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Wednesday, Aug. 31, 2016

Branstad, legislators wrangle over budget, taxes

Tuesday, March 27, 2012

Gov. Terry Branstad (left) talks to Fostoria Mayor Marlin Voss following Saturday morning's Eggs and Issues session at Spencer Community Theatre. Property tax and education reforms were hot topics during the two-hour event.
(Photos by Randy M. Cauthron)
Party lines were evident as Gov. Terry Branstad joined area legislators to discuss budgeting, property taxes and education at Saturday morning's Eggs and Issues session in front of about 125 people at Spencer Community Theatre.

In his opening remarks, Branstad blamed poor budgeting practices for "financial instability," such as a $540 million Medicaid deficit that was filled with one-time revenues. His Republican colleagues decried practices such as spending more than the state takes in and using one-time revenues for ongoing expenses.

"Appropriations are taking a long time," Rep. Royd Chambers, R-Sheldon, said. "We do believe in the House that we need to be frugal. Iowa's economy is doing well, but we need to keep our eye on the ball. Federal cuts are coming."

Chambers spoke out against using "notwithstanding language" to dedicate $200,000 from the Rebuild Iowa Infrastructure Fund to match $500,000 funding for an electronic fish barrier to keep silver "jumping" carp, out of the Iowa Great Lakes.

"We're working on alternatives to come up with those dollars from a legitimate part of the budget," Chambers said.

The bill had passed out of the Senate and Branstad supported it and was "appreciative of the fact that there's a group raising money privately as well."

Rep. Jeff Smith, R-Okoboji, applauds as Spencer Chamber of Commerce Director Bob Rose presents Senate President Jack Kibbie, D-Emmetsburg, with a plaque honoring him for 32 years of service in the Iowa Legislature and support for the chamber. Kibbie, who is retiring after this session, received a standing ovation following the presentation and expressed thanks for the recognition. "I've really enjoyed representing this area," Kibbie said.
Chambers also said the state should save funds to hedge against cuts in federal funding and Sen. David Johnson, R-Ocheyedan, echoed that sentiment.

"Our savings account is full," Johnson said. "You'll hear we should start spending it. Did you forget the floods of '93, '08 and '11?"

Senate President Jack Kibbie, D-Emmetsburg, attested that the Senate budget total is 97 percent of the state's revenue, but Johnson disagreed with that figure.

According to Rep. John Wittneben, D-Estherville, the current House budget spends only 94 percent of the state's revenue, or $300 million less than what is allowed.

"I'm not saying, 'Spend it because it's there,'" Wittneben said. "I will say, 'Don't cut programs that help this state and save this state money in the long run just to create a fund that I don't know what you want to do with it."

He also took another shot at Republicans, saying, "I wish my own finances would have been run as poorly as the state's two or three years ago because we do have a $1 billion surplus."

Branstad said the law was circumvented to spend more than 99 percent from 2007 to 2010 and Johnson added, "It wasn't that many years ago that this state was running on a $1 billion deficit and that's the sins of Republicans and Democrats both."

The two parties also disagree on how to address property tax reform. Branstad's plan is to reduce commercial property tax by 40 percent over eight years and the House passed that proposal, while the Senate prefers a $250 million plan to abate the first $30,000 of property taxes for businesses.

"The Senate bill you passed did nothing to protect residential (taxpayers)," Branstad told Kibbie. "It does nothing for tenants."

Kibbie said the Iowa State Association of Counties and League of Cities are concerned about receiving less property tax revenue.

"They want a $2 billion windfall," Branstad countered, referencing a projected $2 billion increase in taxes over the next eight years. He believes his plan will save residential taxpayers $606 million, commercial taxpayers $347 million and agricultural taxpayers $226 million, in addition to protecting small businesses who rent property.

While Branstad said growth would occur due to the proposed reform, Kibbie questioned where that growth would happen.

"Will it be for the 49 mayors calling me?" Kibbie asked. "They're damned concerned they won't have money to hire police, fire or maintain their communities."

Branstad said his plan would budget funds to offset that problem, starting with $50 million the first year up to $250 million for the fifth year.

"Reimbursements need to go to communities not benefiting from growth," Branstad said.

He explained that he vetoed the earned income tax credit last year, but is willing to compromise on the issue to accomplish property tax reform.

On education, Kibbie pointed to a $100 million gap between the House and Senate.

"I have 18 school districts in my district, more than any other senator," Kibbie said. "All those school districts with declining enrollment would get less money with 4 percent allowable growth than they did with 2 percent allowable growth last year, because of declining enrollment."

He also pushed for more community college funding, as the 110,000 students are paying more than 60 percent of the cost. Currently, Branstad is promoting a $4 million increase in general aid and the House added $5 million to the Accelerated Career Education program, but Kibbie said there is a $40 million difference between the House and Senate plans.

"To make this a political basketball game isn't right," Johnson said. "Community colleges have to be a priority. That's our game in northwest Iowa and we have to move the ball forward."

When Jerry Crew asked about the possibility of a gas tax increase, Branstad said it would likely not happen this year. He pointed to $50 million in savings identified by Iowa Department of Transportation Director Paul Trombino as a reason why the increase should be avoided.

"People are seeing this as an option we may have to go to," Rep. Jeff Smith, R-Okoboji, said. "Roads are key to economic development. That will have to be addressed, but I don't think you'll see it come to the floor."

Kibbie said if an increase is to happen, it should be phased in over a five-year period.

Clay County Central Point Coordinator Kim Wilson asked how a $51 million shortfall in mental health funds will be addressed.

Johnson sits on a bipartisan committee charged with addressing the issue, but said funding has yet to be decided, as a $125 million to $131 million county levy is set to expire next year.

"We're trying to come up with a well-thought-out way to manage this," Branstad added.

The last question of the day referenced the Iowa Supreme Court's decision on Branstad's 2011 item veto that closed 36 satellite Workforce Development offices.

"I item vetoed the language that said we had to keep those offices open because we couldn't afford it," Branstad said. He pointed to a decrease in unemployment, from 6.1 to 5.4 percent, since the decision that replaced offices with kiosks in places like community colleges and libraries.

"The Supreme Court made a decision, but their decision never did get to the merits of the veto," Branstad said.

He contends the decision would close all Workforce Development offices, which led him to request a stay on the decision to allow time for him and the Legislature to reinstate funding.

"I think we're going to get that done, which will let us continue to provide these services and maintain workforce development and not have to lay off staff of Workforce Development," Branstad said.

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