State budget challenges and education issues led the topics discussed by state senator Kim Reynolds of Osceola and state representative Cecil Dolecheck of Mount Ayr when they met with more than two dozen Ringgold county residents for a legislative coffee Saturday.
The legislators noted that Governor Chet Culver’s budget was received by legislators last week and despite claims by the governor, the budget spends more than the state takes in and raises taxes, the legislators noted.
In addition to general fund appropriations of $5.32 billion, the governor uses $387 million in one time money to increase spending, Dolecheck said.
This includes $207.5 million from the cash reserve fund. This is the fund that the state has set up so that it can meet its payment obligations on time and not a “rainy day” fund, Dolecheck noted. All the state’s funds where extra money is put for emergencies have already been spent. When the state can’t pay its bills on times, governmental agencies like schools have to borrow money to meet their expenses while waiting for the state funds.
The budget also uses $37.76 million from the Senior Living Trust Fund for Medicaid expenses, $48 million in stimulus money for education and general purposes and $94.2 million in stimulus funds for Medicaid expenditures. Total spending for general fund items is $5.707 billion, Dolecheck explained.
“Using one time funds for on-going expenditures is part of what has gotten us in the mess we are in,” Dolecheck noted.
The budget also plans to use $341 million in savings from the reorganization of government, and these savings are not realistic, Reynolds noted.
The reorganization includes items like moving Highway Patrol expenses to the Road Use Tax Fund, an idea that Dolecheck says has bi-partisan opposition.
This does not produce any savings for taxpayers but just moves costs to another fund, decreasing the resources available to construct and maintain Iowa’s roads.
Ringgold county supervisor Larry Ford was at the meeting to make sure the legislators knew that the measure would cut road spending in the county by $126,000 if it were passed.
Another big area of “savings” in the reorganization plan is finding more unclaimed property in Iowa, but this money is to be returned to the rightful owners of the property, not used to fund state government.
“The Legislative Service Agency, a non-partisan analyst, reviewed the reorganization bill and pegged the savings at approximately $43 million and I’m skeptical that even that amount will be realized.
“The bill falls short of true long term reorganization, fails to adopt methods to measure reorganization efforts and does nothing to address the unsustainable spending that has gone on the past three years,” Reynolds said.
Counting on the reorganization to provide a big chunk of money for the budget will only cause problems down the road when the savings do not show up, the legislators said.
Dolecheck noted that House Republications will not vote for a budget that spends more than the state receives in revenue and that governor Culver’s budget does not meet this test.
“Government getting bigger and hiring more employees has to stop,” Dolecheck said.“We need to have openness and transparency in government and the first week has been a dismal failure in this regard.”
Dolecheck said that Iowa’s 99 percent spending limitation is not working as Democrats authorized nearly 70 loopholes in the current law to allow spending increases.
“I think the law needs to be added to the Iowa Constitution so it has to be followed,” Dolecheck noted.
Dolecheck said that the governor’s budget will increase taxes by passing them down to the county and school level.
For instance the governor claims to fund two percent allowable growth for K-12 education at $333 million. This comes from $233 in general fund spending and $100 million from the state’s Cash Reserve Fund, which helps keep payments on time. The Legislative Services Agency estimated that the two percent will cost $514 million in fiscal year 2011 so the budget underfunds the two percent by $170 million. Since the spending authority would remain, the difference would have to be made up by school districts with higher property taxes.
The governor also plans to cut the amount of state funding that comes back to counties in property tax credits like the homestead exemption. Not funding this one exemption would mean an increase in property taxes of $160 for each homeowner in Ringgold county, county assessor Neil Morgan pointed out when he heard this portion of the budget plan.
Funding the State Patrol out of road use taxes would also mean that counties would have to raise property taxes to be able to do the same kind of road work that has been done in the past.
Educational issues
As well as budget issues, the legislature has been busy passing several bills dealing with education, the legislators noted.
The bill that would make the state eligible for the Race to the Top federal funds was passed by the legislature and signed.
The bill lifts the cap on charter schools in Iowa, eliminates the sunset for new charter schools and establishes innovation zones. Half of the federal money that might come in the federal grant would go to the Iowa Department of Education to help implement the Iowa Core Curriculum while the other half would go to school districts.
A section of the bill slipped in at the last minute would require plans for dealing with the persistently lowest-achieving schools to negotiate a memorandum of understanding with the teacher’s union before actions could take place. If the board and teachers were unable to come to an agreement the matter would go to an arbitrator.
“There was no requirement or even additional point awarded for a bargaining agreement,” senator Reynolds noted. “This is one more attack on local control. The section takes the decision making away from leadership and elected officials and places it with mediators.”
Dolecheck and Reynolds noted that a number of school districts were rushed into signing memorandum of agreements to be part of the program before the final bill came out and some of them are now trying to find ways to get out of the actions.
There may be an opportunity to take another look at the bill, especially if the state does not get accepted in the first round of funding. Dolecheck said several legislators are having second thoughts at what was rushed through the legislature in order to try to meet an application deadline.
Some of the other bills already passed included a bill that delays establishing the state percent of allowable growth for fiscal 2012 until fiscal 2011 is balanced, which puts it into the next session. While this plays havoc with school districts making their budgets, legislators felt that this was necessary instead of just taking a guess at how much might be available.
Another bill signed by the governor attempts to limit the potential property tax increase that will occur as a result of the governor’s October 2010 across the board cut of $235 million to K-12 school districts.
The bill grants authority to the School Budget Review Committee, a state appointed board, to determine the amount of cash reserve a school district can maintain.
Dolecheck said that there are no school districts in his district that have reserves high enough to bring action by the SCRB, but this means that they will need to raise taxes to make up for the shortfalls in state spending at some point.
Kim Reynolds noted that she offered an amendment that would have provided more local control and flexibility to school districts by suspending several of the unfunded mandates passed down by the state, but this effort failed so she voted against the measure.
Early incentive program
Another bill that has passed the Senate is the state employee retirement incentive, an early retirement program that may bring some savings to the state if new employees are hired at lower pay rates and some of the jobs are not refilled, the legislators noted.
The plan defines the eligible state employees that can participate in the plan, gives a five-year guaranteed health insurance benefit in an authorized group plan and pays $1,000 a year from a minimum of 10 years of service up to a maximum of 25 years of service, with this payment spread over five years. The law also says that once an employee applies and is accepted in the early retirement program they may not accept any other position with the state.
Republicans offered an amendment that would have established a base full time equivalent number so that legislators could monitor the early incentive program and better track the effectiveness in regard to state positions being filled in subsequent years, but this amendment failed.
About 1,000 employees would be expected to take advantage of the program, it has been estimated.
Because of the shortened 80-day session this year, the legislators noted that things were moving very fast and people needed to keep a careful watch on what comes before the legislators so they could respond quickly to let legislators know how they feel on matters.
After being filled in on the legislation that is underway, the meeting was opened to questions.
Issues discussed included right to carry gun licensing legislation, fair share legislation, property tax credits, IPERS changes, AEA reorganization and problems that the new laws on electrical and plumbing inspection have brought.