Democrats Still Cleaning Up FY 2009 Budget

From this week’s House Republican Newsletter:

House (Finally) Begins Work to Balance the FY 2009 Budget

On Monday, February 23, the House Appropriations Committee approved House Study Bill 212, which attempts to balance the FY 2009 budget.

The FY 2009 General Fund revenue estimate was first decreased by the Revenue Estimating Conference (REC) on October 9, 2008. It was further decreased by the REC on December 12, 2008.

Due to the excessive spending in the 2007 and 2008 sessions and the reduction of revenue by the REC, the FY 2009 budget was in a deficit situation. In attempting to balance the FY 2009 general fund budget, the Governor recommended four things:

  • Shifted $48 million of revenue from other funds into the general fund
  • Made selected cuts of $30 million to Executive branch agency budgets
  • Enacted a 1.5 percent across the board cut, which cut $89 million
  • Increased spending by $63.3 million via supplemental appropriations

In addition, the Governor reallocated $30 million of funds to put into the new Jumpstart Iowa Program.

In hindsight, it is clear that the Governor should not have taken the piecemeal approach to fixing the FY 09 budget. Had the Governor enacted a 3 or 4 percent across the board cut in October, it not only would have eliminated the FY 09 shortfall but also would have helped reduce the deficit in the FY 10 budget.

HSB 212 is the Democrats’ answer to the FY 2009 budget deficit.

The bill reduces FY 09 general fund appropriations by $30.3 million, transfers $48 million of revenue into the general fund and makes $17.3 million of supplemental appropriations. The bill also legalizes the Jumpstart Housing Assistance Program and the Jumpstart Small Business Assistance Program and the transfers to fund it, which were done via Executive Order by the Governor last fall.

It cuts funding for the Courts by $3.8 million in FY 09, which is the equivalent of a 2.6 percent across the board cut. Also, cuts the standing unlimited appropriation for the Legislature by $956,590 in FY 09, which is the equivalent of a 2.6 percent across the board cut. The Courts will have the equivalent of 9 furlough days to meet its target. No details were released on how the Legislature would achieve its cut.

The bill uses the Governor’s recommendation to backfill the cuts to the Department of Corrections and the Department of Public Safety. The bill appropriates $5.6 million to DOC and $1.4 million to DPS to backfill their share of the 1.5 percent across the board cut. It also backfills cuts to the Department of Commerce, Racing and Gaming, Infectious Diseases, and County Mental Health funding.

It also provides supplemental appropriations to the Department of Natural Resources ($2 million for general fund operations and $4 million to the Fish and Game Trust fund) and Iowa Workforce Development ($313,000 to IWD for labor services, workers’ compensation and IWD field offices).

HSB 212 was approved by the House Appropriations Committee on a party-line vote.

House Republicans are concerned with the use of one-time money to balance the FY 2009 budget and the impact it has on FY 2010 and FY 2011. There is also a fear that the REC will further reduce revenue at its March 20th meeting, meaning that he FY 09 budget would again be out of balance.

House Republicans will offer several amendments on the floor to cut wasteful spending and ensure that taxpayers get a more efficient state government.