Iowa House, Senate expected to approve budget agreement

A House-Senate conference committee has signed off a supplemental budget plan to cover unpaid indigent defense costs and fund prison operations, human services and other programs until June 30.

Senate Appropriations Committee Chairman Joe Bolkcom, D-Iowa City, said he hoped the long-sought agreement will be “the beginning of a number of successful negotiations in the next week or so.”

House Appropriations Committee Chairman Scott Raecker, R-Urbandale, said he expected the conference committee report to be approved by “resounding” margins by both chambers yet this afternoon.

The House and Senate were slated to vote Monday on a tentative package that would provide $45.7 million in supplemental spending to cover unpaid indigent defense costs, prison costs and other state programs through June 30. The plan also would direct a one-time $20 million appropriation to county mental health funding to reduce a waiting list for services and would establish a July 2013 “sunset” whereby the current mental health services delivery system would be ended – a deadline designed to force policy makers to transition to a new revamped model.

House-Senate conferees also agreed to establish a taxpayers' trust fund that would capture up to $60 million annually from the state's general fund ending balance to be available for providing tax relief effective in the fiscal year that begins July 1, 2012. The Senate File 209 pact also included provisions to increase the earned income tax credit from 7 percent to 10 percent for about 240,000 working families making up to $45,000 annually and to provide bonus depreciation tax briefs for businesses that make equipment and machinery purchases.

Both appropriations chairmen were optimistic Gov. Terry Branstad will sign the bill, but the governor made no commitment Monday morning.

The special taxpayers' fund was not something he proposed but Branstad plans to accept it at the insistence of Republicans who control the Iowa House. He would not make the same commitment for the earned income tax credit increase that was sought by legislative Democrats who currently hold a 26-24 majority in the Iowa Senate.

“It wasn't something that I recommended but it's something we can live with,” Branstad said in discussing the new taxpayers' trust fund. “This is absolutely essential for their (House GOP) caucus and we want to work with them. We've reached an accommodation with them.”

Branstad said he was supportive of the provisions of SF 209 that would “resolve the budget mismanagement of last year” but he said he would weigh any tax issues in terms of their impact on job creation. Otherwise, he said “I have made it clear from the very beginning what my priorities are and what my standards will be. I've indicated my interest in working with them to try to work things out.”

“It sounds like he is reserving his right to make decisions,” Bolkcom said. “We worked in good faith with the governor's office. Our advice to him is sign it. Take the deal.”

“This is an excellent package of both tax relief, supplemental appropriations and long-term tax relief support. I would be hopeful that he would sign it,” Raecker said.

He does not anticipate that Branstad will veto any part of the bill.

“I think this is actually a very good piece of legislation for Iowans' benefit,” Raecker said.

If Branstad vetoes the Earned Income Tax Credit, or any other part, it may not bode well for reaching agreement on other parts of the budget, Bolkcom said.

“Frankly it would make kind of a rugged ending here,” Bolkcom said. “If he vetoes some of this, I think its' going to create kind of a challenging environment.”

Senate File 209 contained a mix of tax policy and spending issues that included nearly $46.7 million in supplemental funding – with $5.9 million for community colleges, $14.2 million for the state Department of Corrections, $18.6 million for the public defender and indigent defense programs, nearly $3 million to restore cuts to the Iowa State Patrol and public safety functions, $1.2 million for public health, and more than $2.6 million for mental health institutions with the state Department of Human Services.

The overall tax relief included in the package was $141 million not including the $60 million that eventually will flow each year into the newly created taxpayers' trust fund.

During the ongoing talks, legislative Republicans agreed to drop proposals to establish a minimum health insurance premium of $100 for all state employees and a prohibition on the state Department of Natural Resources purchasing land through the end of the current fiscal year while reducing Resource Enhancement and Protection (REAP) by a like amount.