REVENUE
RUNNING STRONG THROUGH FIRST SIX MONTHS
Through the
first half of Fiscal Year (FY) 07, General Fund revenue growth
continued to be strong compared to the first half of FY 06.
Through the
first six months of the fiscal year, gross General Fund revenue grew
by $143.8 million, or 5.4 percent compared to the first six months
of FY 06.
The REC
estimate for FY 06 is an increase of $285 million (4.9 percent)
compared to FY 06. Despite the REC increasing the revenue estimate
in December, revenue continues to exceed expectations.
Once again,
all major revenue sources increased compared to the first half FY
06. Personal income tax increased by $68.5 million, or 5.5 percent,
sales and use taxes were up $7.1 million or 0.8 percent, corporate
tax payments were up $56.8 million, or a whopping 42.1 percent.
Other taxes were up $9.1 million or 5.8 percent and other receipts
were up $2.2 million, or 1.2 percent.
If revenue
comes in at the REC estimate of 4.9 percent (which appears likely),
the FY 07 budget will end up with a surplus of $266 million.
Assuming minimal supplemental appropriations (including no need for
a supplemental for Medicaid for the first time in five fiscal years)
and filling the reserves to 10 percent of the budget, there will be
at least $225 million left over to transfer into the Senior Living
Trust Fund (SLTF). However, only $201 million is needed to
completely repay the SLTF to $300 million.
Under the
law approved last year, all of the ending balance not needed to fill
the reserves to 10 percent is transferred to the SLTF. In his
opening day speech, Representative Rants challenged the new majority
to use the entire surplus not needed to fill the reserves to 10
percent or for minimal supplemental appropriations to repay the SLTF.
However, it is unlikely the majority party will agree to the
challenge because they will need every penny of the FY 07 surplus to
fund all of their priorities.
The revenue
outlook for FY 08 is also rosy. For FY 08, the REC has projected a
3.5 percent increase in gross revenue. Due to the increase in FY 07
(which increases the FY 08 base revenue) and the FY 08 increase, the
majority party will have over $400 million to spend on the FY 08
budget. However, with nearly $600 million in built-in and
anticipated spending increases, it is easy to see why the majority
will need the entire FY 07 surplus and FY 08 revenue to fund all of
their spending priorities.
The bottom
line is that House Republicans will work with the new majority if it
proposes budget ideas like repaying the SLTF. However, House
Republicans will not be willing to help the majority overspend and
undo all of the hard work that was done the past four years to get
the state’s finances in order.
MINIMUM
WAGE – FIRST BILL INTRODUCED--CONTROVERSY OVER SENATE COLA INCREASE
In September
1997, Congress approved the Fair Labor Standards Act (FLSA), which
established minimum wage, overtime pay, recordkeeping, and child
labor standards affecting full-time and part-time workers in the
private sector and in federal, state, and local governments.
The federal
minimum wage for covered non-exempt employees is $5.15 an hour. The
federal minimum wage provisions are contained in the Fair Labor
Standards Act (FLSA). Many states also have minimum wage laws.
Various
minimum wage exceptions apply under specific circumstances to
workers with disabilities, full-time students, youth under age 20 in
their first 90 consecutive calendar days of employment, tipped
employees and student-learners.
In 1989, the
Democrat-controlled Iowa Legislature established a state minimum
wage law. This provision set Iowa’s minimum wage at the higher of
the federal minimum wage law or $4.65. Due to the passage of the
federal FLSA, Iowa employees are entitled to $5.15 an hour because
that is the higher of the two.
The
“training wage” is $4.25.
House File 1
House
File 1, sponsored by all 54 House Democrats, increases the state
hourly minimum wage in a two-part jump.
The minimum
wage would increase to $6.20 on April 1, 2007. Then, on January 1,
2008, the minimum wage would jump to $7.25.
House
File 1 also increases the training wage to $5.30 on April 1,
2007 and $6.35 on January 1, 2008.
Senate File 1
Senate
File 1, sponsored by all Senate Democrats, is similar to
House File 1, with two major exceptions.
Senate
File 1 provides for an automatic annual increase or cost of
living allowance (COLA) of the state minimum wage. This
increase is based on the yearly increase in the consumer price
index. Additionally, the Senate bill eliminates the “training
wage”.
The
so-called “cost of living adjustment”:
Forces
automatic pay increases regardless of performance.
Forces
automatic increases with no guarantee of increased revenue to the
business.
Only two
other states in the nation adjust their minimum wage:
Vermont –
Beginning on January 1, 2007, and on each subsequent January 1, the
minimum wage rate is increased by five percent or the percentage
increase of the Consumer Price Index, or city average, not
seasonally adjusted.
Washington
-- Beginning January 1, 2001, and annually thereafter, the rate is
adjusted for inflation by a calculation using the consumer price
index for urban wage earners and clerical workers for the prior
year.
Ways & Means
Update
Bills introduced in committee this week:
No bills introduced in committee
Bills passed out of committee
this week:
No bills passed committee
Week
in Review Archives