Branstad, lawmakers consider options to keep government running July 1

DES MOINES – The countdown to a possible government shutdown continued Monday, but Gov. Terry Branstad and legislative leaders remained confident they were on track to resolving their remaining differences before the state's new fiscal year arrives on Friday.

“I think everybody is very aware that June 30 is looming just days away and I think there needs to be a sense of urgency to try to get this wrapped up so bills can get down to the governor,” said Rep. Scott Raecker, R-Urbandale, chairman of the House Appropriations Committee. “I think we've moved closer.”

Leaders of the split-control Legislature were down to four budget bills, but they encompassed about 70 percent of the state general fund.

House Speaker Kraig Paulsen, R-Hiawatha, said there was a long-shot chance final adjournment could come yet Tuesday, but Sen. Bob Dvorsky, D-Coralville, chairman of the Senate Appropriations Committee, said he was hopeful the session's final day would be Wednesday.

The House and Senate on Monday spent the 2011 session's 169th calendar day moving budget measures to conference committees and sending up to 10 measures to the governor. At day's end, the biggest sticking points continued to be commercial property tax reform and spending levels for education – higher education, preschool and basic K-12 state aid - human services and infrastructure projects such as expanded passenger rail.

“We're very optimistic now that the conference committees are coming together that we can get these issues resolved and pass a sustainable budget that that spends less than we take in every year,” Branstad told his weekly news conference. “We are feeling more and more confident that the budget that will pass will meet those guidelines that we have spelled out.”

Senate Majority Leader Mike Gronstal, D-Council Bluffs, said Republican who hold a 60-40 majority in the Iowa House and Democrats who hold a 26-24 edge in the Iowa Senate were “making great progress,” but he said both sides will have be “flexible” if they're to going find middle ground on the property tax issue.

Branstad has proposed that commercial property taxes, which currently are taxed at 100 percent of assessed value, be gradually lowered to 60 percent over five years at a cost of $250 million. New business ventures would get the 60 percent break immediately. He also proposed agricultural and residential property tax increases be capped at 2 percent. House Republicans approved a tax rate phase-down to 75 percent for commercial property.

Senate Democrats favor a $50 million yearly tax credit targeted primarily to smaller and Main Street businesses. One compromise idea floated by Democrats would reduce commercial and industrial property taxes to 75 percent of their current level with the state “backfilling” or reimbursing local governments for the tax revenue they would lose, negotiators said.

Monday's Senate work was slowed by an apparent lightning strike that hit the Capitol building on Sunday, knocking out the chamber's electronic voting machine and microphones – forcing senators to should their bill explanations or debate points.

Mike Marshall, secretary of the Iowa Senate, said business was being conducted “the old fashioned way, we call the roll and we mark it down.”

State government has never begun a fiscal year without a new budget in place in Iowa, adding pressure on legislators to negotiate compromises with fiscal 2011 slated to end at midnight Thursday. The last time lawmakers pushed the deadline this close was in 1992 when the Legislature adjourned on June 26 after a second special session.

Branstad has said he has the authority to keep the state running on July 1 using emergency powers if the Legislature fails to pass a budget. Iowa Attorney General Tom Miller said his office hopes the question is “a moot point” because, while a court likely would allow the governor to spend money to protect the health and safety of Iowa citizens, there would be a “whole series” of difficult, complicated constitutional questions that would occur if the state faces a shutdown scenario.

“By and large, the best solution to all this is for them to pass a budget,” Miller said. The other option would be to pass a short-term appropriation to keep government functioning if negotiations continue into July, he said.

Branstad said he would be willing to sign a temporary spending measure keeping state government running after the end of the budget year on Thursday, but said he's getting indications that lawmakers are nearing compromises that he can accept. He said a stop-gap might be needed to give him up to 30 days to review the individual bills that lawmakers send to his desk this week. He said details of the temporary arrangement are being worked out so he does not have to make a rushed decision on complicated measures.

Under Iowa law, the governor has three days to take action on a bill that arrives on his desk while the Legislature is in session. The governor has 30 days to act after the session ends of bills that were passed in the closing hours.

“If there is a government shutdown in this state, it totally sits on the desk of Terry Branstad because he has provided absolutely no leadership to do anything other than to let the shutdown happen,' said Danny Homan, president of American Federation of State, County and Municipal Employees (AFSCME) Council 61, the largest state employees' union. “There doesn't need to be a shutdown in this state. We've got a $1 billion surplus.”