Budget impasse inches closer to shutdown deadline

DES MOINES – House Speaker Kraig Paulsen said Thursday he still is hopeful a budget deal can be struck yet this month to avert a government shutdown, but he's getting to the point where he's ready to ask Branstad administration officials to see their contingency plans if no new state spending is authorized when the 2012 fiscal year that begins July 1.

“It's my understanding that the governor's office and all of the different executive branches are working through those things and I have told them that we're now getting close enough that I'm probably going to be asking to see their plan here very soon, but I haven't done that as of yet,” the Hiawatha Republican said after the 158th calendar day of the 2011 legislative session came and went without a budget agreement.

New talk of a potential government shutdown surfaced when what appeared to be productive talks this week broke down into finger-pointing and renewed gridlock Wednesday with Republicans claiming Democrats keep adding spending demands and Senate Democrats saying they will reconvene next week to begin passing budget bills that will spell out their priorities and include some compromise areas that have been agreed to during negotiations.

“We've seen this up and down all throughout the process,” Gov. Terry Branstad said Thursday in expressing optimism that agreements can be forged in the remaining two weeks of the current fiscal year.

“I'm patient and I think it takes perseverance,” he said. “We need to continue to work to get everybody to recognize that this is something that needs to be worked out.”

Sen. Robert Dvorsky, D-Coralville, chairman of the Senate Appropriations Committee, accused Republicans of being willing to “play with fire” by pushing the state closer to a shutdown with their insistence over a property tax reform approach that would provide “enormous” tax breaks to out-of-state corporations. He said Democrats have offered a tax credit approach that would cut taxes for most commercial property owners without shifting the burden to residential property taxpayers or hurting local schools and services.

Branstad and GOP legislators want to cut rates up front on new or remodeled commercial property and phase down rates on existing businesses. Paulsen said Democrats' approach would be more difficult to administer and manage and provides no guarantee that the promised relief would come to fruition – especially given the Legislature's history of underfunding tax credits.

“We want real, meaningful and guaranteed tax relief. That being said, we'll go back and look one more time at it because we're interested in doing something here,” the House speaker said. “We continue to remain very committed to making sure that something happens on property taxes.”

Despite Democrats' claim they have agreed to the GOP fiscal 2011 general fund spending limit of $5.999 billion, Paulsen said he believes they are about $100 million over the cap with provisions that seek to underfund Medicaid and other ongoing expenses that again could require supplemental appropriations during the 2012 session to fully fund commitments. “We're not going through that mess again,” he said.