Heaton sees state financial issues clouding session

BY BROOKS TAYLOR

Mt. Pleasant News

?We don?t have any money? was the first remark by State Rep. Dave Heaton-R-Mt. Pleasant when asked his thoughts on the 2016 session of the Iowa Legislature.

The financial pie, according to Heaton?s statistics, resembles more of a doughnut and he said there aren?t near enough slices to go around.

Heaton said legislation passed several years ago is putting a financial stranglehold on the budget. The first was a bipartisan property tax relief bill that Heaton says cost the state $550 million over three years with the final installment coming this year. The property tax relief bill included a rollback on property tax (similar to the residential property rollback) paid by commercial property owners to local governments with the state promising to ?backfill? the property tax money lost by local governments through the rollback.

Secondly, the state approved a bipartisan teacher leadership bill. The measure allows school districts to appoint instructors to be mentors to new teachers. The state expenditure for the program is $50 million per year over a three-year period, and 2016 will be the last year for the appropriation.

He said the above legislation was based on an annual six-percent increase in state revenues. ?We?ve taken seven million dollars off the table through those two programs,? he noted. ?With the agriculture economy falling, state revenues are down and only growing at about 3.5 percent.?

That creates a significant financial problem, he continued. ?When you look at this year?s anticipated state revenue of $7.237 billion and expenditures of $7.174 billion, that only leaves $153.1 million,? he explained.

However, the state has agreed to pay $269.5 million in expenditures. Those expenditures include an increase of $64.3 million for Medicaid; $25 million for commercial property tax relief; $53 million for education (mentoring program, etc.); $63.2 million for salary adjustments for state employees; and $20 million for the REAP program.

The above expenditures do not include any increase in funding for the state?s school districts, community colleges and the Regents? universities. That is not good because Iowa school districts felt they were short-changed last year with 2.45 percent in allowable growth money, and Governor Terry Branstad?s veto of approximately $55 million in one-time supplemental aid to school districts.

Regents are requesting $49 million in additional money; community colleges want $10 million; a bill in the Senate would give school districts two-percent allowable growth money at a cost of $83.1 million. Similar allowable growth (2.45 percent) to school districts as last year would cost the state $102 million and four-percent allowable growth, which is sought by most school district administrators, presents a bill of $168.1 million.

Add to that an additional $8 million to meet federal child-care requirements (licensure which means hiring more inspectors) and even ?fuzzy math? won?t lighten the crunch.

The delay in turning the state-managed Medicaid program to private companies (the transition was backed up to March 2016 from January 2016) will cost the state another $18 million, Heaton said.

He added he supports the decision to turn the Medicaid program over to private companies but says the quick turnaround (the decision was announced in late summer) was shortsighted.

?The Medicaid program is growing at an unsustainable rate,? he said. ?It is like having Pac Man in the budget?The state really had no choice (in leaving the Medicaid business). These private companies are hiring thousands of employees. Most managed-care companies lose money the first two years they sign on with the state. While I agree with the change, I don?t agree with the quick turnaround. We tried to do it all at once and it was chaos.?

The veteran state representative said more would be known on the budget following the governor?s condition of the state address on Tuesday, Jan. 12, the day after the legislature convenes. ?We are all waiting to hear what he has to say and how he is going to handle the problem we have with the 2017 budget.?

Allowable growth for K-12 school districts ?is a very serious problem,? according to Heaton. ?We have to identify where the money will come from and how much.?

For several years Heaton has been attempting to pass legislation, which would remove K-12 school transportation expenditures from the general fund and allow districts to pass a special tax levy for such funding. He said that progress is being made on the proposal. Some legislators, he said, want to allow school districts to use the one-cent sales tax money for transportation, but the representative said many school districts already have that money earmarked for other needs.

A longtime advocate for improvement in the mental-health delivery system and chairman of the House Health and Human Services Committee, Heaton said work is still needed on the redesign of the system.

?We need to address the issue of counties providing non-Medicaid services to residents, such as support services for those people with disabilities,? he explained. ?We also have to work with the governor?s office on continued improvement of the state mental-health system. There is a lot of work to do in the area of children?s mental health and problems remain with access to mental-health services.?

Because it is an election year, Heaton said the session could become contentious. ?Being an election year could complicate the process,? Heaton stated. ?The parties want to make sure they can show differences between them and the other party. It could be difficult to find common ground to solve some of the issues. We just don?t need a lot of angst and blood on the floor.?