Second Step
Last week Governor Branstad presented to the Legislature, his budget for the next two years. Under the Iowa Constitution, the Governor proposes a budget and the Legislature approves that budget. His budget proposal is the starting point for the development of the Legislative Budget Target that eventually, after debate and negotiation, evolve into a state budget for the next two years.
The Governor was not ”bashful” as he laid out his plan for the next two years. All of us in the Legislature know that we have severe budgetary problems-----a $500 million dollar shortfall. Everyone knows we cannot sustain our current budgetary level. The Governor campaigned on the issue of a sustainable budget. “We cannot spend more than we take in. Our state budget has been running on a credit card. Iowa families have had to reign in their spending, and so should we.”
The Governor promised to cut the budget and create jobs. His budget request does both, as most agencies are cut by six percent and he proposes to cut the corporate income tax rate and reduce commercial property taxes.
This is the first budget proposal in five years that would align ongoing revenue with ongoing spending, and it does it in the first year. The Governor’s recommendation for FY 2012 is just over $6.1 billion, or a decrease of $185 million, compared to adjusted FY 2011.
He freezes state spending for K-12 schools. “Allowable growth” means the dollar amount by which state costs per pupil, and district costs per pupil, will increase from one budget year to the next.
The previous administration and majority party set a two-percent allowable growth for FY 2011, and then proceeded to underfund that new funding authority by $156 million. In addition to that, they used $47.9 million in one-time federal stimulus funds and a one-time transfer of $5.1 million from the Underground Storage Tank Fund to replace general fund dollars. This is a total of $209.1 million that needs to be replaced in the budget if we want to fulfill our obligations to schools and property tax payers. Add to this a built in program increase of $6.7 million which comes no matter what allowable growth rate is set, and zero percent allowable growth rate, which means the legislature has to find $215.9 million for FY 2012 just to meet the obligations from the previous legislature.
The Governor does not propose any funding for the “Culver salary increase”. Because of Governor Culver’s agreement, the agencies must give the raises (15% over two years) but they will have to fund the raises within the money they are appropriated for operations. The bill is $108 million, and agencies will have to find the money. Workers with most seniority will get their raise, while those with less will lose their jobs.
The Governor, in his effort to attract business, proposes to set corporate income tax at a flat rate of six percent, at a cost of $200 million. He would raise gambling taxes from the current 22 percent to 36 percent.
The Governor also proposes that new corporate property be taxed at 60 percent of value and existing corporate property would be reduced to 60 percent (from the current 100 percent) over the next five years. He proposes making up one-half of the $500 million reduction in revenue, and local governments will be forced to make up the other half.
This next week the “budget dance” will begin; The House and the Governor on one side, and the Democratically controlled Senate on the other. The House and the Governor will negotiate and come to an agreement on a budget that will spend no more than it takes in. The Senate will want to continue on their ways of the past-----using one-time monies for ongoing expenditures.
At stake, and the focal point of the debate, will be the projected ending balance for FY 2011…..$327 million. The House and the Governor would return this excess revenue to the tax payer and stand on a sustainable budget. The Senate would spend it.
The House and Senate must come to some agreement between themselves, and in the end, Governor Branstad waits with his veto pen to eliminate anything he does not agree with in our agreed-to budget.
I know it sounds all too complicated, but our founding fathers wanted it this way. Our form of government forces us to have discussion and negotiation to come to an agreement that collectively addresses the best interests of the people. It may look awkward and confusing, but “there is no king.” There was one once, but many have fought and died for the democracy we have today.
Visitors to the Capital this week include Cassie Alaniz Gerst, Henry County Mentoring; Steve Brimhall, Mayor of Mount Pleasant; Pat Fricke and Sydney Bradley of Winfield; Warden Ron Mullin and Robin Malmberg of Mount Pleasant.
My mailing address is:
Dave Heaton, State Representative, State House, Des Moines, Iowa 50319
Phone: 515-281-7327 ~ Fax: 515-281-6958
E-mail: dave.heaton@legis.state.ia.us
Web page: http://www.daveheaton.net
If you have any issues or concerns, please contact me.
Be sure to include your name and address with any communication to my office.
State Rep. Dave Heaton, R-Mount Pleasant, represents the 91st House District,
which includes all of Henry County and the northern half of Lee County.
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