Government

GOP tries to close $50M Iowa budget gap

Legislators hope to make a deal by May 3 target

FILE PHOTO: The State Capitol Building in Des Moines on Wednesday, January 15, 2014. (Stephen Mally/The Gazette)
FILE PHOTO: The State Capitol Building in Des Moines on Wednesday, January 15, 2014. (Stephen Mally/The Gazette)
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DES MOINES — For the first time in three years, state lawmakers are starting their budgeting process in a surplus position rather than having to cut agency spending in short order to stem a flow of red ink.

Republicans who control the House, Senate and governor’s office say they are nearly $50 million apart in a fiscal 2020 state budget plan that will top $7.6 billion. But they are optimistic they can close that gap in negotiations this month in a way that will fund priorities and help restore some areas particularly hard hit by recent midyear adjustments.

And that ends this legislative session without going into overtime.

“I’m not anticipating any protracted challenge in getting this done,” said House Majority Leader Chris Hagenow, R-Urbandale, whose GOP caucus set spending targets of nearly $7.668 billion — a target that envisions spending more than Gov. Kim Reynolds’ $7.658 billion recommendation and Senate Republicans’ $7.619 billion status-quo proposal for the budget that begins July 1.

“I’m confident we’ll come to an agreed-upon number in the appropriate amount of time. I think we’re on schedule,” added Hagenow, who will play a key role as the General Assembly wraps up its 2019 work over the next four weeks headed toward a May 3 adjournment target. “I’m sure we’ll have productive conversations and reach conclusion on it.”

Senate Majority Leader Jack Whitver, R-Ankeny, said that majority Republicans who have the first unimpeded opportunity to build a budget based on their priorities are taking a cautious approach to avoid overcommitting in a time of flooding disasters hitting much of the state and a shaky farm economy that could impact future revenue growth.

“I’m pretty optimistic that we’ll be able to close the gap” between the House and Senate spending targets, said Whitver, who expects some gradual “catch up” spending would be possible in budget areas that took the brunt of previous cutbacks like higher education, public safety, corrections and courts.

“We still want to be very conservative with our budget so we don’t get into a position where we have to de-appropriate again,” he said. “The economy is a little uncertain and so we want to make sure that the promises we make in this budget we can keep.”

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Republicans already have passed and Reynolds has signed a boost of about 2.1 percent for K-12 schools that will give districts nearly $90 million in new money to fund programs and transportation costs.

Still, Sen. Joe Bolkcom, D-Iowa City, ranking member of the Senate Appropriations Committee, called the increase “dismally low” and under the cost of inflation.

Bolkcom said major state income tax cuts Republicans passed last year lowered revenue growth projections and pose “an enormous drag on our ability to meet the priorities of Iowans.”

“We’re looking at nine straight years of state government of status quo budgets and it’s beginning to put a pinch on the kinds of services that people come to expect,” he said.

Rep. Chris Hall, a Sioux City Democrat who is ranking member on the House Appropriations Committee, said the GOP tax cuts were heavily tilted toward a “very select, very limited” number of Iowans; and repealing the top 1 percent over the next five years would free up $658,000 to invest in public services.

Big issues of recent years like water quality improvements are getting only “lip service” from majority Republicans this session, he said.

“The fact that we are not making budget cuts this year has kept the debate a little bit quieter and I would say that it is floating below the radar of most citizens but it’s no less critical,” Hall said.

While Senate Republicans say their overall spending target reflects status-quo spending, Sen. Mike Breitbach, R-Strawberry Point, chairman of the Senate Appropriations Committee, said money has been freed up because the current budget that expires June 30 included a $113 million cash reserve repayment and one-time expenditures for Medicaid that will not be required in the new budget.

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Legislators also are looking at a supplemental appropriations topping $140 million to fund Medicaid programs yet this fiscal year.

Also to be addressed in ongoing budget negotiations is a different approach between the House and the Senate on technology funding, different spending levels in several key areas and $38.8 million in additional tax relief in fiscal 2020 included in the Senate Republican targets that are not in the House or governor’s plans.

