Lawmakers, governor settle on overall Iowa budget figure

UPDATE: Leaders in the split-control Legislature and Gov. Terry Branstad have agreed upon the overall spending level for the fiscal 2014 budget year – a key development that should begin the process of shutting down the 2013 legislative session.

Negotiators said Tuesday that overall spending for the state general fund beginning July 1 will be nearly $6.483 billion. That would represent about a 3 percent increase compared to current year funding that is under $6.3 billion.

“We have a tentative agreement on that and the individual budget targets. The conference committees are working through those things. We're making progress,” said House Speaker Kraig Paulsen, R-Hiawatha. Achieving that agreement “builds momentum” for adjournment, he said.

“It's a good sign but it doesn't mean we're done,” added Senate Majority Leader Mike Gronstal, D-Council Bluffs.

The “ultimate compromise,” as Gronstal described it, includes a GOP proposal to increase state aid to K-12 school districts by 4 percent in fiscal 2014 – with a 2 percent increase that's built into the per-pupil base and a separate 2percent hike that is one-time money for next school year only. The fiscal 2015 state aid funding level that public schools are slated to receive will increase by a full 4 percent but will be built on the 2 percent base established for next year.

Several budget subcommittees were slated to reconvene later Tuesday to discuss their differences and the full contingent of 150 House and Senate members was slated to return to the Capitol on Wednesday to resume floor debate on the various spending areas as agreements get forged.

“I think we'll get a lot of the budget things done in the next couple of days,” said Sen. Bob Dvorsky, D-Coralville, chairman of the Senate Appropriations Committee. “There are still other issues out there, though.”

Those other issues include reaching a compromise on property tax relief, education reform and expanded health care coverage for needy Iowans.

“I think we're working toward resolution,” Paulsen told reporters. “I'm expecting that we'll have a bill that addresses property taxes and we'll have a bill that addresses education reform that will both be sitting on the governor's desk and I think he'll be excited to sign them.”

Democrats were adamant that the 2013 regular session not adjourn without an agreement to expand health care coverage to needy Iowans but GOP negotiators said the impasse between a Medicaid expansion or Branstad's Healthy Iowa plan might require more work in special session to resolve.

“I think speculation at this point as to whether or not we find a resolution on that is premature,” Gronstal said.

Paulsen said talks also were under way to provide some direct tax relief to Iowa income taxpayers, although he did not have a ballpark estimate of what level of rebate or other reduction might be available to Iowans when they file their 2013 income tax returns.

“We're finalizing some of the tax issues. That would be part of the discussion,” added the House speaker, who noted that a priority of his caucus is to return surplus money from the taxpayers trust account that Republicans view as an overpayment made by Iowa taxpayers.

Gronstal said a “must-do element” for legislative Democrats is increasing the earned income tax credit for working Iowa families so he expected that would be a component of any compromise on tax issues this session.

Republicans who control the Iowa House by a 53-47 margin and Democrats who hold sway in the Iowa Senate with a 26-24 majority issued spending targets in February that were $484 million apart. They have spent the intervening weeks seeking to narrow that gulf and finally arrived at the $6.483 billion compromise this week.

House Republicans had a $6.414 billion starting point that they said would boost the state's general fund by 3 percent that would represent 98 percent of ongoing state revenue. For their part, majority Senate Democrats proposed a fiscal 2014 spending target of about $6.9 billion.

The fiscal 2014 budget plan that Branstad unveiled in January called for $6.543 billion in general fund spending.

Lawmakers likely will need to approve supplemental spending for the current fiscal year to cover a projected shortfall in Medicaid funding that has a midpoint of about $47 million.

Sen. Bill Dotzler, D-Waterloo, co-chair of the economic development budget subcommittee, said he believed his conference committee would forge an agreement quickly that likely would provide about $18 million in job-creation incentives and raise the $120 million cap on tax credits but not to the $185 million level that business groups favor.

Dotzler escorted retired NASCAR race driver Rusty Wallace around the Capitol Tuesday to pitch a proposal to include an $8 million state commitment over four years to help the Iowa Raceway in Newton make needed upgrades to attract a future Sprint Cup race to central Iowa. Dotzler estimated a Sprint Cup event would have a $100 million economic benefit for Iowa.

______

House-Senate conferees agree to economic development budget

DES MOINES – House-Senate negotiators were able to agree Tuesday to a $15.5 million general fund allotment for economic development programs in fiscal 2014 by financing a sizable amount of regent university research and workforce development initiatives with state gaming profits.

Sen. Bill Dotzler, co-leader of a House-Senate economic development conference committee, said more than $66 million in research activities at the University of Iowa, Iowa State University and the University of Northern Iowa will be funded with gaming money. The state gambling profits also will be used to fund a new skilled workforce initiative at Iowa's community colleges in the next fiscal year.

Dotzler and Rep. David Deyou, R-Nevada, the other conference committee co-chairman, said the economic development package also funds qualify jobs incentives at $18 million, raises the cap for yearly state tax credits from $120 million to $170 million and uses $8 million to establish an innovations fund by which investors could recoup a 25 percent state tax credit for helping finance start-up ventures.

The economic development budget compromise that could come before House and Senate members during floor debate Wednesday would authorize on additional wage investigator, expand staff to deal with a backlog of workers' compensation cases and direct the state Department of Workforce Development to close a satellite workforce center in one of four towns were usage is the lowest. Those locations include Iowa City, Webster City, Decorah and Fort Madison.

--Rod Boshart, The Gazette