Iowa lawmakers reach agreement on fiscal 2015 budget target

$6.972 billion target would be increase of more than 7 percent over current budget

Rod Boshart
Published: March 5 2014 | 3:40 pm - Updated: 1 April 2014 | 9:11 am in

DES MOINES – Leaders in the split-control Legislature agreed Wednesday to an overall spending level for the fiscal 2015 budget year – a rare and key development that could hasten the process of shutting down the 2014 legislative session.

Negotiators set a joint overall spending target for the state general fund beginning July 1 at nearly $6.972 billion. That would represent a 7.39 percent increase compared to current year funding that is $6.492 billion and come within $30 million of Gov. Terry Branstad’s proposed fiscal 2015 spending plan.

“In my 10 years, I do not remember one (year when we had joint targets) and in talking in staff, they do not remember when there is a split chambers that there have been joint targets,” said Rep. Chuck Soderberg, R-LeMars, chairman of the House Appropriations Committee, “so it’s a pretty significant milestone to work together to achieve this.”

“I don’t think this has happened in recent memory,” added Sen. Bob Dvorsky, D-Coralville, chairman of the Senate Appropriations Committee, in sizing up the joint targets. “This is like my 28th year here and democracy actually works, strange as it may seem, and that’s part of it. We just sit down and start talking and go through these budgets and keep working away, and so it actually does work.”

Lawmakers’ fiscal 2015 spending target is lower than the $7 billion in general fund spending Branstad proposed in January and was under the fiscal 2015 available revenue estimate of $6.983 million established in December by the state Revenue Estimating Conference.

David Roederer, director of the state Department of Management and Branstad’s budget chief, said the governor “is still sticking by his budget” and administration officials will monitor developments as the budget subcommittees “flesh out” the details of next fiscal year’s spending plan.

“It’s still a journey,” Roederer said in an interview.

Within the overall target set by Republicans who control the Iowa House and Democrats who lead the Iowa Senate, the health and human services area received a nearly $107.4 million boost to $1.858 billion, while education was in line for an $87.15 million increase to $986.1 million that included money to freeze tuition for in-state residents at regent universities and an $8 million hike for community colleges.

The joint targets also would fully fund a 4 percent increase in state aid to K-12 school districts, provide money to cover 2013 commitments made for property tax relief and education reform and increase the state’s share of Medicaid spending.

“We believe that this is the art of what is possible,” said Senate Majority Leader Mike Gronstal, D-Council Bluffs, who held a closed-door meeting with House Speaker Kraig Paulsen, R-Hiawatha, where the two smiling leaders shook hands after sharing details with their respective majority caucuses.

Lawmakers already passed a 4 percent increase in state aid for K-12 public schools for fiscal 2015 last session that Branstad signed into law -- increasing basic state aid by $245 per pupil to $6,366. Earlier this session, Democrats in the Senate approved a 6 percent boost in state which would have boosted per pupil funding for Iowa’s public elementary and secondary schools by $382 to $6,748 for each student, but majority House Republicans declined to set a fiscal 2016 school funding level this session as prescribed by state law.

The proposed spending level agreed to by Republicans who hold a 53-47 edge in the House and Democrat who have a 26-24 majority in the Senate would grow by nearly $479.6 million over fiscal 2014 estimates. The governor proposed to hike general fund spending by more than $508 million in the fiscal year that begins next July 1, but aides noted his fiscal 2015 request was inflated by commitments to tax relief and education reforms that were approved last session.

“Iowa must continue to be a place of opportunity where people willing to work hard and play by the rules can succeed,” said Sen. Bob Dvorsky, D-Coralville, chairman of the Senate Appropriations Committee. “That means making smart investments in the economy, education, and health care, while also defending the right of Iowa workers to earn a decent living. It also means a fiscally responsible budget that is balanced, does not raise taxes and leaves our ‘rainy day’ and reserve accounts full.”

In January, Branstad proposed to increase overall general-fund spending by 7.8 percent over current funding levels. That total shrunk to 5.7 percent when the money to “backfill” local governments for potentially lost revenue was taken into account, aides said.

Overall, the governor’s $471 million in adjustments for fiscal 2015 included $120 million for property tax replacement, $170 million to provide a 4 percent boost in state aid to K-12 public schools, $54 million in implement education reforms approved last session, and $86 million to pick up a greater share of the state’s Medicaid obligation not covered by the federal government.

“The budget is very fair to all departments,” said Soderberg, who noted that no increased funding was provided for state salaries but agencies were given adequate dollars and flexibility to meet their priority and staffing needs. The House budget leader also said state surplus money will not be used to fund ongoing programs or services, but legislators could look for one-time areas to reduce state debt depending on the flow of tax collections through the remaining of the fiscal year.

The governor projected that his spending plan would result in a $723 million surplus by the end of June 2015. However, his budget experts said the state’s ending balance is expected to decline incrementally in coming fiscal years until settling at about $87 million in fiscal 2019 once the property tax and education reforms are fully implemented.

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