Branstad expects ‘challenging’ state budget cycle

DES MOINES — Gov. Terry Branstad opened what he called a 'challenging' budget cycle Friday with hearings on a fiscal 2016 spending plan and a swelling list of demands fueled by multiyear commitments, higher costs and surprise developments.

'We want to be very careful and very frugal and yet be able to provide the resources needed to meet the priorities,' Branstad said at the start of hearings on state agency general fund budget requests approaching $7.05 billion, a 3.8 percent increase over current appropriations.

Projections assembled by the Legislative Services Agency expect the state treasury to have a $520.4 million surplus on June 30, 2015. But nearly $500 million in built-in and anticipated spending increases could drive net state appropriations to $7.43 billion in fiscal 2016. That figure does not include new money in state aid for K-12 school beyond teacher upgrades under education reform commitments or increased compensation for state employees.

John Baldwin, director of the state Department of Corrections, opened this year's round of budget hearings by submitting a status quo budget — but adding a $15.3 million wish list for more staffing and other needs associated with opening two new state prisons, if general fund revenue is available.

State budget officials note the state faces multiyear commitments for property tax relief costing $142 million next fiscal year; education spending needs totaling $124.7 million; and increased Medicaid costs and federal funding shifts that have caused human services funding requests to spike by $202 million.

The state also faces a Medicaid shortfall in the current year pegged at about $60 million; about $40 million in increased costs to provide health insurance to state employees in calendar year 2015; and at least $16 million in salary costs.

LSA assumptions project the state's surplus could shrink to $176.3 million by the end of fiscal 2016, with another $718 million in the cash reserve and economic emergency accounts.

'We don't have the huge problem that we had four years ago,' Branstad said. But he added that he and the split-control Legislature must remain vigilant in the coming budget cycle to control the size and cost of government.

Prison director hopeful new Fort Madison penitentiary can open soon   The head of Iowa's corrections system said Friday he is hopeful the newly built Iowa State Penitentiary will open in 2015 but he did not have a specific timetable for when the long-delayed prison will come on line.

'Believe it or not that place is going to open up,' John Baldwin, director of the state

Department of Corrections told Gov. Terry Branstad and other administration officials during Friday's hearing where the corrections agency presented its fiscal 2016 funding request and priority issues.

Baldwin said architectural design flaws in the new prison's geothermal heating and cooling system and its smoke control system have cost at least $5 million in extra expenses that state officials will seek to recoup once the project is completed and Iowa's most-dangerous inmates are transferred into the new facility that was slated to open in January 2014. He said state officials are awaiting a certification that will help determine if more work is needed to get the $132 million prison operational and enable them to close the aging penitentiary if will replace.

'We are becoming more confident that it will become open in the very near future. I'm really hopeful of that. It's gone on way too long,' said Baldwin, who expressed frustration with delays that have plagued the project.

'I have been involved in 29 corrections buildings – most of them community-based corrections facilities but also a lot of prisons. If you added up all of the problems we had on all of those buildings,' he said, 'it wouldn't even be a blip on the issues we've had with these two systems in Fort Madison. It's just wrong that the engineering was so out of touch with what building requirements are.'

Baldwin said the delays has forced the state to operate two facilities about two miles apart, with the old penitentiary staffed to keep inmates locked up behind bars and the new facility open for construction workers and operations checks by a small security force that also has to keep curious people from going on prison grounds.

The corrections agency submitted a status quo fiscal 2016 budget request, but added a $15.3 million wish list for more staffing and other needs associated with opening two new state prisons if general fund revenue is available.

The Iowa Board of Corrections last month approved a 4 percent boost in spending for fiscal 2016 that would add 176 new staff positions in the $394 million request that would fund Iowa's prison system and community-based facilities for the 12-month period beginning July 1.

The proposal seeks to increase corrections spending by $15.3 million to add 147 full-time staff at Iowa's eight prisons and 28 staff in residential programs within four judicial districts. A separate request was submitted for capital improvements totaling $92.2 million that would finance new residential beds, facilities improvements and critical maintenance needs over the next two fiscal years -- $52.4 million in fiscal 2016 and $39.8 million the following year.