Two-year state budget 'not negotiable,' Branstad insists

Gov. Terry Branstad drew a hard line Monday, saying his insistence on a two-year state budget is “not negotiable” and he will not allow lawmakers to “cut corners and make deals” to finish the 2011 session.

“My position on a biennial budget is a position based on the commitment I made to the people of Iowa and it's not negotiable,” Branstad told reporters during his weekly news conference. “I will work with them and look at all issues on their merits. That's the way I've always done things. I'm not going to make a deal one for another.”

The first test of Branstad's resolve to end past “budget chicanery” by converting to a system this session that relies on detailed two-year budget plans and five-year projections to bring stability and predictability to state government could come as early as this week.

The House and Senate were slated to vote Monday on a tentative package that would provide $45.7 million in supplemental spending to cover unpaid indigent defense costs, prison costs and other state programs through June 30. The plan also would direct a one-time $20 million appropriation to county mental health funding to reduce a waiting list for services and would establish a July 2013 “sunset” whereby the current mental health services delivery system would be ended – a deadline designed to force policy makers to transition to a new revamped model.

House-Senate conferees also agreed to establish a taxpayers' trust fund that would capture up to $60 million annually from the state's general fund ending balance to be available for providing tax relief effective in the fiscal year that begins July 1, 2012. The Senate File 209 pact also included provisions to increase the earned income tax credit from 7 percent to 10 percent for about 240,000 working families making up to $45,000 annually and to provide bonus depreciation tax briefs for businesses that make equipment and machinery purchases.

On Monday, Branstad said the special taxpayers' fund was not something he proposed but he plans to accept it at the insistence of Republicans who control the Iowa House. He would not make the same commitment for the earned income tax credit increase that was sought by legislative Democrats who currently hold a 26-24 majority in the Iowa Senate.

“It wasn't something that I recommended but it's something we can live with,” Branstad told reporters in discussing the new taxpayers' trust fund. “This is absolutely essential for their (House GOP) caucus and we want to work with them. We've reached an accommodation with them.”

Branstad said he was supportive of the provisions of S.F. 209 that would “resolve the budget mismanagement of last year” but he said he would weigh any tax issues in terms of their impact on job creation. Otherwise, he said “I have made it clear from the very beginning what my priorities are and what my standards will be. I've indicated my interest in working with them to try to work things out.”

Sen. Bob Dvorsky, D-Coralville, chairman of the Senate Appropriations Committee, said he expected the House-Senate conference report to be signed Monday and passed in both legislative chambers by wide margins of approval. He said he believed that would be a signal to the governor to accept the package in its entirety with no item vetoes.

“My hope is that if we get a good vote in both the House and the Senate, which we should, that it would be difficult for him to veto any provisions from that. If he does, it's going to be a big problem dealing with the Legislature,” Dvorsky said. “I would hope that the governor would work with us in good faith.”

Senate File 209 contained a mix of tax policy and spending issues that included nearly $46.7 million in supplemental funding – with $5.9 million for community colleges, $14.2 million for the state Department of Corrections, $18.6 million for the public defender and indigent defense programs, nearly $3 million to restore cuts to the Iowa State Patrol and public safety functions, $1.2 million for public health, and more than $2.6 million for mental health institutions with the state Department of Human Services.

The overall tax relief included in the package was $141 million not including the $60 million that eventually will flow each year into the newly created taxpayers' trust fund.

During the ongoing talks, legislative Republicans agreed to drop proposals to establish a minimum health insurance premium of $100 for all state employees and a prohibition on the state Department of Natural Resources purchasing land through the end of the current fiscal year while reducing Resource Enhancement and Protection (REAP) by a like amount.