DES MOINES — Gov. Terry Branstad said he wants to eliminate allowable growth from the state school funding formula and replace it with something else.

“We haven’t put (a proposal) together yet, my staff is working on it,” Branstad said during a question-answer session at the Iowa Farm Bureau’s annual meeting in Des Moines. “We’re looking at some type of inflation … a factor that would be fully funded by the state.”

Iowa lawmakers each year set allowable growth. It is the percent that a school district can allow its budget to grow from year to year. Branstad told the group the practical effect of that system is “you have an automatic increase in property tax each time allowable growth goes up.”

Allowable growth covers a good share of schools’ infrastructure, transportation and operational costs. Lawmakers, particularly Democrats, have criticized the governor for recent proposals of zero percent growth for allowable growth.

“Something like this, we’d have to see the details of what comes out,” said Jean Hessburg, spokeswoman for the Iowa State Education Association.

Branstad, who earned a standing ovation from the audience during his entrance and exit, kept his prepared remarks on the topic of taxes.

He said a property tax relief plan will be a primary part of his legislative agenda for the 85th General Assembly, which convenes on Jan. 14.

“I want to assure local governments that we will fully fund the (tax revenue) reduction,” he said. “But we want to make sure it’s a replacement and not used for additional spending.”

Branstad also said he thinks a fuel tax hike could pass the Iowa Legislature this session.

“The only way I see the legislature doing it is if it is part of a comprehensive tax reform proposal,” Branstad said. “The thing about it is, is it’s a motor user fee which means people who use the roads, pay for them — including out-of-state users.”

The remark about out-of-state users drew applause from the crowd. It was one of two times the governor got applause during his speech. The other was when he said that state workers should pay at least 20 percent for their health insurance coverage.