Republicans pushing new state budget package

With less than a month remaining until the start of the 2012 fiscal year, Iowa House Republican leaders have stepped up efforts this week to draft the two-year budget Governor Terry Branstad is demanding. Republicans have drafted an omnibus budget bill combining all the usual appropriations bills, plus a few other things on their legislative wish list. The omnibus bill includes two small gestures toward a compromise with Democrats who control the Iowa Senate. However, Senate Democrats don’t sound ready to accept this package as the final work on state spending for the next two years.

Details and early reaction to this week’s budget news are after the jump.  

Negotiations over the past month didn’t produce any substantive compromises between House Republicans and the governor on the one hand and Senate Democrats on the other. The battle lines have been clear for weeks. Democrats objected to various cuts in education and economic development programs, particularly to Republican demands for zero allowable growth for K-12 school district budgets. The overall size of the general fund budget is also in dispute; House Republicans are sticking to their original figure of $5.99 billion. Branstad joined them in that demand a couple of weeks ago, which was puzzling. Revenue projections for the coming fiscal year have improved since the governor submitted his draft budget in January, which included more than $6.1 billion in general fund spending. Senate Democrats have said they won’t stand for putting Iowa schools on a “starvation diet” for two years when the state will have nearly $1 billion in various surpluses and reserve accounts as of June 30.

House Republicans announced earlier this week that they were writing an omnibus budget bill. They hope to include their property-tax reform plan and new limits on public employee collective bargaining rights in the legislation. (The House and Senate have worked out very different approaches to reducing commercial property taxes, and a collective bargaining bill that passed the House this session died in the Senate Labor Committee.) The omnibus contains language modeled on a South Dakota law, which would remove Medicaid coverage for abortions in cases of rape or incest. Instead, Medicaid would cover the cost of an abortion in Iowa only if the pregnant woman’s life was threatened. Earlier this year, Senate Democrats removed similar language from a budget bill the House had approved.

Democrats initially sought to label the omnibus “dead on arrival.” In a June 1 prepared statement, Senate Appropriations Committee Chair Bob Dvorsky said the budget bill “looks like Frankenstein” because it stitches “together several pieces of dead legislation into one big monster.”

“This budget bill is big, ugly and threatens the security of middle-class Iowa families.

“While House Republicans attempt to pass this dead-on-arrival legislation, Senate Democrats will continue exposing the impact of the Republican budget on middle-class Iowans to sunlight. We remain opposed to a two-year starvation diet for Iowa schools, health care cutbacks for millions of Iowans, and deep cuts in job creation efforts.

“In the end, we hope the Governor and Republican legislators will abandon their Frankenstein strategy and return to the bargaining table with a serious compromise plan.”

New details about the omnibus package emerged yesterday. The Iowa House Republican analysis of the budget bill is here (pdf). The total general fund budget for fiscal year 2012 would be $5.99 billion–no movement at all from the level Republicans have been demanding. The general fund budget for fiscal year 2012 would be $5.84 billion.

In a nod to Senate Democrats, the bill would fund 2 percent allowable growth in K-12 education budgets–but only for fiscal year 2013. School districts would face zero allowable growth for the coming fiscal year. That would be the first year of zero allowable growth in nearly four decades since Iowa adopted this methods of K-12 budgeting.

I am surprised that zero growth for K-12 in 2012 has turned into a deal-breaker for House Republicans and the governor. Even during the farm crisis of the 1980s, even during the budget crunch years of 1992 and 2001, even when hard-core conservative Chris Rants was speaker of the Iowa House, Republicans never passed a budget with zero allowable growth for K-12 budgets. Democrats have said for months that this demand was unacceptable and won’t clear the Senate. Revenue collections and projections have improved since the legislative session began in January. I expected a deal by now–maybe 1 percent growth in K-12 funding one year and 2 percent the next, something along those lines. But for whatever reason, House Speaker Kraig Paulsen is standing firm on no growth for the coming fiscal year.

The omnibus bill contains one other small gesture toward the Democratic position. Republicans agreed to preserve the current structure of the voluntary preschool program for four-year-olds for the coming year. However, Republicans still want to slash funding for that program from $70 million to $35 million in fiscal year 2012. They also hope to pass a bill during the 2012 legislative session converting universal preschool into a voucher-based program, with parents of four-year-olds paying on a sliding scale.

Senate Appropriations Chair Dvorsky’s prepared statement for June 2 was more conciliatory than his comments the previous day. However, he made clear that Democrats aren’t going to accept this package as-is:

“The Governor and House Republicans took a small step today toward addressing the concerns of many Iowans by agreeing to a 2 percent increase in basic school funding for the 2012-2013 school year.

“With one billion dollars in the state’s savings accounts, Democrats still believe more must be done to avoid a two-year starvation diet for Iowa schools, health care cutbacks for Iowa families, and deep cuts in job creation efforts.”

Democrats had previously outlined 10 key disagreements impeding a compromise on the state budget. The omnibus proposal isn’t anything close to meeting them halfway on those demands.

Governor Terry Branstad announced this morning that on June 6 he will launch a 43-city tour to promote the new Republican budget package. The governor had already decided to stay in Iowa throughout June to continue budget negotiations. He will send Lieutenant Governor Kim Reynolds on a trade mission he had planned to lead in Asia. Today Iowa Democratic Party Chair Sue Dvorsky characterized the governor’s planned tour as an attempt “to continue spreading misinformation about Iowa’s financial outlook and demand massive cuts to state programs.” In a statement, she asserted that Branstad still isn’t “negotiating or working towards a solution” with Democrats.

Share any opinions about state spending or predictions about the budget endgame in this thread. I think some deal will be struck by the end of the current fiscal year on June 30, but I expect more brinksmanship from both sides before that happens.

P.S.- Paulsen said the omnibus bill doesn’t include language from earlier House-approved legislation promoting nuclear energy in Iowa or banning undercover recordings at farm operations. He didn’t rule out adding those provisions as amendments when the House debates the omnibus next week.

UPDATE: Senate Democrats plan to hold a series of “Open Budget Hearings” in Des Moines, beginning on June 6 to coincide with Branstad’s statewide tour. From a June 3 press release:

Informed Iowans will detail the impact on Iowans of the significant points of disagreement between Senate Democratic proposals and those of Governor Branstad and House Republicans. […]

All hearings will be open to the public and will be live streamed on the Internet at…  […]

“With one billion dollars in the state’s savings accounts, Republicans are needlessly insisting on an austerity budget that will hurt Iowa families, local schools, and local economic development,” said Dvorsky.  “The facts are on our side. That’s why we’ve organized these Open Budget Hearings.  By bringing more openness and transparency to the negotiations, we hope to help Iowans better understand what’s at stake and increase the pressure on Republicans to compromise by stepping away from their extreme demands.”

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