Some Iowa budget areas will get less state money next year

DES MOINES - Republican legislative leaders believe some budget areas will be getting less money for the fiscal year than begins July 1.

That's due to revised revenue projections that are forcing the governor and lawmakers to temporarily tap reserves to plug a shortfall and then repay the money over the next two years.

'We will be looking at budget reductions, absolutely,” said House Speaker Linda Upmeyer, R-Clear Lake. 'I suspect every budget will see reductions. I think that's inevitable when we're looking at taking at least $130 million out of the budget from what we had projected earlier.”

Downsized fiscal 2018 revenue growth projections - coupled with Iowa's expenditure limitation, the reserve 'backfill” - and other issues have significantly shaved the amount of new money legislators have to spend, given that the Legislature and Gov. Terry Branstad already have committed $40 million to K-12 schools and face more Medicaid demands, Upmeyer said.

'We need to keep everything on the table,” said Senate Majority Leader Bill Dix, R-Shell Rock. 'We can't continue to spread ourselves so thin. The state has had too broad of priorities, and we're making sure we're really focusing in on what Iowans want us to do.

'Bottom line, we're going to do as Iowa families do, and that is not spend more than what the state projections are revenues to come in,” Dix added.

Branstad is required to submit revisions to the two-year budget he proposed in January by next Wednesday, Upmeyer said.

After that she expects Republicans will issue spending targets and begin formulating budget plans for fiscal years 2018 and 2019.

Dix and Upmeyer said Republicans' agenda this year still includes a tax reform package that looks at simplifying and streamlining the state's income tax system.

But the House speaker conceded the state's financial situation has posed challenges.

'There's no doubt it is much more difficult to imagine how we would move forward with tax reform, perhaps tax cuts, in an environment where we've cutting budgets. We're just going to work through all of it,” she said. 'People will contemplate how this might be done and, when the opportunity arises, we will have some of the plans in place. There are still opportunities for reform I believe that could very well work anyway.”

Dix said tax reform is a key component of the effort to focus on growth, telling reporters 'we're not taking our eye off of sensible tax reform that puts Iowa in a better position to attract new investment to our state and keep high-paying jobs here.”

Senate Democratic Leader Rob Hogg of Cedar Rapids said he was 'very concerned that Iowans will be hurt by budget cuts that will be proposed by the Republican majority.”

The state, he said, is 'absolutely not” in a position to consider tax cuts that aren't affordable.

'We are very interested in tax reform that modernizes our tax code and helps spur our economy,” he said. 'I am not interested in big tax cuts in the guise of tax reform.

'The Branstad-Reynolds' Republican direction has gotten carried away with tax cuts, and that's why we're in the fiscal mess that we today,” he added. 'If they go down the route of cutting taxes more, that will make the budget

mess even worse.”

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