State Budget Looks to Pass; School Aid Next

Jan 30, 2017

A lot of action happened last week at the statehouse and it shows no sign of slowing down. Here’s what to expect going into the week.

The state budget is a “done deal,” Joyce Russell says. On Monday, the Iowa House will vote on a Senate budget bill that resolves an immediate shortfall in Iowa’s $7.2 billion state budget. It was approved on a party-line vote in the Senate.  It will likely be the same in the House this week. This is an agreement worked out among the governor and Republicans in the House and Senate. The bill would make significant cuts to a number of state agencies. It also shifts money from various separate funds and puts it into the general fund where the deficit is looming. One example that brought a big crowd to the capitol last week: the Cultural Trust Fund that makes arts and culture grants to Iowa artists and communities.  Governor Branstad took the balance in that fund and put it into the general fund. “The fund is still on the books but it’s empty,” Russell says.

The deal also puts off some tax cuts. After the election, Republicans were speaking to groups around the state talking about their hopes for cutting taxes, now that they had the majority.  Income taxes are included. 

“Others had warned that the state can’t afford tax cuts right now,” Russell says.

The governor had called for about $30 million in tax deductions and would have extended some federal income tax deductions to Iowa taxpayers.  “This is very disappointing.   We always want to give tax relief to Iowans,” says Senator Randy Feenstra is new main GOP tax writer in the Senate. “But we had $118 million in deficit spending from the year before that we had to fix.”

“There’s been a lot of talk about how the state got to this point of having to cut the budget,” Russell says. The governor blames the farm economy and certainly it’s a big reason for this year’s’ downturn. “But taking a broader view, some Democrats are arguing that it’s been big tax cuts over the years that left the state treasury where it is,” Russell says. That includes the record property tax cut back in 2013.

The next big thing: State School Aid. “The budget cutting bill is off their plates as early as today,” Russell says. Governor Branstad recommends a 2% increase. School superintendents say they need at least 4% to avoid laying off teachers. Some information came out last week that Republicans in the legislature may be going to offer a little more than 1% increase. “If that’s true that’s going to be very controversial,” Russell says.

Legislators are shortening the session. As part of the budget-cutting bill,  they’re cutting the session back from the regular 110 days to 100 days in order to save money on per diem. So the legislature’s taking some of the hit of the budget cuts.

There was a little bit of snarkiness in the debate in the Senate on the budget bill that Governor Branstad’s office isn’t taking any cuts to help balance the budget,” Russell says.