History repeats at Iowa state capitol with standoff over spending

Members of the split-control Legislature appear ready to budget like it's 2011.

That was the year Republicans with a majority in the Iowa House and Democrats who led the Iowa Senate wrangled well past their deadline for adjournment over spending differences that pushed them to the brink of a potential state government shutdown before they reached agreement on June 30.

The dynamics of the current fiscal 2016 budget impasse are similar to the post-election session of four years ago. But much can change as spring unfolds at the Statehouse and - as opposed to the old expression - past performance is not an indication of future outcome.

At issue is what the state can afford and what is available to spend to avoid a recurring scenario in which the governor and Legislature make funding commitments, only to have to scale them back when tax collections fail to meet expectations.

Lawmakers head into a new biennium having appropriated nearly $6.483 billion in fiscal 2014 and $6.994 in the current fiscal year that runs through June 30.

State revenues have stabilized and are on the upswing after a period of uncertainty caused, in part, by federal tax changes and the way they affected state revenue due to Iowa's law that allows taxpayers to deduct their federal tax payments from their state income tax liability.

Revenue for state budgeting purposes totaled $6.769 billion in fiscal 2013. But then it dipped 4.1 percent, to $6.489 billion, in fiscal 2014 before rebounding to an expected $6.767 billion this fiscal year - which would be growth of 4.3 percent based on the latest Revenue Estimating Conference (REC) projections.

For the new budgeting year that legislators are addressing, state revenue is expected to grow by 6 percent to nearly $7.176 billion based on fiscal 2016 REC projections.

Figures compiled by the nonpartisan Legislative Services Agency (LSA) indicate the state treasury will close the current fiscal year with $696.4 million in its cash reserve and economic emergency fund, and have an ending general-fund balance of $352.3 million. That equates to a nearly $1.049 billion.

That is down from the peak of nearly $1.539 billion at the end of fiscal 2013, when the reserves stood at $611.1 million and the ending balance was $927.7 million. The surplus and reserve accounts for fiscal 2014 stood at nearly $1.477 billion.

Using Iowa's 99 percent spending limitation law and assumptions for built-in spending commitments and anticipated increases, LSA officials have determined Gov. Terry Branstad and the Legislature would have nearly $7.423 billion in available funds using the REC's tax collection estimate of nearly $7.176 billion and $319.1 million in excess carry-over of uncommitted revenue.

Branstad offered a budget plan in January that sought to spend $7.341 billion in fiscal 2016. That would be a 5 percent increase over current spending and would use $129 million of the state's carry-over surplus to balance the ledger while covering ongoing commitments to provide property tax relief and reform education.

Senate Democrats last week came out with fiscal 2016 spending targets that matched the Republican governor's budget framework. House Republicans have taken a position that they will not spend more than the $7.176 billion that is projected to be collected, so any funding increases for ongoing programs or money devoted to covering the 2013 commitments to property tax relief and education reform must come from the roughly $180 million in new revenue over existing appropriations.

That is the starting point for negotiations to come.