DES MOINES — Legislation intended to erase a projected general fund shortfall and keep the state budget balanced through June 30 was approved by the GOP-led Iowa Senate on Wednesday evening and sent to Gov. Kim Reynolds for her expected signature.
On a 28-21 party line vote, senators approved a de-appropriations measure that would cut $25 million in funding to state agencies and repurpose $10 million in uncommitted gaming revenues that were earmarked for economic development incentives to become a “revenue enhancement” instead.
All 28 GOP senators voted for the bill, while 20 Democrats and one independent opposed it.
The revised Senate File 2117, approved by the Iowa House 59-41 one day earlier, would leave the state with a projected ending balance of $31.9 million on June 30.
The largest spending reduction — nearly $11 million over the next three months — will come from the University of Iowa and Iowa State University, while Human Services will take a $4.3 million cut, the prison system will lose $3.4 million, the court system will be pared back by $1.6 million and community colleges would be cut $500,000.
Senate President Charles Schneider, R-West Des Moines, who also doubles as the chairman of the Senate Appropriations Committee, said lower-than-forecast state tax collections created a shortfall. But then “better-than-expected” revenue growth aided by a cut in federal income taxes allowed Republicans in the House and Senate and Reynolds to lessen the cuts they originally envisioned.
“Iowa is in sound financial shape,” noted Schneider, who said the GOP majority was being “fiscally responsible” in balancing the ledger and providing a $31.9 million cushion.
But Sen. Tod Bowman, D-Maquoketa, said the “unnecessary” and “shortsighted” decision to cut higher education would result in higher tuition costs for students.
“It’s a simple cause and effect,” said Bowman.
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Schneider said K-12 education, Medicaid, the Iowa State Patrol, the commercial property tax “backfill” to local governments and the University of Northern Iowa were “held harmless” in this process.
But Sen. Joe Bolkcom, D-Iowa City, ranking member of the Senate Appropriations Committee, said Wednesday’s action represented the “continued bungling” of state finances by Statehouse Republicans.
At the start of the 2018 session, Reynolds had proposed $29.6 million in cuts to cover a $27 million gap between what lawmakers budgeted last year for fiscal 2018 and the revenue projections at the time. To be comfortable, Reynolds and Republican lawmakers wanted to create an ending balance for June 30 of one-half of 1 percent of the budget, or about $35 to $36 million.
The Senate Republican plan initially was more severe, calling for $52 million in cuts. That later was reduced to $34 million when senators approved Senate File 2117, The House’s first plan called for $22.7 million in cuts.
“These cuts could have and should have been avoided,” said Sen. Nate Boulton, D-Des Moines.
Earlier this month, the state’s Revenue Estimating Conference boosted Iowa’s tax revenue projections, including showing an increase in the windfall expected from federal tax changes from $28.4 million to $33.3 million. But that still left a $3.6 million gap between the revenue forecast and the $7.274 billion general fund budget the Legislature had approved a year ago, according to a Senate Republican staff analysis.
In addition to the $25 million in general fund budget cuts agreed to this week, the overall adjustment in SF 2117 includes $10 million of unspent gaming revenue earmarked for the High-Quality Jobs Program that has been channeled in the general fund as a revenue adjustment and a $2 million supplement for indigent defense and utility costs.
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