On Monday, January 9, 2017, the legislative leaders gaveled in the start of the 87th General Assembly, which marks the first time in 20 years that Republicans control the House, Senate, and the Governor’s office. All eyes are on Des Moines to see if the gridlock we have had for the last few years continues or if there is a smoother process of deciding our budget. However, the discussion of the coming year’s budget is being overshadowed by the budget reductions that have to be made this fiscal year, which ends June 30, 2017.

When the Iowa Legislature tries to set the budget amount for the coming year, it relies on the projections of the Revenue Estimating Conference (REC). The REC usually meets in October, December, and March/April to set the estimates for upcoming General Fund revenue. The December 2016 meeting of the REC sets the amount the Governor uses for his budget proposal and which the House and Senate will also utilize.

The October 2016 REC meeting estimated the projected revenue for FY17 at $7.31 billion and FY18 at $7.61 billion. When the REC met in December, both estimates had decreased. While these percentages are still increasing the growth has just slowed down slightly. The FY17 revenue is now projected to be $7.21 billion, and FY18 is $7.56 billion. The $100 million in decreased revenue estimated for FY17 has necessitated spending cuts of approximately $110 million from the current year’s budget, while the Governor is now using the $7.56 billion estimate as the basis for his FY18 budget as identified in his Condition of the State address.

With the revised projection for FY17, the FY18 budget will have $320 million in new money for the fiscal year. However, we have to remember that a large percentage of the money is already spoken for by previous legislation, such as the Teacher Leadership Grant and the rollbacks in property tax are just a few.

The October 2016 meeting of the REC projected that revenue growth for FY17 would be 5.6 percent, and the December meeting lowered that growth to 4.2 percent. It is important to note that Iowa’s revenues are not negative; they are still increasing. A growth of 4.2 percent is a substantial increase in revenue when you consider the cost-of-living adjustment for 2016, which is only 0.3 percent. The REC also increased the projected growth for FY18 from 4.1 percent to 4.8 percent. So as one can see, it is going to be a fight for any new money. The state has committed to funding the property tax rollbacks for five years and there is the addition of retention in third grade along with the switch to Smarter Balance test for Education that are just a few of the things that will be competing for the new money along with increased costs to the other Departments. The Iowa Legislature has some difficult choices ahead.

Iowa is now at a crossroads. As the session is underway, we know that the House and Senate has approved $118 million in budget cuts for the current fiscal year. These are a few of the difficult questions facing the Legislature. Hopefully, they will remember the people of Iowa are paying the bill.

The views expressed in this column are those of the authors and not necessarily those of the Public Interest Institute. They are brought to you in the interest of a better informed citizenry.

Jennifer L. Crull is an IT Specialist with the Public Interest Institute in Muscatine.