The real divide, and the most difficult to reach agreement on, are the five big fiscal issues that separate the two houses and the Governor. The Governor has the power to veto anything we might agree to, or can threaten to use it to force an agreement between the House and Senate. Few of us in Republican Caucus have been in the Legislature long enough to experience the influence of the Governor in this manner. A few served when Gov Branstad was here before and they know he can be a staunch opponent.
The first divisive issue that the Legislature must address is Governor Branstad’s two-year budget proposal. The Governor vetoed the Transportation Appropriation bill we sent down with only one year’s appropriation. On all of the appropriation bills the House has complied with the Governor’s request, over lengthy objections of the minority. The Senate is adamantly opposed and has striped the second-year language from our appropriation bills and sends them back to us.
Education spending is yet to be resolved. The House wants to set allowable growth at zero percent. The Senate wants to set it at two percent. Last year, after Governor Culver’s across-the-board cut, school districts raised their local property taxes or utilized their reserves to address the cut. The Legislature also, last year, utilized one-time monies from the federal government totaling $66 million dollars with most applied to one percent allowable growth which was $56 million dollars. The House is willing to appropriate $286 million dollars of new money toward K-12 education. When comparing that to the Senate’s $56 million dollars for that year, the House proposal looks generous.
The Senate and the House disagree on the state’s total budget. The Governor also has a different target. The House is approaching the budgeting process with a proposal that is coming in low, even lower than the Governor’s recommendation, which is pegged at 99 percent of the state’s revenue, according to the REC’s forecast made in December. This is in compliance with the statutes of Iowa, and has not been followed in recent years. Recent years the budget has been based on the March REC estimate, giving additional money. ($50million in FY10)
The budget debate is what leads us to the key decision the Legislature must make. What do we do with the projected $329 million dollars projected to be the ending balance for the FY2011? Do we include these left over funds in the FY 2012 budget and use one-time money for ongoing expenditures, or do we return the money to the tax payer in the form of property tax relief? Spending one-time money on ongoing expenditures is what got this state in trouble in the first place. The use of cash reserves, ARRA funds from the federal government, and other state trust funds gave this state a false sense of security. I stated at the start of this session that the “day of reckoning” was to come, and a sustainable budget should be the ultimate goal of this Legislature this session. We are at that point where decisions will have to be made. We still have to deal with a $700 million gap in the next fiscal year.
If in fact we have this much of an ending balance, it will be one-time money. Ongoing expenditures will take the budget to a level I don’t think we will be able to sustain in the following year. I recognize that the $329 million of carry-forward money goes into the base of FY 2012, but if you add the carry-forward to FY 2012, that means you are forcing the FY 2013 budget to need that $329 million dollars in increased revenue to sustain the 2013 budget. That’s too much to ask of an era of economic uncertainty. Constituents, when asked their opinion of the use of the ending balance, have been split. Some have suggested property tax relief; others have suggested we use the money for one-time expenditures, improving our parks, streets, recreation, buildings……things that would improve our state’s quality of life. Whatever the case, this Legislature has to come together on these important issues if we are going to be able to go home and all of us say that we have done our part in moving this state forward.
To accomplish this, we are going to have to find compromise between the two chambers and the Governor. Compromise, to some, is a dirty word. There are those who feel that compromise is a sacrifice of one’s principles. There are some instances where that could be said. One should stand on their core beliefs, but one should understand that this Legislature is made up of 150 individuals, each representing their respective constituents. We live in a democracy where collective decisions turn the wheels that make our form of government work. One former Representative I have great respect for, House Speaker Harold Van Maanen, has told me that governing is about consensus. To be able to get resolution, ultimately consensus is necessary.
We must, the House, the Senate, and the Governor, come together – hopefully by the April 29 target date.