Under the Golden Dome, Too – Week Fifteen

Upmeyer UTGD

In February, I wrote about the House and Senate budget targets. These targets become the framework for the state’s general budget and have provided guidance as we have moved through the budget process.

Under our proposal, the state uses 98 percent of ongoing revenue for Fiscal Year 2014.  In other words, our plan would spend 98 cents for every dollar of state revenue, while funding the priorities of Iowans.  That makes for a total budget of $6.4139 billion, which is a modest increase of 3.2 percent over last year.

In contrast, when the budget targets were released earlier this year, the Majority party in the Senate proposed spending $6.9 billion in Fiscal Year 2014, which is $487 million more than our proposal.  Their proposal would spend $1.05 for every dollar of state revenue.  This results in a double-digit increase of 11 percent of state general fund spending over last year.  If signed into law, state revenue would need to grow by 6.3 percent to maintain this level of spending.  It’s important to note that over the last 20 years, revenue has grown at an average of 3.4 percent per year.

As budgets have been moving through the legislative process, it has now become clear the Senate Majority has actually surpassed their own unsustainable budget targets.  The budgets that have passed the Senate have spent nearly $47 million MORE than what their initial targets laid out.  These changes would now result in an 11.6 percent increase in spending over last year.

Simply put, this kind of overspending is unsustainable and creates uncertainty for all Iowans.  The biggest uncertainty is dealt to middle-class Iowans and those on fixed incomes.  This behavior is what leads to future across-the-board cuts and does nothing to create predictability or stability for Iowa job creators.  We realize the importance of passing a responsible budget that instills confidence in all Iowans.

The scheduled date for adjournment of the 2013 session is Friday, May 3.  Unfortunately, the last two years the appetite for spending by the Senate Majority has kept us beyond the targeted end date.  You can rest assured we will not support a budget that spends more money than the state takes in, we will not use one-time funds for ongoing expenses, we will not intentionally underfund our entitlement programs (promises to Iowans) simply to fix the problem down the road, and we will return unused tax dollars to Iowa taxpayers.

We will continue to stick to these core principles throughout the budget negotiations in order to keep the state’s fiscal house in order.  I look forward to working with all members of the House, Senate, and Governor throughout the remaining few weeks in order to finalize a budget that meets the priorities of Iowans.

In addition to continuing to move through the budget process, the House also took action on a bill this week aimed at providing a valuable economic development tool for cities across Iowa.  HF 641, dubbed the Iowa Reinvestment Act, would allow cities to create “reinvestment districts” in order to expedite economic development.  The bill would allow the capture of two-thirds of the state sales tax and the state hotel excise tax generated by new projects within the reinvestment district to be used to offset the cost of that development.  Each proposed project would be required to be reviewed and approved by the Iowa Economic Development Authority Board.  HF 641 has been sent to the Senate for further consideration.

As always, please feel free to contact me anytime with the issues you care about at linda.upmeyer@legis.iowa.gov or 515-281-4618.

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