Iowa budget tops $8.1 billion in new fiscal year

DES MOINES — Republicans who control the Iowa Legislature are hailing their $8.119 billion state budget for the coming year as a conservative plan that meets needs in critical areas while maintaining a responsible approach to spending during an economically volatile pandemic.

The overtime 2021 legislative session produced a new state budget slated to boost overall spending by $290.7 million for the fiscal year beginning July 1.

The, 3.7 percent increase in spending includes $100 million for expanded broadband services in Iowa.

And it is $178.2 million below available revenue that could have been allocated under Iowa’s 99 percent expenditure limitation law.

The state treasury is slated to end this fiscal year June 30 with a $487.6 million surplus after lawmakers approved nearly $50 million in supplemental appropriations and adjustments before adjourning the 129-day session.

That surplus will be shaved to $385.8 million by June 2022 with the state’s reserve fund balances sitting at an estimated $817.9 million on top of the ending balance.

“We’re very happy with it,” Sen. Tim Kraayenbrink, R-Fort Dodge, chairman of the Senate Appropriations Committee, said of the compromise on tax and spending policy agreed upon by Republicans, who control the state Senate 32-18 and the House 59-41.

“There were things that we had to give, and they had to give, and that’s how it works,” Kraayenbrink said. “We really feel that overall it was fairly done. We probably went a little higher than we need to, but we felt really good about the outcome of the budget this year.”

Conservative approach

Iowa is getting billions of federal dollars to recover from the COVID-19 pandemic. But lawmakers chose to take a cautious approach as the state sorts through the requirements for using the one-time money for such areas as Medicaid, which may need to be supplemented with state money in future years.

“The approach has always been conservative spending and spend within our means,” Kraayenbrink said.

The Appropriations Committee chairman said legislators held back some money in the ending balance to cover any future needs as use of the federal relief money plays out.

But he felt state revenue projections look good and “now we’re looking at — with our fingers crossed — a great agricultural year for us, which we feel is going to put us in a better spot so we’re very optimistic” the budget will be able to support cuts in income and property taxes approved this month.

‘No new money’

Sen. Joe Bolkcom, D-Iowa City, ranking member of the Senate Appropriations Committee, said minority Democrats would have like to have seen more funding than the $20 million increase for corrections staffing, equipment and safety.

Democrats, he said, also wanted increased state investment in regent universities, water quality, pandemic recovery and replacing trees lost in the Aug. 10 derecho.

He also expressed concern about the future state takeover of funding for mental-health services and new priorities enacted without new money to support them.

“The universities got no new money,” he said. “It wasn’t because we don’t have money. It’s because the Republicans continue to punish the public universities. They don’t like these institutions.”

Iowa’s K-12 schools got a 2.4 percent funding increase for fiscal 2022, but another $26 million to help them cover pandemic-related costs fell victim to a GOP stalemate.

Kraayenbrink said K-12 funding needs will be a priority next session, but Bolkcom says the state’s commitment to education has lagged below the inflation rate for years.

“Stockpiling this money in the ending balance — their track record has been to turn around and make big tax cuts to wealthy Iowans with that money,” said Bolkcom. "It’s more likely going to end up as a tax cut to wealthy people as it is supporting local schools.”

Comments: (515) 243-7220; rod.boshart@thegazette.com