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Iowa Gov. Branstad Focuses on Balanced Budget in 2015 Condition of the State

Branstad seeks $7.3 billion budget for fiscal 2016.

By Rod Boshart

State lawmakers from both political parties took greater issue with what Gov. Terry Branstad did not include in his 2015 legislative agenda than what he outlined in Tuesday's Condition of the State address and his $7.3 billion budget proposal for the next fiscal year.

MORE: Text, highlights and video of every governor's annual address.

For Democrats, it was the lack of talk and money for K-12 public education. For Republicans, it was the absence of income tax relief and 5 percent spending growth that required $129 million of the state's surplus to balance the state's fiscal 2016 ledger.

"In his speech, he said that our budget should reflect our priorities, and then he completely ignored K-12 (school) funding. I guess that tells us where his priorities are," said Sen. Herman Quirmbach, D-Ames, who indicated majority Senate Democrats will seek more than the $320 million in overall education spending the governor proposed over the next two fiscal years. He expected Democrats would set 6 percent growth as the starting point for education aid negotiations.

Budget documents distributed by Branstad aides called for boosting state supplemental aid to K-12 schools by $50 million, or 1.25 percent, in fiscal 2016 and $100 million, or 2.45 percent, in fiscal 2017 along with money needed to fund early childhood and teacher leadership/education reform initiatives.

"You've got to look at the whole picture with what we're doing for education and just not one piece of it," Branstad said in an interview. "We're investing in improving the skills of our teachers to improve the achievement of Iowa students, and we're doing it in a very thoughtful, systematic way over a period of years. I feel good about that."

Meanwhile, Republicans like Urbandale Sen. Brad Zaun said he was disappointed by the level of spending the governor proposed for the next two fiscal years.

"I think we're spending too much money, but I recognize that this is a starting point for discussions. I would assume the House budget will come out a lot less," Zaun said. "We're growing government, based on this budget, at a 5 percent rate and I think that's too excessive."

Branstad proposed a two-year state budget plan that seeks to boost general fund spending by 5 percent beginning next July 1 to fund priority increases and cover past commitments made to provide property tax relief and implement K-12 education reforms.

The governor submitted a budget proposal that seeks to increase general fund spending to $7.3 billion in fiscal 2016 and $7.5 billion the following fiscal year, when general fund spending would rise by 2.5 percent, according to Branstad aides. Overall, state spending would jump 4.3 percent to $7.818 billion in fiscal 2016 and top $8 billion the following fiscal year, or about 2.5 percent.

The governor's balanced spending plan seeks to fully fund the state's property tax reform and education reform commitments while freezing in-state undergrad tuition at state universities for a third straight year and allocating $320 million in new dollars for Iowa's K-12 schools and $57.65 million to improve water quality in Iowa over the next two fiscal years.

Community colleges and state universities would receive 1.75 percent increases for operations in fiscal 2016 -- $3.5 million for community colleges and $8.8 million for the regents to fund performance-based changes and the tuition freeze, while tuition grant funding for private colleges in Iowa would grow by $4 million, aides said.

"Our work has put us on a bright, sustainable path," Branstad said in delivering his 20th Condition of the State address to a joint legislative session Tuesday. "Our budget is balanced, our state maintains a budget surplus, our economic emergency accounts are fully funded and our unemployment rate is the 10th lowest in the nation. And we've done it together."

David Roederer, director of the state Department of Management, said the biennial budget required the use of $129 million and about $25 million in surplus funds, respectively, to help balance spending in each of the next two fiscal years. Projections show general fund ending balances, beyond the required 10 percent in surplus reserves, slipping from $411 million at the close of the current fiscal year next June 30 to $250 million in fiscal 2016, and then to $193 million in fiscal 2017, before starting to grow again in future fiscal years.

House Speaker Kraig Paulsen, R-Hiawatha, said his majority caucus would prefer to see government spending go down and more money returned to taxpayers in contrast to the governor's budget approach. "We're very committed to our principles of balancing ongoing revenue with ongoing expenses. We'll just have to work through it."

Branstad's budget blueprint called for $347 million in new spending for fiscal 2016, which included $132 million for property tax relief, $121 million for education, $72 million for human services, $13 million for justice system programs and $9 million for other budget areas. Without the commitment to property tax relief, the proposed increase in state general fund spending would be 3.1 percent.

The proposed funding increases for fiscal 2017 would total $184 million -- with $139 million for education, $28 million for human services and $16 million for property tax relief topping the list.

"While we applaud the governor for making anti-bullying legislation a priority, we deeply regret he has ignored the details in how he is proposing to fund Iowa's K-12 public education system," said Tammy Wawro, president of the 34,000-member Iowa State Education Association, who noted Iowa ranks 35th nationally for per-pupil funding that is $1,612 below the national average.

"Iowa's schools cannot function on a wing and a prayer," added Wawro, head of Iowa's largest teachers' union, "We have seen the results of a sleight-of-hand approach when the governor claims he wants our public schools to be the best, yet still underfunds them."

Overall, state spending divides up 55 percent to education, 26 percent to human services, 9 percent to justice systems and 10 percent to fund other areas of state government in Branstad's fiscal 2016 budget plan, aides said.

"We've put ourselves in quite a tough spot with the commitments we've already made," said Sen. Joe Bolkcom, chair of the Senate Ways and Means Committee. "I think this tight state budget is going to undermine our ability to make sure our kids get the best classroom experience possible, the best teacher possible."

State operations are funded equally from federal and state sources, which make up about $14 billion in overall spending. However, with federal budget cuts and cost shifts in the offing and uncertainty looming over grain prices paid to Iowa farmers, "I think it's fair to say that we need to be extremely cautious," Roederer said.

Highlights of Gov. Terry Branstad's budget plan

--Balanced for two years, fits within five-year projections

--Fully funds commitments to property tax relief, school reform

--General fund appropriations $7.341 billion (up 5 percent) in fiscal 2016, $7.525 billion (up 2.5 percent) in fiscal 2017

--Spending breakdown: education 55 percent, health/human services 26 percent, justice 9 percent, other 10 percent

--Major fiscal 2016 increases (total $347 million): property tax $132 million, education $121 million, human services $72 million, justice $13 million

--Major fiscal 2017 increases ($184 million): education $139 million, human services $28 million, property tax $16 million, justice $3 million --Overall two-year commitment: $320 education, $57.65 million water quality

--Ending balance (surplus) $250 million in fiscal 2016, $192.6 million in fiscal 2017

--Cash reserves $721.2 million in fiscal 2016, $750 million in fiscal 2017

(c)2015 The Gazette


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