Senate Republicans project about $258 million in new money available for budgeting, Breitbach said.

“We would like it to be a sustainable, growing budget that people will be happy with, that controls spending but also addresses some of the areas that we feel that we’ve been lacking a little bit in,” he said. “There have been some pent-up desires. We’ve known that there are some areas of the budget that we needed to increase or we felt like we wanted to increase, but you can’t let the horses run wild. You’ve got to kind of keep that emotion in check and say OK is this sustainable? Is this in the best interest of the people of Iowa?”

Rep. Pat Grassley, R-New Hartford, chairman of the House Appropriations Committee, said House Republicans used the governor’s budget plan as a baseline but went higher in some spending areas. Even so, he said, the House’s $7.668 billion target accounts for 97.45 percent of ongoing revenue and fills all reserve accounts to the legal requirements and leaves a “healthy” ending balance.

“It’s probably a little premature for me to say how to difficult it may be the close the gap,” he said, since some of the Senate Republican budget pieces haven’t been released.

The Senate Appropriations Committee began work last week on budgets funding the justice system and the courts while the House passed its approach to funding higher education and worked on health and human services and infrastructure spending in committee.

Rep. Gary Worthan, R-Storm Lake, co-chair of the House-Senate justices system and judicial branch budgeting areas, said he was hopeful lawmakers can reach agreement on funding areas that will bolster the Iowa State Patrol with more troopers and Division of Criminal Investigation agents, and fund needed staffing positions in county clerks of courts offices statewide.

“We’ll see where that all shakes out,” he said.

For her part, Reynolds proposed a $7.658 billion state budget that puts new money into public K-12 schools, higher education, public safety and her signature workforce development program.

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The state’s public universities would get a funding boost: $7 million each for the University of Iowa and Iowa State University, and $4 million for the University of Northern Iowa under the governor’s approach. That matches the request made by the universities, which have said recent years of low state funding forced tuition hikes.

The House passed a $960.8 million education bill, House File 758, which boosts community college funding by $7 million and provides $15.9 million for state universities to be dispensed at the discretion of the Iowa Board of Regents.

Heading into negotiations, Senate Republicans had a $947 million target for its education budget bill. Sen. Tim Kraayenbrink, R-Fort Dodge, the subcommittee co-chair, said he expected “give and take” in the negotiations to provide adequate funding without over-promising.

“I’ve always said that it’s kind of hard to give your kid an allowance and then right before they go into a movie with his date to go take their money back and they have to go back and watch Netflix,” he said. “That’s what it kind of felt like we were doing for the past two years because these groups were actually planning on that money and three-quarters through the year we had to come back and take some of that money away from them and that’s just not fun.”

David Roederer, director of the state Department of Management who serves as Reynolds’ budget director, said the governor delivered a message of caution in recommending a spending plan she felt was prudent and sustainable.

“If their numbers are close to the governor’s recommendations, I think that will put most agencies on pretty firm standing,” said Roederer, who noted that negotiations usually are smoother with one party in control because “you don’t have real deep-seated philosophical differences.” For that reason, he said, “I believe the budget will come together fairly quickly.”

Reynolds proposed $20 million in the upcoming fiscal year and $12 million the following year for Future Ready Iowa, the workforce program that aims to ensure 70 percent of Iowa workers have post-high school education or job training. The new funding will support scholarships and grants.

As part of her focus on rural initiatives, Reynolds proposed $10 million each over the next two budget years to support the expansion of broadband internet access. She said that will help leverage an additional $120 million in private investment in broadband expansion.

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Reynolds proposed $11 million over the next two budget years to help the state’s regional mental health care delivery systems offer expanded services. She also proposed giving the regions more time to spend down their capital balances and increase the amount of funding that can be carried over from one year to the next, And she budgeted for four more psychiatric residency positions at the UI for doctors who will practice in rural communities.

l Comments: (515) 243-7220; rod.boshart@thegazette.com

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