Government

Iowa budget closes with $127 million surplus

Higher ed, human services, courts and prisons all took cuts

The dome of the State Capitol building in Des Moines is shown on Tuesday, January 13, 2015. (Adam Wesley/The Gazette)
The dome of the State Capitol building in Des Moines is shown on Tuesday, January 13, 2015. (Adam Wesley/The Gazette)

DES MOINES — The state ended with a higher-than-expected general fund surplus of $127.3 million for fiscal 2018 now that the books officially have been closed, Gov. Kim Reynolds announced Tuesday.

She credited the estimated ending balance to $95.6 million more in state tax collections than what the Revenue Estimating Conference had predicted last March.

“Our economy is growing, incomes are rising and our state’s budget is a reflection of that,” Reynolds said in a statement.

When the 2018 fiscal year ended June 30, the non-partisan Legislative Services Agency reported that general fund receipts grew by $287.8 million to $6.685 billion — a 4.5 percent growth rate that was above the revenue panel’s forecast 2.8 percent increase.

Analysts attributed part of that to changes Congress made in the federal tax code. Starting last February, the law lowered the amount of federal taxes being withheld from paychecks, which meant Iowans had more income subject to state taxation — creating a windfall for the state.

The surplus also follows a bruising legislative session in which lawmakers cut tens of millions of dollars they already had appropriated amid fears of a shortfall.

Earlier this year, Reynolds — a first-term GOP governor facing her first statewide election bid in November after succeeding outgoing Gov. Terry Branstad — had said she expected Iowa’s checkbook would balance once all the accruals, transfers and other adjustments were accounted for.

ARTICLE CONTINUES BELOW ADVERTISEMENT

“Last year it was so volatile. We saw great fluctuations right up until the last day,” Reynolds told reporters last June. “But right now, we’re on target to meet our projections.”

One year earlier, the state had to borrow $13 million to balance the budget at the close of the 2017 fiscal year. That was in addition to $131 million in cuts and adjustments made during a volatile budget year.

Then last March, the GOP-led Legislature passed and Reynolds signed another $35.5 million in midyear budget adjustments to head off what appeared to be a potential revenue shortfall.

The measure cut $25 million from state agencies and repurposed $10 million in uncommitted gaming revenues for a “revenue enhancement.”

At the time that Senate File 2117 was approved 59-41 by the Iowa House and 28-21 by the Iowa Senate, budget makers projected the state general fund would have an ending balance of $31.9 million on June 30.

The largest reduction — nearly $11 million — was made to the University of Iowa and Iowa State University, while human services took a cut of $4.3 million, the prison system lost $3.4 million, the court system was pared $1.6 million and community colleges were cut $500,000.

Architects of the revisions noted that K-12 education, Medicaid, the Iowa State Patrol, the commercial property tax “backfill” to local governments and the University of Northern Iowa were held harmless.

In response, the Board of Regents approved tuition increases starting this fall at Iowa’s three public universities.

ARTICLE CONTINUES BELOW ADVERTISEMENT

Thank you for signing up for our e-newsletter!

You should start receiving the e-newsletters within a couple days.

Rep. Chris Hall, D-Sioux City, ranking member of the House Appropriations Committee, predicted Iowans “won’t be fooled” by the news release issued by Reynolds’ office Tuesday.

“Just a year ago, Reynolds illegally transferred millions and put $130 million on the state’s credit card,” Hall said in a statement. “Earlier this year, Gov. Reynolds and Republicans made $34 million in mid-year budget cuts for (fiscal year) 2018 and raised tuition on Iowa students to pay for it. Today, we learned those cuts were made to pad the state budget for a press release in an election year.”

But Rep. Pat Grassley, R-New Hartford, attributed the surplus to responsible budget management by majority Republicans.

“Responsible budget management has led to record investment in education, full reserve accounts, and lower taxes for working families. This is a stark contrast with the budget problems from 10 years ago,” he said in a statement.

Senate Majority Leader Jack Whitver, R-Ankeny, declared in a statement: “Senate Republican policies have helped make Iowa the number one state in the nation.”

Sen. Joe Bolkcom, D-Iowa City, ranking member of the Senate Appropriations Committee, though, said Tuesday’s announcement was more evidence of the “fiscal mismanagement and misplaced budget priorities” of Republicans.

“Last year, the governor took a victory lap because she didn’t need the Legislature to have a special session to fix her budget mess,” Bolkcom said in a statement. “This year, the governor is cheering because there’s still money in the state’s bank account. That would be great news if she and the Republican-controlled Legislature hadn’t slashed funding for job training and higher education, reduced protections for seniors and other vulnerable Iowans, and made health care less accessible for thousands of Iowans.”

l Comments: (515) 243-7220; rod.boshart@thegazette.com

Give us feedback

We value your trust and work hard to provide fair, accurate coverage. If you have found an error or omission in our reporting, tell us here.

Or if you have a story idea we should look into? Tell us here.

CONTINUE READING

Give us feedback

We value your trust and work hard to provide fair, accurate coverage. If you have found an error or omission in our reporting, tell us here.

Or if you have a story idea we should look into? Tell us here.