Branstad happy with Iowa balanced budget, but upset about water quality inaction

DES MOINES - Gov. Terry Branstad gave the split-control Legislature passing marks Monday for producing a balanced budget that met state needs despite constraints, but he blamed majority Senate Democrats for blocking an effort to address water-quality problems that was his top priority.

Branstad said he was proud the Senate and GOP-led House made tough decisions in crafting a $7.351 billion spending plan for next fiscal year. The fiscal 2017 plan increased spending by $104 million and was $200,000 below the state's 99 percent expenditure limitation law.

The state will end the current fiscal year with a projected $75.3 million surplus on top of the $718.7 million in cash and emergency reserves, and lawmakers approved an extra $72.4 million in supplemental spending through June 30, according to the Legislative Service Agency. Next fiscal year's surplus was projected at $80 million by June 30, 2017, with reserves totaling $738 million at the required 10 percent level.

'I know that not everybody is satisfied, because there just wasn't enough money to do all the things that people wanted,” the governor told his weekly news conference. 'But I applaud the Legislature for working together with a divided Legislature to accomplish this and to keep Iowa on a solid fiscal basis.”

Branstad expressed dismay that lawmakers weren't able to find consensus on a long-term water quality funding plan after rejecting his 'bold” plan to divert a portion of future sales tax revenue growth meant for school infrastructure toward programs to curb water pollution and promote conservation practices.

The governor said he would have accepted a House-passed bipartisan plan to generate nearly half a billion dollars for water quality efforts over 13 years by shifting money from state infrastructure projects and using revenue Iowans already pay on their water bills, to be distributed similarly to his approach.

However, Senate Majority Leader Mike Gronstal, D-Council Bluffs, said there was limited Senate interest in a House bill that essentially moved existing money around within the general fund when a new revenue source was needed to address the long-term needs. He said none of the three alternative - a fractional sales tax increase, a new commodity checkoff option or an ending-balance 'trigger” to fund water quality - had consensus support to move forward.

During Monday's news conference, Branstad slammed Gronstal for burying the House bill in committee, and he rejected the Senate leader's assessment that the various water-quality approaches lacked collaboration and communication in accomplishing the needed consensus to reach his desk.

'He's the one that blocked it, he's the one that didn't let the bill be debated,” Branstad said of Gronstal, who faces re-election this fall. 'He's trying to blame somebody else for his unwillingness as majority leader to debate an important issue. I think he's going to have to be held accountable for that, and it will be up to the voters to decide.”

Gronstal issued a statement responding to the governor later Monday, noting that the water-quality plans 'floated” by the Governor and House Republicans had 'little or no support” from senators in either political party. 'Taking money from one priority - public schools - and giving it to another priority - water quality - was met with bipartisan opposition in the Senate and statewide opposition from education advocates,” he said.

Senate GOP Leader Bill Dix of Shell Rock said Iowa farmers are continuing to make voluntary investments to improve water quality, and he hoped lawmakers would continue talking with Iowans about the best way to address the challenges, including employing 'new technologies that are becoming available every day.”

'What I hear from people is they want to make sure that we get the policy right, that we're actually going to be pursuing efforts that hold the promise of actually improving our water quality and not just spending a lot of money that may not produce a desired result,” Dix said at the close of Friday's session.

In the current budget year, state funds totaling nearly $25 million were appropriated to the state Department of Agriculture and Land Stewardship for water-quality initiatives, while another $12.55 million were provided to the state Department of Natural Resources for lake restoration and water-quality monitoring.

Branstad said he plans to keep working during the interim to build support for a water-quality plan that can win legislative approval during the 2017 session.

One water-quality alternative was a 'revenue-neutral” plan offered during the session by Sen. David Johnson, R-Ocheyedan, to incrementally raise the sales tax from 6 percent to 6.375 percent over three years to fund a constitutionally protected natural resource trust approved by Iowa voters in 2010 while offsetting it with a corresponding phased adjustment to the Iowa income tax filing thresholds.

Johnson's proposal was ruled ineligible for consideration under a procedural challenge during a budget debate last week, but Branstad indicated Monday the idea might be worth pursuing - just not as a stand-alone sales tax increase.

'The three-eighths of a cent is something we‘d be willing to consider, but not by raising taxes. There are other ways I think to do it,” Branstad told reporters Monday.

Asked to elaborate, the governor said: 'You'll hear about it in the future, I'm sure.”