Revenue estimates key to budget issues

DES MOINES - The most important event affecting the 2009 session this week likely will happen after lawmakers finish their scheduled work Thursday and go home.

That's because the state's Revenue Estimating Conference is slated to meet Friday to consider whether to revise downward its December projections on how much tax money the state will collect yet this fiscal year and in fiscal 2010 - decisions that carry major state budget ramifications.

University of Iowa economics professor John Geweke, who directs the UI Institute for Economic Research, said the three-member panel will be asked to make its projections against a backdrop of “unprecedented uncertainty.”

In the past, he said, state revenue prognosticators have charted a conservative course to avoid budget deficits, and they likely would do well to maintain that posture come Friday, said Geweke, a member of the Governor's Council of Economic Advisors.

“We're not going to be in for a substantial increase in revenue for at least the next year,” he said. “We're seeing projections of very slow revenue growth at best for the next two to three years.”

Should the three-member panel lower the $6.052 billion estimate for fiscal 2009 and the $6.026 billion estimate for fiscal 2010, Gov. Chet Culver will be required to resubmit a budget plan to lawmakers that could further revise the current budget and next fiscal year's spending plan, said Charles Krogmeier, Culver's chief of staff and an REC member.

Majority Democrats in the Legislature already have fashioned fiscal 2010 spending targets that were some $130 million below the governor's budget package.

Krogmeier said the March revenue projections and Iowa's share of the federal stimulus money will be the focus of talks between the governor and top Democrats aimed at finalizing state budgets and shutting down the session in April.

“Once the REC number is in, there's going to be huge focus on the budget,” said House Speaker Pat Murphy, D-Dubuque.

During this week's run-up to the REC meeting, the House is expected to take up bills dealing with mental-health parity in insurance coverage, raising the compulsory school attendance age to 18 and providing gender pay equity.

The Senate will focus on legislation designed to expand access to affordable health insurance coverage for children, and lawmakers are expected to discuss the governor's proposed

$750 million infrastructure bonding plan in closed-door meetings. House Democrats also are expected to caucus on several labor issues they want to take up before adjourning.

“Stay tuned, you may be in for a surprise or two before the session is over,” said House Majority Leader Kevin McCarthy, D-Des Moines.

What's been surprising so far this session, said GOP legislative leaders, is what little substantive work has been done to help the tens of thousands of Iowans without jobs due to the national recession.

“We've had time this year to talk about bike bills, we've talked about changing the name of the Department of Elder Affairs to DOA - even ‘Saturday Night Live' picked up on that one - we've talked about changing the presidential vote to a popular vote making Iowa and its issues irrelevant, and we've talked about legalizing marijuana,” said Senate GOP Leader Paul McKinley of Chariton.

“But we have not yet had a serious discussion about what matters most to Iowans - and that's getting an economy where people can have jobs. It's a very serious issue, and we continue down the wrong path,” he added. “Quite frankly, I think the sooner the Legislature can adjourn, the safer Iowans should feel.”