This week, the House and Senate both released their budget targets for the year. This is a general number indicating how much each party is willing to spend along with a number for each specific budgeting area. These numbers give direction to the budget subcommittees on how much money they have to begin allocating to specific programs.
For Fiscal Year 2014, the House Republicans have proposed a budget that is both balanced and sustainable. It meets the four principles established by House Republicans that I have been discussing over the past few weeks. Our budget:
- Spends less than the state collects;
- Prevents the use of one-time money to fund on-going needs;
- Balances the budget by without intentionally underfunding entitlement programs;
- Returns unused tax dollars to Iowa’s taxpayers.
The overall amount of revenue that is available to be spent in Fiscal Year 2014 is $7.1822 billion. This amount includes the $688.1 million in the ending balance that is an overpayment by Iowa taxpayers. The amount of ongoing revenue that is available is $6.5377 billion. The Fiscal Year 2014 proposal by House Republicans spends $6.4139 billion. This is a 3 percent increase over last year’s spending level and it protects priority services in the areas of education, health and human services and public safety.
Also of note is that this budget proposal includes the funding necessary to maintain our commitment to education; including the funding necessary to allow the Regents universities to freeze tuition, $10 million to the community colleges, and a two percent increase in supplemental state aid for our local schools.
The House Republican budget spends 98 cents for every dollar of state revenue.
While revenue growth is currently ahead of projections, there is a great deal of uncertainty about future revenue due to the on-going drought conditions, slow economic growth, and the federal budget situation.
Senate Democrats also rolled out their plan for the Fiscal Year 2014 budget. Their proposal spends $6.9010 billion which is $487 million more than the House proposal. Additionally, this is $301.7 million more than the state has in ongoing revenue.
The Senate Democrats’ budget spends $1.05 for every dollar of state revenue.
This is a nearly 11 percent increase in state General Fund spending over last year’s level. To sustain this amount of spending requires a minimum of 6.2 percent growth in revenues in Fiscal Year 15 (not including Medicaid growth). To give you some perspective, annual revenue growth has averaged 3.34 percent over the past twenty years.
We will begin the process of working through the budgeting process while remaining committed to sticking to the budgeting principles that put the state on solid ground and bring certainty to Iowa taxpayers and employers.
As always, please feel free to contact me if you have any questions or concerns. My office phone number is (515) 281-3521 or my email is firstname.lastname@example.org