DES MOINES — Nine months into the fiscal year, the Iowa House Tuesday approved a $25 million cut and another $10 million adjustment to the current budget to deal for the second year in a row with a shortfall.
The largest cut — nearly $11 million over the next three months — will come from the University of Iowa and Iowa State University.
The final deappropriation, which could be debated Wednesday by the Senate, was approved on a 59-41 party-line vote.
Thanks to what Senate President Charles Schneider, R-West Des Moines, called “better-than-expected revenue this year,” the budget revision that House and Senate Republicans and GOP Gov. Kim Reynolds agreed on is less than they proposed earlier this year. That means less pain than anticipated for state agencies and Iowans, said House Appropriations Committee Chairman Pat Grassley, R-New Hartford.
But that didn’t cut it with Rep. Chris Hall of Sioux City, the ranking Democrat on the Appropriations Committee. Republicans are saying Iowans “should be grateful because this could have been worse. Hogwash.”
“The real question at hand is over the past year has state government under the Grand Old Party made life better for the average working family in terms of income, education, health care and stewardship of our tax dollars? The answer is a clear ‘no.’”
The tight budget situation has nothing to do with mismanagement under Republicans, Grassley countered.
“In fact, it has to do with proper management of the state budget — to not ignore it, to not go to 10 percent across-the-board cuts and cuts things like Medicaid and schools,” he said.
“We’re in a situation where we have to make tough decisions,” Grassley said. “It’s budgeting. It should be tough.”
Reynolds had proposed $29.6 million in cuts to cover a $27 million gap between what lawmakers budgeted last year for fiscal 2018 and the revenue projections at the time. To be comfortable, Reynolds and Republican lawmakers wanted to create an ending balance for June 30 of one-half of 1 percent of the budget, or about $35 to $36 million.
The Senate Republican plan initially was more severe, calling for $52 million in cuts. That later was reduced to $34 million when senators approved Senate File 2117, The House’s first plan called for $22.7 million in cuts.
Earlier this month, the Revenue Estimating Conference boosted Iowa’s tax revenue projections, including showing an increase in the windfall expected from federal tax changes from $28.4 to $33.3 million. But that still left a $3.6 million gap between the revenue forecast and the $7.274 billion general fund budget the Legislature had approved a year ago, according to a Senate Republican staff analysis.
In addition to the $25 million in general fund budget cuts agreed to this week, the overall adjustment in SF 2117 includes $10 million of unspent gaming revenue earmarked for the High-Quality Jobs Program that has been channeled in the general fund as a revenue adjustment.
That leaves the state with a projected $31.9 million ending balance June 30.
The Board of Regents takes the biggest hit in the deappropriation deal — $10.9 million out of a proposed $565.3 million general fund appropriation. However, under the deal, the University of Northern Iowa is held harmless. So ISU and the UI will absorb it all.
The Department of Human Services faces a $4.3 million cut and Corrections will lose $3.5 million. The Judicial Branch share of the deappropriation will be $1.6 million. The cuts to other departments are less than $1 million each.
But there will be pain, said Rep. Vicki Lensing, D-Iowa City, who thought it was odd for lawmakers to cut university funding “at a time when the state of Iowa is focusing on high-demand jobs and attracting and retaining young people.”
Now the UI appropriation will be $55 million less than it was in 2009 — a 30 percent cut, she said.
“Cutting the universities is not the right way to accomplish that,” Lensing said. “They take it on the chin and deal with it, but at what cost?” We are pricing students out of their future.”
The bill also included some policy changes.
Democrats argued against changes to the use of the Economic Emergency Fund that Rep. Todd Taylor, D-Cedar Rapids, said would cede legislative authority to the governor. The changes proposed in the bill would allow the governor to transfer more than $50 million to balance the state’s ledgers without legislative approval. His amendment to prohibit it failed 42-58.
Hall, the Sioux City Democrat, proposed repealing all tax credits administered by the Department of Revenue over the next five years. Any tax credit reauthorized would be subject to repeal five years after reauthorization. He also proposed prohibiting any tax cut until the state’s Economic Emergency Fund was replenished. Neither proposal was ruled to be germane.
Once the deappropriation is complete, lawmakers will turn to the fiscal 2019 budget that begins July 1.
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