Iowa House-Senate agree on $117.8 million budget cuts
Iowa House and Senate Republican leaders have struck an agreement with Gov. Terry Branstad to fix a shortfall of nearly $118 million in the state's budget for the fiscal year ending June 30.
The deal includes no spending cuts for K-12 education and Medicaid health care. It proposes a combination of $88.2 million in budget cuts for state agencies with $25 million in transfers from a variety of state funds. That includes $12 million shifted from the Grow Iowa Values Fund, which is a source for projects focused on job creation or retention, value-added agriculture and entrepreneurial efforts. There is also a $4.5 million adjustment to property tax credits, which are still fully funded.
"There are tough choices that have to be made because we spent too much," said Sen. Charles Schneider, R-West Des Moines. "We have been concerned for some time that we have been spending too much and not having enough for situations like this."
But Sen. Joe Bolkcom, D-Iowa, complained that tax cuts are being held harmless and are growing faster than state spending. He added that he was especially disappointed the budget plan will hurt higher education programs, particularly community colleges and the three state universities.
Year after year of tight spending for higher education will have a "super-detrimental effect" on students and will force significant increase in college tuition, Bolkcom said.
Budget deal cuts $8 million from UI, ISU; $2 million from UNI
The agreement on an amendment to Senate Study Bill 1018 was approved on a 2-1 vote Monday in an Iowa Senate subcommittee, advancing it to the Senate Appropriations Committee. Both the House and Senate are expected to finish work on the budget revisions this week, sending them to Branstad for his signature.
Ben Hammes, a spokesman for Branstad and Lt. Gov. Kim Reynolds, confirmed that both collaborated with legislators on the agreement. The completion of work on the deal will allow lawmakers to shift their focus to budgets for the 2018 and 2019 state fiscal years.
After repeated complaints that Branstad's blueprint for spending cuts hit too hard on higher education, the agreement softens the impact of spending cuts. Iowa's community colleges now face a $3 million reduction, compared to $8.7 million originally sought by the governor. In addition, the three state universities will share $18 million in cuts compared to $25.5 million as first proposed.
The breakdown on Board of Regents' cuts includes $8 million for the University of Iowa, $8 million for Iowa State University, and $2 million for the University of Northern Iowa.
The Iowa Department of Corrections, which operates Iowa's prisons, had faced a spending reduction of $15 million, which has now been reduced to a cut of $5.5 million. In addition, legislators said there will be operational reductions of $11.5 million across most of state government. The Iowa Department of Public Safety, which had faced $3.8 million in cuts, now must trim $1 million in spending. Meanwhile, Iowa's judicial branch, which faced $7.7 million in cuts, will make $3 million in cuts.
Rep. Pat Grassley, R-New Hartford, who chairs the House budget committee, said House members agreed to reduce the size of spending cuts on the three state universities in an effort to ease burdens on the schools. He also said the revised budget is intended to ensure that state troopers won’t be taken off the state's roads by the Department of Public Safety
Grassley said he plans to move the bill through a House subcommittee and full committee Tuesday.
No money will be transferred from the Iowa taxpayer trust fund, but $6.1 million will be transferred from the Cultural Trust Fund, along with $1 million from the Strategic Investment Trust Fund, $2 million from the Innovation and Commercialization Fund, $2 million from Economic Development Energy Projects, and $2 million from the Federal Economic Stimulus & Jobs Holding Fund.
Sen. Tim Kraayenbrink, R-Fort Dodge, who is a financial adviser, said lawmakers need to tighten their reins on spending, noting that about $750 million in state budget surpluses have been exhausted the past three or four years.
"It is time for us to set priorities. We can't afford to fund everything," Kraayenbrink said.
State Rep. Chris Hall, D-Sioux City, issued a statement accusing Republicans of violating their own budget principles for each of the past three years. Citing data from the Legislative Services Agency he said this is the first time in decades that a de-appropriations bill will be required at a time when the state’s economy is positive and revenue collections are growing.
"Since the Branstad-Reynolds administration and House GOP took control in 2011, the state budget has grown by $1.4 billion," Hall said. "State services have been cut or underfunded each year while a greater share of individual taxpayer dollars have been sent to out-of-state corporations. The Iowa GOP has lost all credibility on budgeting. After giving away the state’s budget surplus, policies enacted by the Branstad-Reynolds administration and Republicans have slowed the state’s economy and left the budget in the red."
Branstad told reporters Monday he blames the need for state budget cuts on a "very difficult farm economy" that has resulted in commodity prices that have been below the cost of production. He emphasized that cuts are being made selectively, and not across the board, allowing lawmakers to set priorities, such as not disrupting Iowa's K-12 schools.
"We at least have a budget that is balanced and our reserve accounts are full," Branstad said.