This week the House of Representatives passed the De-Appropriation Bill. This bill was jointly agreed to by the House, Senate, and the Governor. The Senate passed their bill last Thursday and the House passed the same version on Monday night, and sent the legislation to the Governor for his signature.
This all began last July when revenue began to come in below the Revenue Estimating Conference (REC) estimate. Revenues continued to fall behind and in December the REC reported that this year’s budget would face a $117 million shortfall. This budget was approved by the 2016 Legislature. To fix this problem, the 2017 Legislature needed to reduce spending levels so that they did not exceed revenue, 2017 is the fourth consecutive year where actual revenue to the state will not meet the official forecast from the REC. Many people ask what happened to our state’s ending balance. Well, with four straight years of budgets exceeding revenues, the money is gone. There is no ending balance to draw from and therefore, that is the reason we had to pass this de-appropriation bill.
From the beginning, the goal of the House and Senate was to hold K-12 education and Medicaid harmless. This is significant in that these two important budgets make up 60 percent of the budgets. House Republicans also tried to hold our Community Colleges harmless, but somewhere in the negotiations with the Senate and Governor, that battle was lost.
Both the House and Senate Appropriations Committees passed identical bills that reduced state spending by $117.6 million for the current fiscal year. The bills reduce specific appropriations to state departments and agencies by $81 million. Another $11.5 million will be cut from various Executive Branch agencies through reductions in operational expenditures. These can include limits on purchases of office supplies, employee travel, office equipment, printing and binding, marketing campaigns, and a hiring freeze. The final portion of the reductions will be made through the use of unexpended funds. This amount -$25.2 million – will also be reduced from the funds available for use in FY 2018 which is a necessary move to satisfy House Republican budgeting principles.
Within the bill, House Republicans have given state agencies flexibility to implement the cuts in the best way possible for their agency. This will help agencies avoid program disruptions that impact the public.
While the bill includes reductions to state universities and community colleges, the amount in the bill is less than the amount in the Governor’s proposal. Universities experienced an $18 million reduction, versus a $25.5 million governor proposal. Reductions for community colleges amounted to one third of the Governor’s request. The President of the Board of Regents, Bruce Rastetter, has told the media that this reduction will not result in a tuition increase.
The Health and Human Services Budget was especially challenging. Representative Heaton had to find $25 million in reductions. While nobody enjoys making cuts this late in the year, Rep. Heaton felt fairly happy with the results. He did not have to affect any services to any people currently being served; did not have to affect any current programs; was able to re-direct federal funding toward previous General Fund expenditures and utilize unspent available money. At the same time, he was able to provide additional needed funding to the State Children’s Health Insurance Program, $259,179; The Cherokee MHI, $124,553; the Independence MHI, $1,136,912; and the Civil Commitment Unit for Sexual Offenders in Cherokee, $478,878. The net contribution of Health and Human Services amounts to $24, 950,195.
Critics of the bill say we could have financed this De-Appropriation Bill in a different way. They say we could have used the reserve as a source of funding. Yes, we could, but by law we would have to repay the fund in the following year. This would create a $117 million shortfall in that year. There would be no money for education and we would have to short health care.
There are others who think we should have used the tax credits, of which Iowa has $241 million currently granted. The Legislative Fiscal Bureau said that because they have already been distributed, it would be impossible to go there. Perhaps in another year we should visit these tax credits and retain only those which would be deemed necessary.
This bill brings many concerns. The Department of Corrections will experience a $5.5 million reduction; the courts will receive a $3 million cut; and the Highway Patrol budget will be reduced by $1 million. These reductions amount to one-third of what the Governor proposed in his de-appropriation budget. We did the best we could to soften the blow in these three critical areas. It is my hope that in the coming budget year we will do everything we can to re-establish the funding levels for our prisons, our courts and our highway law enforcement. Part of the problem is that the Legislature crafts budgets on revenue estimates. If revenues rise, great, but when they fall short, problems arise.
The bill was signed by the Governor on Wednesday. We will now move on toward establishing our 2018 budget.
On Tuesday morning, Major General Timothy Orr, Adjutant General of the Iowa National Guard, addressed a joint session of the General Assembly. As usual, he did a fine job, and finished up by stating that members of the Iowa National Guard are “woven into the fabric of Iowa through communities in every corner of the state, ready and willing to transform from civilians to soldiers and airmen in a moment’s notice to answer the call of our state and nation”.
Next week, I will report on Supplemental State Aid to k-12 education.
You may reach me at the Capitol during the week by phoning me at 515-281-3221, or at home on weekends at 712-434-5880. You may write me at the State Capitol, Des Moines, Iowa, 50319. My home address is P. O. Box 398, Aurelia, Iowa 51005. If you have email, please contact me at [email protected].