Iowa House GOP offers $261 million plan for bond debt, pensions, regents universities

A plan to spend $261 million paying off state bond debt and making investments in state universities won bipartisan support in a House committee Wednesday.

However, the Republican-sponsored House Study Bill 239faces an uncertain future because minority Democrats are concerned it will starve their priorities and plunge the state into deficit next year.

Democrats on the panel had no problem with using $113.8 million of the state's estimated $822 million ending balance to pay off bonds, including I-JOBS bonds, saving the state $15.5 million in the Rebuild Iowa Infrastructure Fund (RIIF) and the general fund.

The rub was that Republicans proposed using the remainder to build up the Taxpayer Trust Fund, a mechanism the GOP created last year to return surpluses to taxpayers.

“In my view, if you paid all you bills at the end of the fiscal year and you have a balance, you've over-collected,” Appropriations Committee Chairman Chuck Soderberg, R-Le Mars, said. “This is a means to return this to the Iowa taxpayers who rightly deserve this money back in their pockets.”

Income tax cuts and property tax relief would be two ways of doing that, he said.

Making investments in education, Medicaid expansion and infrastructure are other ways, said Rep. Tyler Olson, D-Cedar Rapids.

“We have, what I think, is a unique opportunity in this legislative session, because of our state's financial strength, (to) come up with a property tax reform plan, perhaps, an income tax reform plan and make some investments in education, health care and infrastructure and really set the state on a path for a large economic growth,” Olson said.

“But House Republicans have refused to take that balanced approach,” said Olson, who is considering a 2014 run for governor. “So until we see some indication they are willing to put those two together, we're going to continue to oppose their plans.”

Only one Democrat, Rep. Cindy Winckler of Davenport, voted against the plan Wednesday.

“Although there is a lot of good, this bill alone creates a deficit in the general fund budget,” she said. Winckler estimated HSB 239 would result in a $211 million in 2014 and put the budget $450 million in excess of Legislature's spending limitation – 99 percent of revenues.

“Paying off bonds … is a good thing to do, but deficit spending is not,” she said, adding that it was disappointing the plan was being offered on the 115 day of a 110-day legislative session.

“I cannot support this and have a clear conscience,” Winckler said. “This is irresponsible.”

However, Soderberg pointed out her numbers are based on all the bills House majority Republicans have passed this year, not on spending approved by both chambers. If the Democratic-controlled Senate approves those House bills, Soderberg said, HSB 239 can be adjusted accordingly.

The bill may be debated by the full House Thursday.

HSB 239 also spends:

• $91.3 million and $18.9 million, respectively, into police and judicial pension funds, to bring them up to 80 percent of their obligation – the same as the Iowa Public Employee Retirement System.
• $33.7 million to pay off Honey Creek State Park bonds, saving $2.1 million; $29.5 million to retire I-JOBS bonds, saving $2.3 million; $26.1 million for prison construction bonds, saving $8.4 million; and $24.5 million for school infrastructure bonds, saving $23.7 million.
• $10 million for “unique funding challenges” at the University of Northern Iowa plus $1 million for UNI's advanced manufacturing initiative at Waterloo TechWorks.
• $7.5 million for Iowa State University's bioeconomy initiative and $12 million for its research park.
• $1 million for a multipurpose training facility at the Hygienic Lab at the University of Iowa.
• $1 million for the Department of Safety for equipment.
• $1.6 million to the state department of agriculture to close ag drainage wells.
• $2.5 million to the Department of Administrative Services for major maintenance.

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