This past week was the first week back for the 2014 Iowa General Assembly. The governor gave his state of the state speech ... probably the most well-received speech given by a governor since I started in the Legislature eight years ago.
Gov. Branstad also deserves our appreciation for delivering his budget on the second day of session, instead of waiting till the end of January as required by law. This has been his practice the past couple years, but was not generally the practice in the past. Receiving the budget early allows the appropriation process to get started and more time to do it right.
The governor’s budget is proposing to spend $7,000.9 million from the General Fund in FY 2015. This is slightly above the Revenue Estimating Conference’s December ongoing revenue estimate of $6,983.2 million. The proposal represents an increase of $505 million over the FY 2014 budget. Over $330 million of the increase goes to implement two bills – the Commercial Property Tax Relief bill and the landmark Education Reform package, which included raising supplemental state aid for schools by $245 per student. Another $86 million is solely for paying the state’s share of Medicaid costs. Due to Iowa’s strong economy and federal changes to the financing formula, the state’s share of Medicaid is at an all-time high.
On the revenue side, Gov. Branstad proposed eliminating the income tax collected on military pensions. This would result in a $10 million reduction in ongoing revenue in FY 2015. At this point, there is no federal tax coupling bill since Congress has not enacted changes to the federal tax code yet. That may change if the omnibus appropriations bill being considered in Washington actually passes.
Among the highlights of the governor’s budget proposals are:
Home Base Iowa – Gov. Branstad has requested two separate $1 million appropriations for implementation of the Home Base Iowa initiative, which will work to attract veterans to move and live in Iowa. The first request will fund an Iowa Workforce Development study researching the compatibility of military occupational training and service with state licensing requirements. The second request would fund a grant to a nonprofit veteran service organization to use to market Iowa.
Apprenticeships – As part of his proposals to help Iowans acquire the necessary work skills to join and advance up the career ladder, the governor provided funding for two different apprenticeship programs. He is expected to introduce legislation revising the 260F program to change the focus to apprenticeship training. This would include increasing the funding available for this program by $1 million. Part of the governor’s changes will be an increase in funding, which is reflected in his FY 2015 budget by an additional $1 million being requested. Branstad is also proposing to expand the existing Innovative Business Internship Program, by providing apprenticeship opportunities to Iowa students studying in the STEM fields (science, technology, engineering, and mathematics) and providing $2 million as incentives to employers to participate.
Supplemental State Aid for schools – Gov. Branstad’s budget provides funding for the $245 per student increase (4 percent) in supplemental state aid to schools in FY 15 that was approved last session.
Mental Health Equalization Fund – the governor did include the $29.8 million in equalization funding that was initially provided last year. There was some speculation that these funds would not be included in the FY 2015 proposal.
Regents Institutions – Gov. Branstad provided the 4 percent increase in general aid funding for the three Regents universities. 2.3 percent is for maintaining the tuition freeze, while the remaining 1.7 percent is for their on-time graduation initiatives. The governor provided initial funding in the RIIF budget for the next series of infrastructure projects at each of the universities.
Community Colleges – He maintained community college general aid funding at the FY 14 level.
In the past three years, the budget enacted by the Legislature and signed by the governor has been lower than the governor’s initial proposal. I expect that to be the case again this year, as the House will stick to our budget principal that we will not spend more than our on-going revenue.
(If you have any questions or concerns, please contact me. )