeting approach, state lawmakers left the Statehouse last May having locked in a fiscal 2015 spending plan that funds 87 percent of next fiscal year's government operations with $5.644 billion.

The departmental public hearings are slated to run through mid-December. Branstad said he and his staff won't finalize budget decisions under the state Revenue Estimating Conference meets Dec. 12 and he plans to present his fiscal 2015 spending plan to lawmakers will his Condition of the State address on Jan. 14.

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