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Gov. Branstad releases FY 2015 budget proposal

Published: Wednesday, Jan. 22, 2014 9:41 a.m. CST

During his condition of the state address, Gov. Terry Branstad laid out his budget proposal for fiscal year (FY) 2015. The proposal implements the major policy initiatives passed by the Legislature during the 2013 session and introduces some new ideas as well.

The governor’s budget is proposing to spend $7,000.9 billion from the general fund in FY 2015. 

This is slightly above the revenue estimating conference’s December ongoing revenue estimate of $6,983.2 billion.

The proposal represents an increase of $505 million over the FY 2014 budget. More than $330 million of the increase goes to implement two bills – the Commercial Property Tax Relief bill and the landmark education reform package, which included raising supplemental state aid for schools by $245 per student.

Another $86 million is solely for paying the state’s share of Medicaid costs. Because of Iowa’s strong economy and federal changes to the financing formula, the state’s share of Medicaid is at an all-time high. 

On the revenue side, Gov. Branstad proposed that the state eliminate the income tax collected on military pensions. This would result in a $10 million reduction in ongoing revenue in FY 2015.

At this point, there is no federal tax coupling bill since Congress has not enacted any changes to the federal tax code yet. That may change if the omnibus appropriations bill being considered this week in Washington actually passes.

Among the highlights of the Governor’s budget proposals are:

Home Base Iowa – Gov. Branstad has requested two separate $1 million appropriations for implementation of the Home Base Iowa initiative, which will work to attract veterans to move and live in Iowa.

The first request will fund an Iowa Workforce Development study researching the compatibility of military occupational training and service with state licensing requirements. The second request would fund a grant to a non-profit veteran service organization to use to market Iowa as a place for veterans to locate after completing their military service.

Apprenticeships – As part of his proposals to help Iowans acquire the necessary work skills to join and advance up the career ladder, the governor provided funding for two different apprenticeship programs.

The governor is expected to introduce legislation revising the 260F program to change the focus to apprenticeship training. This would include increasing the funding available for this program by $1 million.

Part of the governor’s changes will be an increase in funding, which is reflected in his FY 2015 budget by an additional $1 million being requested.

The governor is also proposing to expand the existing Innovative Business Internship program, by providing apprenticeship opportunities to Iowa students studying in the STEM fields (science, technology, engineering, and mathematics) and providing $2 million as incentives to employers to participate.

Supplemental state aid for schools – Gov. Branstad’s budget provides funding for the $245 per student increase (4 percent) in supplemental state aid to schools in FY 15 that was approved last session.

Mental Health Equalization fund – the governor did include the $29.8 million in equalization funding that was initially provided last year. There was some speculation that these funds would not be included in the FY 2015 proposal.

Regents institutions – Gov. Branstad provided the 4 percent increase in general-aid funding for the three Regents universities, 2.3 percent is for maintaining the tuition freeze, while the remaining 1.7 percent is for their on-time graduation initiatives.  The governor provided initial funding in the RIIF budget for the next series of infrastructure projects at each of the universities.

Community colleges – the governor maintained community college general-aid funding at the FY 14 level.

Some Iowans were initially concerned the governor’s budget proposal called for spending more than the ongoing revenue projection by the Revenue Estimating conference. The difference is approximately $27.7 million, which is a relatively small gap to be closed. And, in the past three years, the budget enacted by the Legislature and signed by the governor has been lower than his initial proposal.

Iowans can rest assured House republicans will not end the 2014 legislative session until they have passed a budget that meets their budgeting principles:

• We will spend less than the state collects

• We will not use one-time money to fund on-going needs

• We will not balance the budget by intentionally underfunding programs

• We will return unused tax dollars to Iowa’s taxpayers.

I look forward to seeing you at one of my legislative coffees during the course of the 2014 legislative session.

For Clarke County:

• Friday Jan. 24

Noon – Lakeside Casino in Osceola

• Friday Feb. 28

Noon – Lakeside Casino in Osceola

• Friday March 28

Noon – Lakeside Casino in Osceola

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