Legislature to take up state budget

By Jared Klein

Last Monday, we started another legislative session in Des Moines.

I am excited to continue to work to represent House District 78 for another session. Governor Kim Reynolds laid out her administration?s recommendations for the state budget in Fiscal Year 2019 on Tuesday, calling for increased funding for education and Medicaid in the new year.

This is just the Governor?s budget plan and is absolutely not the final budget. There will likely be changes, but everyone was talking about it this week. This newsletter will give some insight into the intricate details of the proposed budget.

The Governor is proposing a General Fund budget of $7.4415 billion in the year starting on July 1, which would amount to a 2.71 percent increase over the revised spending level in Fiscal Year 2018. This would also mean the state would be spending 97.48 percent of resources available in FY 2019.

As part of the budget, the Governor has incorporated the projected revenue increases the state is expected to get with the passage of the Federal tax reform bill late in December. Governor Reynolds? budget projects that state revenue will increase $110.8 million during FY 2019. The Governor?s budget proposal does not commit these new funds to any spending. With these funds not spent, the proposal anticipates the state having an ending balance of $192.4 million at the end of FY 2019.

Supplemental State Aid for Schools ? Governor Reynolds is proposing that Iowa?s education system receive $62 million in money during FY 2019. The vast majority of this amount - $54 million ? is provided to school districts through an increase in Supplemental State Aid for Schools. The state would also provide districts with $5 million in new funds for the implementation of the Statewide Assessments which have been discussed for several years.

Higher Education ? State funding for state universities under the Board of Regents, Community Colleges, and the Iowa Tuition Grant program for students attending the state?s private colleges also receive an increase in FY 2019. The $13 million in new funds committed to higher education is a similar percentage growth to what is being provided to K-12 education.

Medicaid ? Governor Reynolds? budget proposal includes additional resources for the program that impacts the most Iowans ? Medicaid. In Fiscal Year 2019, the state will spend an additional $55 million for the regular Medicaid program and the Health and Wellness program. This amount would have been significantly higher, if not for an increase in Iowa?s federal Medicaid match rate. The trend in increasing federal share of Medicaid is also expected to continue into FY 2020.

One significant change is for the first time in recent memory, the proposed Medicaid budget does not include a series of cost containment measures to attempt to limit the growth in health care expenditures. The lack of these proposals may be due to the fact that Iowa has implemented just about every cost control option made available to the states by the federal Department of Health and Human Services.

Child Care Assistance ? The strong employment figures experienced in Iowa over the past year create a different dilemma in the state?s child care assistance program. As the state is one of the national leaders in households with both parents working, the high employment levels lead to increased demand for child care. Governor Reynolds? budget includes a $13.4 million for the child care assistance program. Beyond the growth in demand for the program, the state is also still adjusting its budget to meet the new federal child care requirements implemented by the Obama administration and Congress in early 2016.

Courts and Indigent Defense - as required by law, the Governor has included the Judicial Branch?s budget request for an increase in their FY 2019 budget. According to the Governor?s budget, the Courts would receive an increase of $5.143 million from the General Fund and an appropriation of $7.1 million from the Technology Reinvestment Fund.

In terms of providing legal representation to those who cannot afford it, the Governor?s budget calls for a significant hike in funding for the Indigent Defense program. This would receive an additional $4 million in FY 2019, after receiving a FY 2018 supplemental appropriation of $2 million. The state?s Public Defender?s office would also receive an increase of $763,959.

Repayment of FY 2017 Cash Reserve Transfer ? The Governor is proposing to amend the agreement made last year on the repayment of the $131 million borrowed from the Cash Reserve Fund. Instead of paying back all of the remaining $111 million in FY 2019 as was enacted by the Legislature last year, Governor Reynolds is proposing to make two equal payments of $55.5 million in FY 2019 and FY 2020.

Rebuild Iowa Infrastructure Fund ? Governor Reynolds also released her proposal for state infrastructure spending in FY 2019. The Governor is calling for a record amount of RIIF funding be dedicated to the Technology Reinvestment Fund, proposing $20.8 million be transferred to this fund. These funds are used for ongoing technology costs and improvements.

Continuing a tradition started by her predecessor, the Governor is calling for a major commitment to renovate the State Historical Building. She is asking that $6.5 million for renovations and an additional $1.5 million for ?Collections Storage Infrastructure?. Governor Reynolds is also calling for RIIF funds to be used for grants to Iowa communities for broadband improvements.

While major maintenance needs of state facilities has been a growing concern amongst some legislators, the Governor?s infrastructure proposal does not go as far as some would hope. The Department of Administrative Services receives just $3 million in FY 2019 for these critical issues, significantly less than the $11.5 million appropriated in FY 2018.

Surprisingly, the Board of Regents is also given a major maintenance appropriation of $3 million.

In addition to the FY 2019 budget, Governor Reynolds also proposed some adjustments to the FY 2018 budget. As the latest projection of the Revenue Estimating Conference has state revenue coming in one-half of one percent below the current budget level, the Governor has proposed several adjustments to the FY 2018 spending plan.

Most state agencies have their budgets trimmed by 0.9 percent, with state aid to schools being held harmless.

Funding for Medicaid would be reduced by $10 million. Also, the Governor would use $11.2 million of new FY 2018 revenue expected to come in due to the federal tax cut law to help close the small gap in the budget.

The release of the Governor?s budget proposal represents the firing of the starter?s pistol on the annual budget process that dominates each legislative session.

Budget subcommittees will start next week looking at the details of Governor Reynolds? proposal and the hard work on the Fiscal Year 2019 budget will begin in earnest.

Jared Klein represents Iowa House District 78.