Branstad, lawmakers face tough budget decisions

DES MOINES - Gov. Terry Branstad and lawmakers starting state budget work got some positive news Monday when a February report showed a relatively good month for tax collections heading into a key meeting later this month of a state revenue estimating panel that could impact funding decisions.

Overall, state tax collections were up 12.9 percent last month, but Jeff Robinson, a tax analyst for the Legislative Services Agency, said timing issues and other factors impacted that figure and the growth was closer to 3.5 percent in year-to-year comparisons to February 2014.

Even so, Robinson said 'it was a good month,” and year-to-date growth in state tax receipts at 5.1 percent is close to the 6.8 percent yearly growth rate that the state Revenue Estimating Conference established last December.

The REC will meet again March 19 to decide whether to revise the estimates for this year or fiscal 2016, and any downward movement would negatively affect the state budget outlook.

'There's nothing new in this to worry about,” Robinson said of the February report that showed growth in personal income tax collections at 5.2 percent for the year and 5.4 percent for sales/use tax receipts.

A House-Senate conference committee is slated to meet today (Tuesday) to try to resolve an impasse over supplemental state aid to K-12 public schools for fiscal 2016. School districts face a March 15 deadline to certify budgets for the next school year and state negotiators are deadlocked with Branstad and House Republicans favoring a 1.25 percent increase while legislative Democrats want 4 percent growth.

'I believe my recommendations are reasonable and fair, considering the circumstances,” Branstad told reporters Monday. 'I think we have to be realistic and recognize the financial circumstances facing the state and the commitments we've made.”

Sen. Bob Dvorsky, D-Coralville, chairman of the Senate Appropriations Committee, said education has to be a top priority and suggested that previous spending commitments that are pinching budget numbers now could be 'staged” so the impact could be spread out over a longer period.

'Just the governor saying he can't do it isn't the answer. We are separate and equal branches,” Dvorsky said.

'We need to look at everything, and I mean everything - all of the commitments as well as the budget and all of that,” he added. 'We're going to have a real tough budget year and people should be looking at everything. I don't know why they would take anything off the table and not look at the commitments and look at everything else that's out there. That just makes sense policy wise and budget wise.”

Rep. Chuck Soderberg, R-LeMars, chairman of the House Appropriations Committee, said he did not think lawmakers could issue fiscal 2016 budget targets until after the REC meeting March 19 to avoid having to make downward adjustments if the revenue projections are lowered.

Soderberg said lawmakers currently only have about $200 million in new projected revenue to work with in the fiscal 2016 budget, while increased costs for Medicaid, commitments to property tax relief and education reform and the $100 million Republicans have targeted to K-12 schools far surpasses that total already.

'It's sure not getting easier,” said Soderberg, who also acknowledged that school districts are facing a dilemma with the state aid issue still unresolved heading into today's conference committee meeting.

'I guess that's a school board decision whether they use zero or whether they use the floor of 1.25 percent. That would be the question that they would have to struggle with,” he said.