Washington Evening Journal

Fairfield Ledger   Mt. Pleasant News
Neighbors Growing Together | Sep 24, 2018

Houston, we have a problem!

By Dave Heaton

Four years ago this state faced financial disaster.  When the Legislature came to Des Moines in 2011, the state was $800 million in the hole.  Iowa had used the Obama Administration one-time stimulus money for ongoing expenses and the Feds was gone.  Iowa would need fiscal discipline if it was to get itself back on its feet.  
House Republicans committed themselves to four principles to produce a balanced and sustainable budget.
•    1.  We will not spend more than the state collects.
•2.  We will not use one-time money for ongoing expenditures.
•3.  We will not balance the budget by intentionally underfunding programs.
•    4.  We will return unused dollars to Iowa’s taxpayers.
Over the past four years, holding to these principles has allowed Iowa to provide additional funds for education, health care, and public safety while also passing balanced state budgets.  The state was also helped by strong economic growth, particularly in the ag sector which saw record corn and bean prices through 2013.  
But high commodity prices don’t last, and the past year we’ve seen a significant reduction in corn and bean prices.  These lower prices have started to impact the rest of Iowa’s economy.  Just last week, John Deere laid off more than 800 workers in Iowa.  And they stated that the company may have to further reduce its work force.
With Iowa’s economy growing at a slower pace, the state budget has some issues.  The Governor proposed spending $7.34 billion in FY 2016, an increase of $346.7 million over FY 2015, or 4.95 percent.   More importantly, Governor Branstad’s proposal spends more money than the Revenue Estimation Conference has predicted for state revenue -  $7.194 billion.  The gap between ongoing revenue and the Governor’s budget is approximately $146 million.  
Each of the past four years, the budget passed by the Legislature has spent less than the Governor has proposed.  House Republicans are committed to continue this trend.
The three biggest items of the State budget are education, wages and benefits to state employees, and Medicaid.  They consume 90 percent of the entire budget.  Over the past decade, state revenue has grown 4.1 percent annually; state spending on education grew by 4.2 percent and Medicaid by 11.7 percent.  Fifty-five percent of the Governor’s budget is targeted to education.  
This week the House will debate Supplemental Growth for our K-12 school districts.  The House Majority will support the Governor’s proposal of a 1.25 percent increase, which would be $50 million. This is a smaller increase than what schools have received in the past two years.   Last year we approved 4 percent, or $158 million.  Going higher than the Governor’s recommendation would put the rest of government, including state employees and Medicaid, at risk.  
Legislative Democrats are pushing for 6 percent increase in school funding.  Their proposal would amount to $239 million increase for schools, and that doesn’t include the new money already committed in the Education Reform law we passed two years ago. If you combine their education proposal with the rest of the Governor’s budget, the state would be spending 104 percent of projected revenue.  
Their proposal for schools would spend more than all of the new money the state is expecting to have next year.  They would leave no new money for the rest of state government, including the “big bear” in the room - Medicaid.
Iowa’s Medicaid Program has grown significantly over the past two decades.  When I became Chair of the Health and Human Services Budget Subcommittee in 1999, there were 205,000 Iowans in Medicaid and 502,000 kids in school.  The Medicaid budget passed that year after two days of debate on the House floor – spent $420 million and accounted for just 9 percent of the state’s budget.
Today, 405,000 Iowans are on Medicaid, while 479,000 kids attend school. The Medicaid budget for FY 2015 will spend nearly $1.6 billion on Iowa’s share of the program.  Medicaid now takes over 20 percent of the state budget and Iowa’s population has remained the same.
The numbers tell it all.  Iowa is struggling to grow and those Iowans over 65 have grown significantly.  My largest Medicaid expense by far is providing care for our seniors in nursing homes.
The budget before the Legislature is difficult. Even after the Governor proposes $71 million in savings for Medicaid, his budget proposal spends $146 million more than ongoing revenue.  The built-in expenditures we passed last year, property tax relief of $132 million, and $50 million for the Education reform effort are making it very difficult to give K-12 education large increases while also providing health care for our impoverished seniors and the disabled.
This Legislature, both Republicans and Democrats, are going to have to work very hard together, to agree on a budget that is balanced and sustainable.
“Houston, we have a problem.”
Visitors to the Capitol this week were Dr. Phil Miller, School Board President, and Dr. Laurie Noll, Superintendent

Dave Heaton, State Representative, State House, Des Moines, Iowa 50319
Phone: 515-281-7327~Fax: 515-281-6958
E-mail: dave.heaton@legis.state.ia.us
Web page: http://www.daveheaton.net
If you have any issues or concerns, please contact me. Be sure to include your name and address with any communication to my office.