Iowa lawmakers agree on some budget issues

Members of the 84th General Assembly open their 2012 session next week with half of next year's state budget already set. But that doesn't mean it will be any easier to finish a fiscal 2013 spending plan this year.

Lawmakers agreed to Gov. Terry Branstad's demand to establish a biennial budget process during a contentious 2011 session that took until June 30 to finalize a spending package just hours before they faced the prospects of an unprecedented government shutdown.

Republicans who hold a 60-40 edge in the House teamed with Branstad last year to pare down the state's general fund to about $6 billion over objections from Democrats who return to the Statehouse will a 26-24 majority in the Senate thanks to Sen. Liz Mathis' special election win in Marion last November.

The good news for budget-makers is they expect to have about $250 million in increased revenue available and don't have a billion-dollar gap to fill like they previously faced.

The bad news is commitments that legislators already have made for things such as a 2 percent increase in base "allowable growth" funding for K-12 schools, higher spending for Medicaid driven by a tough economy, and a collective bargaining agreement that calls for state employees to receive a 3 percent pay boost next fiscal year are projected to top $300 million.

On top of that, lawmakers and Branstad want to provide commercial property tax relief that will require a state investment of at least $50 million to "backfill" lost revenue to local governments, both parties have agreed to embark on a mental-health redesign that will cost the state $42 million next fiscal year, Branstad wants to start education reforms that carry a yet-to-be-decided price tag, higher education is clamoring for more state aid and the list goes on.

 "It's going to be another tight budget year," said House Speaker Kraig Paulsen, R-Hiawatha.

"Iowans work hard and when they send us their money they expect us to be good stewards with it," the speaker said. "We're going to go through and look at every dollar."

House Minority Leader Kevin McCarthy, D-Des Moines, said the growing state revenues could make it a little easier to pass legislation dealing with commercial property taxes and Iowa's mental health system. There is broad agreement among Democrats

and Republicans that changes are needed in both areas, he noted.

Branstad says 86 percent of the fiscal 2013 state budget is set so he doubts the session will have to span its scheduled 100-day run.

"We think it's going to be a shorter session because there's no need to be the fighting over these big budget items," he said.

"I'm sure there are those who want to spend less and those that want to spend more, but as far as we're concerned we resolved those things for the big items and we don't want to revisit the old fights," Branstad added.

However, Sen. Jack Hatch, D-Des Moines, co-chairman of the Legislature's human services budget subcommittee, said only about half of the new budget has been finalized and lawmakers will maintain their responsibility to appropriate money and not abdicate that role to the governor.

"The Legislature did not give up in any way the lack of flexibility in determining the priorities of our state," said Hatch, who plans to unveil his budget proposals this week. "We still have discretion on that budget."

Democrats say the state's cash and emergency reserves are full, the budget has a healthy ending balance and spending is running well below the 99 percent statutory limit, but Republicans continue to portray the state's fiscal position to be more dire than it really is.

"I expect a fight over the budget because these guys keep saying there's a budget crisis - not true," Hatch said.

Rep. Scott Raecker, R-Urbandale, chairman of the House Appropriations Committee, said there will be a lot of issues on the table again when the split-control Legislature convenes on Monday.

"I am confident that we will find ways to fund the priority initiatives for Iowans," he said.