From Republican Leader Kraig Paulsen:

The House Economic Growth Committee concluded its final committee meeting of the session by inviting Iowa businesses to testify on Iowa’s business climate. This idea was included in the House Republicans’ job creation plan rolled out last fall. The meeting marked the first time the Economic Growth committee engaged in an in-depth discussion with the private sector on the struggles facing Iowa businesses as they work to jumpstart the economy and create jobs.

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From Republican Leader Kraig Paulsen:

Last week in the House, the State Government committee worked on the reorganization bill (SF 2088). The bill in its current form saves a little over $70 million.

In order for the Governor’s budget to balance, he needs a minimum $391 million in “general fund” spending reductions. About $30 million of that is expected to come through early retirements. Another $90 million will be achieved through the Governor’s savings that he achieved internally for a total $120 million in savings.

This leaves $271 million that needs to be saved through additional legislative decisions.

Continue reading for Republican’s $290 million in savings ideas…

From Republican Leader Kraig Paulsen:

The Revenue Estimating Conference (REC) met last Wednesday to revise the revenue estimate for FY 2010 and set the revenue estimate for FY 2011. The REC is a panel of three people — Richard Oshlo (Governor’s appointee), Holly Lyons (Legislature’s appointee) and David Underwood (private sector representative, appointed by the other two members).

Recall a fiscal year runs from July 1st through June 30th and we are currently in FY2010.

The previous REC estimate for FY 2010 was $5.843 billion, or negative 1.4 percent compared to actual adjusted FY 2009. The new estimate is $5.438 billion, or negative 8.4 percent compared to FY 09. This is $415 million lower than the estimate used to create the FY 2010 budget.

As a result the Governor ordered a 10% across the board cut. This cut applies to all General Fund expenditures regardless of need or priority. The cut the Governor made is somewhat larger than was necessary in order to hedge against a further reduction in December and possibly provide some backfill next January.

Most Iowans will see the impact of this cut in their property tax bill. Among other things, an across the board cut reduces the state funding for the K-12 education foundation formula. This is the amount the state provides school districts on a per pupil basis. As across the board cut does not reduce the amount of money a school district can spend.

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From Republican Leader Kraig Paulsen:

Although the 2009 Legislative Session came to an end a few months ago, there is still much that is happening which will affect Iowa taxpayers.

Unless a bill states otherwise all new laws passed this year went into effect on July 1. Some Iowa labor law changes, a few tax provision changes and the implementation of the new sex offender law all took effect on July 1.

June 30th marked the end of the 2009 fiscal year. As I’ve stated in the past, Democrats passed, and Gov. Culver signed, the most spending in the history of our state. So when the books closed on the year yesterday, we shouldn’t have been surprised to find out what a fiscal mess we are in.

The nonpartisan Legislative Services Agency announced that net state revenue came in $161 million below the Revenue Estimating Conference’s (REC) estimate. This news coupled with the historic spending means the 2009 and 2010 budgets are now BOTH out of balance. The 2011 budget (which is the one the Legislature will work on next spring) now has a gap exceeding $1 billion.

My expectation is the Governor will try to transfer what he can and scoop money from where he is allowed, but in the end he will likely be $43 million short. This could result in a special legislative session where legislators are called back to make changes to the budgets.

Be assured, if and when we return to a special session, House Republicans will work to solve this self imposed problem within the money we already have. We will not support raising taxes.

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From Republican Leader Kraig Paulsen:

Tuesday at Midnight was the close of the 2009 session. This is when the Governor had to decide what bills to sign or veto. You have likely already seen some of what was vetoed – especially if it was some piece in which you were interested. But as I told the press … what is more interesting is what he signed.

After all the talk of budget cuts and not raising taxes, the governor just signed what amounts to the most general fund spending in the history of Iowa. I find it truly remarkable that after all the talks of cuts more money was spent than ever before.

I think it was very regrettable that rather than use tough times to make tough decisions this General Assembly used it as an opportunity to grow government.

It is accurate to say Iowa cannot legally spend more than it takes in and House Republicans made sure that law was complied with. So where did this additional money come from? Answer: YOU, of course.

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From Republican Leader Kraig Paulsen:

As we move closer to adjournment for the year, we’ve been hearing that the Democrats may try to make one last go at some big-labor bills that will hurt Iowa taxpayers and our economy.

