Culver revises his budget askings

 DES MOINES – Gov. Chet Culver issued revised budget proposals Friday that trimmed more than $300 million from the fiscal 2010 spending plan he outlined last January.

The governor said his downward revisions reflected the nation's deepening recession and a decision last month by the Revenue Estimating Conference to lower projected state tax collections by about $130 million through June 30 and another $270 million for fiscal 2010.

Culver said his budget revisions call for a 7.9% budget reduction for many state programs beginning next July 1. His spending plan also employs more than $674 million in federal economic stimulus funds to offset deeper cuts.

Overall, the governor's new budget recommendations project state spending at $5.928 billion for current fiscal 2009 and $5.896 billion in the following fiscal year.

 “As governor, managing the seriousness of the recession, working to maintain a balanced budget and strengthening our economy have been and will remain my top priorities,” Culver said in a statement.

 “While the economic recession is serious, it does not mean we abandon our confidence or give up our optimism,” added Culver, pointing to Iowa's strong cash reserves and its AAA bond rating. “As Iowans, we can and will work our way out of this recession.”

The governor proposed to use $43.2 million worth of federal stimulus help to fully fund Iowa's K-12 school aid formula for the current fiscal year, and to earmark another $232.9 million from Iowa's federal stimulus allotment to maintain school aid funding at the previously set 4 percent allowable growth for fiscal 2010.

Likewise, Culver proposed to use $110 million in federal assistance to fully fund Iowa's Medicaid program through June 30, and to designate another $145 million in federal aid for that purpose in fiscal 2010.

The governor projects the state will end the current fiscal year with $564.3 million in reserve even after emergency funds are allocated for disaster recovery efforts, leaving an ending balance in the state general fund of $59.9 million on June 30.

For fiscal 2010, Culver proposed to draw down $164.8 million from those reserve to help fund priority areas while maintaining a $72.2 million ending balance.

Among his fiscal 2010 recommendations, the governor asked  the Legislature to use $56 million in federal stimulus money earmarked for education to avoid severe cuts at Iowa's regent universities and community colleges. He also proposed to tap a separate federal stabilization account to bolster programs for the state universities, community colleges, corrections facilities and public safety functions.

Culver also sought to add back $42.6 million to avoid layoffs and maintain spending for public safety, workforce development and other priority areas. He also proposed to fully fund property tax credits Fund at the fiscal 2009 level.

Legislative Democrats said many of the governor's proposals mirror their revised budget plans, but the biggest challenge will be adjusting to negative economic trends that already have eroded about 10 percent of the state's revenues over the past five months.

“We're going to work with any changes that he makes and try to draw some consensus with him,” said House Speaker Pat Murphy, D-Dubuque. “We've been in some discussions about that already. We're going to take his concepts that he has with changes and see if we can incorporate them with what we're doing currently.”

Democratic leaders have indicated they hope to adjourn the 2009 session by the end of next week.