Iowa legislators ready to dig into budget process

DES MOINES - Iowa lawmakers are now in a position to set the size of their fiscal 2016 budget pie and to carve it up.

Leaders of the split-control Legislature got good news Thursday when a state revenue estimating panel made minor revisions to tax collection projections through June 2016. However, they said the fact that the nearly $7.176 billion the state is supposed to take in next fiscal year was slightly lower than previously projected did not significantly alter an already challenging tax for majority Republicans in the House and majority Democrats in the Senate.

'We knew it was going to be a tough budget going in and it remains so,” said Sen. Bob Dvorsky, D-Coralville, chairman of the Senate Appropriations Committee.

In discussing the state's revenue outlook, members of the Revenue Estimating Conference were cautious but optimistic about Iowa's economy, expressing concern about depressed farm income and sluggishness in some economic indicators, but bolstered by strong employment and lower energy costs.

'I think I see a lot of positive things,” said REC member David Underwood of Mason City, hopeful that some of the negative signs were 'just a real soft landing here before we take off again.”

Rep. Chuck Soderberg, R-LeMars, chairman of the House Appropriations Committee, said the REC changes shaved the money available for budgeting next fiscal year by $19.1 million.

'We'll take that and incorporate that into our budget targets now,” he said. 'We have the number. Now we can move forward. The December estimate was a challenge; now we'll just have to sharpen the pencils to get down to that ongoing revenue number.”

The first two tasks facing a Legislature, which that has been under divided control since 2011, is to establish an overall spending number for fiscal 2016 and then break an impasse over the level of state supplemental aid for K-12 schools - an issue that has vexed lawmakers all the way back to February 2014 when they failed to abide by a state law requiring forward funding of Iowa schools.

Gov. Terry Branstad and House Republicans have taken the position the state can afford a 1.25 percent increase for schools and still meet past commitments to property tax relief, education reform and Medicaid expansion and new cost increases to cover lost federal money and fund other priorities. Legislative Democrats want a 4 percent boost for K-12 schools and contend there is more money available for fiscal 2016 budgeting under the state's 99 percent spending limitation than House Republicans are willing to accept.

Branstad opened the fiscal 2016 budget process in January by offering a $7.3 billion budget plan that sought to raise overall spending by about 5 percent and use $129 million of the state's surplus to balance the ledger. The yearly boost was needed to fund priority increases and cover past commitments made to provide property tax relief and implement K-12 education reforms, the governor said.

The governor's budget called for boosting state supplemental aid to K-12 schools by $50 million, or 1.25 percent, in fiscal 2016 and $100 million, or 2.45 percent, in fiscal 2017 along with money needed to fund early childhood and teacher leadership/education reform initiatives.

Dvorsky said he expected lawmakers to establish fiscal 2016 spending targets soon and expected a House-Senate conference committee on the K-12 issue would be reconvened in hopes of getting budget decisions moving.

Gronstal said he did not know how long it would take to negotiate budget agreements this session, but he did not anticipate a replay of the 2011 session when lawmakers didn't finalize a budget plan until June 30.

'I do think we have gotten better at divided government,” he said. 'I'm hopeful we will be able to resolve it before June 30.”