One issue that seems to be gaining steam is instituting changes to Iowa’s collective bargaining law. The unions want to take away a school board’s authority to get rid of bad teachers. Under the proposal we’re hearing about, current school board rights are at risk. In 2008, the Democrats tried to gut school boards’ rights and this proposal would be similar. They would:

• change the right to let a bad teacher go after the first year of employment with no questions asked. Today, bad teachers who don’t fit in the district don’t have to be re-hired and the school district doesn’t have to go through a long termination process. Legislation last year got rid of this right.
• change the right for the school board to participate in the termination of a teacher. Legislation last year removed the school board as a party to a teacher termination procedure.
• change the right for the school board to appeal the reversal of a termination. Legislation last year said that the government’s administrative law judge was the final decision-maker and the school bard can’t appeal that decision.

It’s time to engage and make your voice heard. Please call your representative at (515) 281-3221 or email them http://www3.legis.state.ia.us/ga/legislators.do?ch=h&ga=83 and tell them not to gut Chapter 20 and protect the rights of our elected school boards.

From Republican Leader Kraig Paulsen:

Last week two significant issues became somewhat clearer. First, the Governor’s bonding proposal was partially revealed. Second, the final budget numbers are starting to take shape. Although there are still significant pieces we have yet to see, it appears the Democrat Leaders want to complete our work this week and adjourn for the year – but at this point I think that will be very difficult.

Bonding

Last week, we were able to see the beginnings of the legislation which will send our state into debt, borrowing between $700 million and $750 million.

It is my understanding that the Bonding Plan includes three separate bills. At this point, we have only seen one complete bonding bill. This is frustrating because as you may recall this was a proposal the Governor proposed 14 weeks ago in his State of the Union address.

Senate File 376 is Part 1 and currently has $175 million in bonding in it. This bill will cost taxpayers $141 million in interest over 20 years. The $175 million is to correct a flaw in the borrowing proposal the Democrats passed last year.

Senate File 474 is Part 2 and has $100 million in bonding in it and will cost the taxpayers $80 million in interest. This is exclusively focused on rebuilding parts of the University of Iowa campus damaged from the floods last summer. These bonds will be backed by tuition.

The last bill is SF 477. We have not seen this legislation but is my understanding that it will total an additional $125 million in borrowing. $100 million of this is for vertical infrastructure that will be determined next year and $25 million for broadband (aka the ICN network).

Over the last two years, Democrats in the Legislature have used well over $200 million in infrastructure dollars for non-infrastructure spending. If the infrastructure fund was used for what it was intended instead of spending it on various non-infrastructure priorities, this borrowing discussion wouldn’t be happening. That means we could be using a pay-as-we-go approach instead of borrowing.

Regardless, plunging our state into debt and borrowing just because we can is not being responsible with taxpayers’ dollars. The Legislature should not saddle our children and grandchildren with debt when we are perfectly capable of paying for the projects on a pay-as-you-go basis.

Budgets

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From Republican Leader Kraig Paulsen:

Last week was eventful in the Legislature. It was the second “funnel” deadline and if a non-Appropriations or non-Ways and Means bill that did not make it through a committee in the other Chamber it is no longer eligible for debate as a standalone bill.

I expect this week to be rather eventful also. We seem to be moving towards adjournment for the year but several significant items remain. I continue to be disappointed by the Legislature’s lack of effort towards any bills that help put Iowans back to work. I also have some significant concerns about the budget.

Below is a list of some of the proposals that seem to have some life in them.

Budget
Budget bills are beginning to move. It is unclear what the final budget will look like. What I do know is this: the current budget year is out of balance by $70+ million and next year’s proposed budget does not match with projected revenues and therefore is currently out of balance. My expectation is that both of these will be brought into balance with some combination of federal stimulus dollars, other one time sources, and tax or fee increases. Regardless, it appears there will be significant gaps to fill when the “one time” dollars go away.

Republicans have offered over $215 million in budgetary cost savings. Click here http://iowahouserepublicans.com/republicans-offer-budget-reductions-to-the-fy-2010-budget for the complete list.

Federal Deductibility
Regarding the repeal of Iowans’ ability to deduct their federal income taxes from their state income a new version has been introduced. It is slightly improved, but continues to be a massive tax increase on Iowans.

Based on the information we received from the Department of Revenue the total tax increase on Iowans over the next five tax years equals $460 million.

Tax Year 2009: -$20 million
Tax Year 2010: -$35 million
Tax Year 2011: $154 million
Tax Year 2012: $157 million
Tax Year 2013: $149 million

Further, the plan continues to have “winners” and “losers” in every income tax bracket. Winners are those who will receive a tax cut – winners are those who will see a tax increase.

Individual Filers/ Winners vs. Losers and No Change

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