Branstad's two-year budget would rely on made-up revenues

Governor Terry Branstad told the crowd at a Republican fundraiser this weekend that he will use his veto power until the legislature sends him a two-year budget to sign.

He didn’t mention that Iowa lacks two-year revenue projections to back up his promises to spend no more than state government takes in. More background and details are after the jump.

Speaking to the Iowa GOP’s "Night of the Rising Stars" event in Des Moines on April 2, Branstad vowed to "get the state’s finances in order":

“And the budget that I’ve submitted and that I’m going to insist on is a two-year biennial budget and every year we spend less than we take in, we spend less than they did last year and we’re not using one-time money for ongoing expenses. We’re also projecting out for five years and spending less than we’re taking in each year.” […]

“If they send me a one-year budget, I’ll veto it, and I’ll veto it, and I’ll veto it until we get a two year budget and get the state on the right financial track.”

I reject the premise that Iowa’s finances are not in order. Our state’s projected budget gap for fiscal year 2012 is one of the smallest in the country as a percentage of state spending. The Iowa Fiscal Partnership demonstrated convincingly here that “Iowa’s budget challenges are quite manageable,” and “additional cuts to essential public services are not needed to balance the 2011-12 budget.”

Branstad also fails to reconcile his demand for a two-year budget with the lack of solid numbers supporting a two-year spending plan. The governor’s staff may have projected state revenues for five years, but Iowa’s budget process relies on numbers from the non-partisan Revenue Estimating Conference. As Bleeding Heartland discussed here, there are no revenue projections for fiscal year 2013, which runs from July 2012 through June 2013. Even if lawmakers had two-year revenue estimates to draw from, biennial budgeting strikes me as less fiscally responsible than annual budgeting, because it is so difficult to predict revenues far into the future. It’s even more irresponsible to draft a two-year budget without any numbers from the REC.

The Republican-controlled Iowa House approved a two-year budget for the Department of Transportation last week. House Appropriations Committee Chairman Scott Raecker told James Q. Lynch of the Cedar Rapids Gazette that the House plans to approve the rest of the budget bills by April 11. All will cover the next two fiscal years.

I have yet to hear Senate Democrats endorse the concept of biennial budgeting. In December, Senate Appropriations Committee Chairman Bob Dvorsky said the upper chamber would approve only a one-year budget during the 2011 session, because a two-year budget “gives too much authority to the executive branch and limits flexibility in a changing economy.”

Speaking to Lynch this weekend, Dvorsky “projected the gap between majority Senate Democrats and Branstad at about $300 million” for the next fiscal year. He also called for “gubernatorial leadership” during negotiations over the state budget in the coming weeks. But in an April 4 press release from the Senate Democrats, Dvorsky had fighting words about the governor’s stance on state spending:

Branstad threatens government shutdown to force starvation budget on schools, public safety, job creation

Statement by Senator Bob Dvorsky of Coralville, chair of the Senate Appropriations Committee

“At a Republican fundraising event over the weekend, the Governor said in regard to the state budget: ‘I’ll veto it and I’ll veto it and I’ll veto it until we get a two-year budget.’

“Why is Governor Branstad willing to massively disrupt Iowa’s economy to force passage of a two-year starvation budget for local schools?  The Governor and Legislative Republicans insist there be NO increase in basic state aid to local schools.  This has NEVER happened since the school aid formula was created 40 years ago. […]

“Given the overreaching power grabs by Republican governors in other states, perhaps Governor Branstad is trying to create a crisis in order to impose an extreme budget, one that would fire thousands of teachers, school workers, prison guards and other public employees.”

I doubt the governor and lawmakers will reach consensus on the budget in time for the legislature to adjourn on April 29, as scheduled.

Share any relevant thoughts in this thread.

UPDATE: Senate Democrats don’t sound open to a two-year budget:

Sen. Robert Dvorsky,  D-Coralville, who chairs the  Senate Appropriations Committee, said the Iowa Legislature hasn’t approved a two-year state budget since 1983 and he doesn’t see any reason to make changes now.

His stance sets up a possible deadlock between Democrats who control the Iowa Senate and the GOP governor, although Dvorsky said he doesn’t expect the clash will lead to a shutdown of state government.

“I think the process will be we will end up with a bill that we will send down that is a one-year budget. We will see if the governor actually vetoes it or not,” Dvorsky said. […]

A two-year budget would provide less flexibility for state policy makers because it would require planning 36 months in advance, Dvorsky added.

Asked  how far Democrats would be willing to go if Branstad carries out his veto threat, Dvorsky said, “Well, I guess we will cross that bridge when we get to it.”

  • no school growth for two years?

    I haven’t heard what Branstad wants in the way of funding for his second year.  Are schools supposed to be frozen for both years?

    And why can’t the legislature remove the Gov’s power to move money around if they budget two years at one time?

    Just wait—if he gets it and there turns out to be a surplus at the end of two years, he will want another tax cut for corporations.  But if there is a deficit, he will want more cuts to education.

    Eventually we will all be home schoolers.

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