DES MOINES — Heading into the 2019 legislative session, Republican talking points include: a) Iowa’s economy is strong; b) the state budget is balanced; and c) there’s a $127 million surplus in the treasury.
“Our budget is in a much a strong position than two years ago when we took over” after years of sharing control of the Iowa Legislature with Democrats, according to Senate Majority Leader Jack Whitver, R-Ankeny.
“This economy is growing,” added Republican Gov. Kim Reynolds. “We have great things happening.”
But after two consecutive sessions of rescinding and repurposing money already appropriated to keep the state’s $7 billion-plus general fund on course, Whitver said Republicans aren’t about to take their feet off the brakes and punch “resume spending.”
“Even though we are in a strong position and it seems there is more money that we could spend, we know we need to be very diligent (because) the economy is a little volatile right now,” said Whitver, 38, who will lead the 32-member GOP Senate caucus when this year’s Legislature convenes Monday.
What concerns Whitver and fellow Republicans is the impact tariffs, trade policy, historic tax changes and employers’ need for skilled workers could have on the state economy and tax collections.
Although the December Revenue Estimating Conference report projected an increase in tax collections, Republican House Speaker Linda Upmeyer, 66, said her 54-46 Republican majority believes it has “no obligation to spend every nickel we take in.”
“No matter what the resources are, our goal is for a responsible budget,” the 16-year House veteran from Clear Lake said. “I would argue that we need to be thoughtful about the budget even though there are more resources than we’ve seen in the last few budget cycles.”
David Roederer, 68, director of the Department of Management, expects the budget process to be “less difficult than some other years.”
But Roederer and the other two members of the revenue estimating panel scaled back previous growth estimates by $18 million in December.
The panel projected a 4.7 percent increase in tax collections — nearly $345 million — in the current fiscal year that ends June 30. Then it expects growth to slow to 1.8 percent, or $139.8 million more, in fiscal 2020 — the budget year for which lawmakers will craft a new state spending plan in the upcoming session.
“We believe that there will be enough funding to do the essentials which government is supposed to do and the commitments that have been made,” Roederer said in December. “There will never be enough money to fully fund everything that everyone comes in the door wanting.”
There will be enough money in the budget to fund her priorities, Reynolds said, but it will be a challenge because “people want more money in education, more money in public safety.”
Most state agencies complied with Reynolds’ request to propose status-quo budgets. Overall, their requests for the budget year beginning July 1 were two-tenths of 1 percent higher than the current $7.26 billion general fund budget.
Reynolds hasn’t ruled out restoring some of the cuts she and the Legislature made in budget de-appropriations over the past two years.
Bottom line, Senate Minority Leader Janet Petersen, D-Des Moines, said, Iowans’ priorities need more funding.
“Hopefully, we won’t see another bare-boned budget year for education,” she said. “Public schools took a significant hit.”
Nor did higher education escape the de-appropriations ax, Petersen, 48, said. Besides millions taken back from the Board of Regents, some students were turned down for Kibbie Grants that cover about half of the tuition at the state’s community colleges.
“It’s going to be a question whether that’s a priority for the governor and the leadership in the House and Senate to support the universities the way they need to be supported and community colleges,” she said. “Iowa families are going to pay the price in higher tuition costs.”
Reynolds’ preliminary budget shows a zero growth rate for K-12 state aid. The growth rate Supplemental State Aid typically is announced after lawmakers begin working on the budget. Whitver pointed out that education funding is 45 percent of the state budget and Senate President Charles Schneider, R-West Des Moines, noted that since 2001, the Legislature has increased state aid to local schools by $765 million.
Two of Reynolds’ priorities in the 2018 session and on the campaign trail were developing a children’s mental health and the workforce development Future Ready Iowa initiative. Both won unanimous support from legislators, “but there is no funding attached,” Petersen said.
“So if you want them to actually work, we’re looking forward to seeing what the governor outlines in her budget,” she said.
Not every department director submitted a status-quo budget.
Democratic Iowa Attorney General Tom Miller is asking the governor and legislators for a $500,000 boost in fiscal 2020 and a $1 million increase in his agency’s budget for the following fiscal year to help recover from years of flat state funding or midyear cuts that have created a “perilous” situation for the state’s Department of Justice. His office has about the same number of attorneys as five years ago but is handling 40 percent more cases.
The Department of Human Services asked for $1.82 billion, about $828 million more than its current budget. Most of that is needed to cover Medicaid, which Roederer said costs about $156 per second.
“If we don’t bend and control the cost curve with Medicaid, that starts to eat up all of the available dollars,” the governor said.
In the end, House Minority Leader Todd Prichard, D-Charles City, said, Democrats are ready to work with the governor and GOP colleagues to fund their shared priorities.
“There’s definitely room with Future Ready Iowa to find bipartisan support,” he said. “There’s definitely room to find bipartisan support to solve Iowa’s mental health crisis.
“But as always, it’s the details,” Prichard, 45, said. “The devil’s in the details.”