Legislative Democrats begin to craft a fiscal 2011 budget

DES MOINES – Legislative Democrats began to assemble a fiscal 2011 budget plan Wednesday that matches Gov. Chet Culver's proposed education increases but goes deeper into reserves to balance the ledger.

Overall, Senate Majority Leader Mike Gronstal said he expects next year's general fund budget to be slightly below current revised levels. Plans call for funding K-12 education increases at the governor's level but using a slightly different approach to achieve similar goals.

At the same time, majority Democrats in the Legislature plan to use a share of the state's cash reserve to cover Medicaid costs rather than schools like Culver proposed, he said. They also probably will use roughly $300 million in one-time reserves to bridge slumping revenues and finance priority needs in the budget year beginning next July 1.

“We go into the cash reserve deeper than he does and, to be forthright, a little deeper than we're comfortable with,” Gronstal said – noting the governor sought to lower reserves to about $265 million while legislative Democrats dip closer to $200 million. He said lawmakers may cut deeper into tax credits or look for other ways to adjust that upward.

Majority-party leaders released fiscal 2011 budget targets for about half of the general fund spending – including more than $81 million in expected savings through government reorganization and Culver's executive order to streamline some operations.

The figure was significantly lower than the $341 million worth of savings that Culver built into his fiscal 2011 budget projections, But Gronstal noted the figure did not include up to $60 million expected to be saved via an early-retirement package and only dealt with savings to the general fund, not the bigger governmentwide projected savings.

The spending targets released Wednesday that budget subcommittees now will use to craft specific legislation based upon their priorities were nearly $261 million below current levels, but included a $172 million drop in health and human services spending that did not reflect the expected cash reserve infusion.

Top House and Senate Democrats said their budget targets were part of “a fiscally responsible plan to help middle-class families, small businesses and other Iowans recover from the national recession.”

“Democrats remain more committed than ever to balancing the budget without raising taxes, continuing to listen to Iowans, and creating more accountability in state government,” said Rep. Jo Oldson, D-Des Moines, chairwoman of the House Appropriations Committee. “We are crafting a responsible economic plan that includes spending less from the general fund next year than we did this year.”

Culver spokesman Troy Price issued a statement expressing confidence the governor and Democratic leaders will successfully reach a balanced budget in the coming weeks.

“Discussions have been productive and the governor is encouraged and determined to achieve a balanced budget as he has the last three years,” Price said in a statement. “The governor will continue to work with leadership in both chambers to craft a balanced budget without raising taxes on hardworking Iowans and continuing to protect Iowa's priorities.”

House GOP Leader Kraig Paulsen of Hiawatha said Republicans will not support a budget that spends more money than the state takes in while keeping the focus on limited government and responsible budgeting.

“These targets give the public an incomplete picture of the Democrats' spending plan,” he said. “However, based on what I've seen, it appears that legislative Democrats plan to carry forward Gov. Culver's property tax increases.”

Senate GOP Leader Paul McKinley of Chariton expressed dismay that the targets were given to Statehouse reporters before minority Republicans received them.

“It would seem to be a simple courtesy. It just demonstrates our complete lack of involvement in this process,” he said. “We'll have to pour over them and see what's there and I hope it's more in balance than the governor's proposal was.”

Sen. Steve Kettering, R-Lake View, ranking member of the Senate Appropriations Committee, said it appeared majority Democrats were hoping for more federal help beyond what's been projected. He added that some of the subcommittee numbers “look achievable,” but it was hard to judge without knowing the overall budget context.