Guy Vander Linden – Capitol News Update February 9, 2012

Representative Guy Vander Linden works at his desk in the Iowa House

Des Moines, Iowa – The Status of Fiscal Year 14 Allowable Growth

There was movement this week on Allowable Growth for Fiscal Year 14; however there are two vastly different proposals. The Senate passed SF 2114 setting allowable growth at 4% for FY14 (the 2013/2014 school year). The House’s bill, HF 2245, doesn’t set growth for FY 14, but instead changes how allowable growth is set.

The Senate’s proposal passed on a party-line vote on Tuesday and is a simple bill on the surface. It essentially means a $143 million increase in the state budget for FY 14. The state cost per pupil increases $240 from $6,001 to $6,241. It would also mean a $59 million property tax increase resulting from the school aid formula.

Will the state have an additional $143 million to spend in future years? This would be on top of the $35 million increase that 2% allowable growth (set by the legislature in 2011) means for FY13. School aid for K-12 in FY13 would total $2.666 billion and at 4% in FY14 would total $2.809 billion.

The House proposal, which passed the Education Committee on a party-line vote, delays setting of the FY14 allowable growth to next legislative session and changes the annual setting of allowable growth 18 months in advance. Last year the legislature set two years’ worth of growth (FY12 and FY13) which lined up with the new biennial budgeting process. HF 2245 codifies that practice, having each successive legislature set two years’ worth of allowable growth in the first year of a biennial budget.

When the legislature is setting budgets for two years and allowable growth is often a large and important part of that, it makes sense to set the growth in line that budgeting. Setting allowable growth 18 months in advance on an annual basis is too often tying the hands of the legislature to a promise that it may not always be able to meet. This has been evident across different legislatures over the past decade:

FY02 – 4.3% across the board cut ($74 million cut to schools)
FY03 – $13 million cap on the school aid formula
FY04 – 2.5% across the board cut ($43 million cut to schools)
FY09 – 1.5% across the board cut ($32 million cut to schools)
FY10 – $30 million cap on the school aid formula
FY10 – 10% across the board cut ($227 million cut to schools)
FY11 – $156 million cap on the school aid formula

Make no mistake, the House is not advocating for establishing a 0% allowable growth for FY 14. This bill would delay a decision on FY14’s growth until next year when the legislature discusses the entire FY 14 and FY 15 budgets. As a reminder, the legislature’s actions last year increased state aid to schools by about $260 million ($215 in FY12, $35 in FY13), the largest increase to schools in the history of the state.
House Republicans feel that the instability caused by continually setting allowable growth 18 months out and tying the hands of future legislatures to a promise for increased funding is too often disruptive to the state budget overall and too often puts an undue burden on property tax payers. Setting the growth in one year for that school year budget and the next is a compromise that meets schools half-way on their budget deadlines while still allowing for more stability in the state budget long-term.

2012 Century and Heritage Farm Program

On Wednesday, February 1, 2012, the Iowa Department of Agriculture and Land Stewardship (IDALS) issued a press release in which Iowa Secretary of Agriculture Bill Northey encouraged eligible farm owners to apply for the 2012 Century and Heritage Farm Program. The program is sponsored by IDALS and the Iowa Farm Bureau and recognizes families that have owned their farm for 100 years in the case of Century Farms and 150 years for Heritage Farms.

Applications are available on the Department’s website at www.IowaAgriculture.gov by clicking on the Century Farm or Heritage Farm link under “Hot Topics.” Applications may also be requested from Becky Lorenz, Coordinator of the Century and Heritage Farm Program via phone at 515-281-3645, email at Becky.Lorenz@IowaAgriculture.gov or by writing to Century or Heritage Farms Program, Iowa Department of Agriculture and Land Stewardship, Henry A. Wallace Building, 502 E. 9th St., Des Moines, IA 50319.

Farm families seeking to qualify for the Century or Heritage Farms Program must submit an application to the Department no later than June 1, 2012. The ceremony to recognize the 2012 Century and Heritage Farms will be held at the Iowa State Fair and is scheduled for Tuesday, August 14th.

The Century Farm program began in 1976 as part of the Nation’s Bicentennial Celebration and over 17,000 farms from across the state have received this recognition. The Heritage Farm program was started in 2006, on the 30th anniversary of the Century Farm program, and more than 500 farms have been recognized. Last year 341 Century Farms and 56 Heritage Farms were recognized.

Democrats’ Budget Spends More Than State Takes In

Senate Democrats released partial targets for the FY 2013 budget, and unlike the proposals by the Governor and Legislative Republicans, Senate Democrats’ blueprint spends more than the state takes in.

House and Senate Republican budget targets appropriate $6.059 billion from the general fund and $106 million from the Health Care Trust Fund (HCTF).

The Governor appropriates $6.244 billion from the GF and $106 million from the HCTF. (The $106 million is the same amount for the HCTF as FY 2012.) Both of these amounts represent a figure that is lower than ongoing general fund revenue.

The Senate Democrats appropriate $6.218 billion from the general fund. While this appears to be $25 million less than the Governor, in reality it is $88 million more than the Governor because the Senate Democrats recommend taking an additional $113 million of tobacco tax revenue and transferring it to the HCTF. The transfer reduces ongoing revenue from $6.251 billion to $6.134 billion.

House Republicans have three budget principles:
1.the budget cannot spend more than the state takes in.
2. it should not use one-time money to balance the budget.
3. it cannot purposefully underfund entitlements like Medicaid and commitments like the property tax credits.

The Senate Democrats’ budget violates the first budgeting principle. Therefore, House Republicans will insist that the final budget spends less than ongoing revenue.