2008 SESSION OF
THE IOWA GENERAL ASSEMBLY CALLED TO ORDER
Representatives and Senators from
all corners of our great state gathered Monday, January 14th at
10:00 AM CST to organize for the peoples business for 2008.
I promised in my release of New
Years Resolutions at the beginning of January, to; Protect Iowa’s “Right to
Work” laws, make sure students come first, make health care more affordable,
be a watchdog for homeowners on property taxes, and eliminate out of control
state spending (1).
I look forward to working for you
this legislative session!
(1)
See
release at:
www.JamieVanFossen.com
GOVERNOR CULVER
RELEASES BUDGET- SPENDING INCREASES OVER 20 PERCENT IN TWO YEARS
On Tuesday, January 15, the Governor
Culver released his budget recommendations for FY 2009. Despite talking
about the need to keep the state’s fiscal house in order, the budget is
loaded with tax increases to pay for the $1 billion spending increase over
two years.
Despite saying that all of the
built-in spending approved last year ($625 million worth) will remain in
place, the Governor claims that spending in FY 09 will increase by only
$361.7 million, or 6 percent compared to FY 08.
He accomplishes this by shifting
$178 million of off-budget spending into FY 08, not counting another $82
million for the FY 09 property tax credits or any other supplemental
appropriations.
The big ticket items shifted into
the FY 08 general fund are:
-$69.7 million from the Healthy
Iowans Tobacco Trust
-$50.2 million for the property tax
credits
-$32 million from the Rebuild Iowa
Infrastructure Fund
-$15 million for Resource
Enhancement and Protection (REAP)
He is shifting both the spending for
these programs as well as the revenue that currently is used to finance
them. The effect of doing this is to increase FY 08 to a huge level and
thereby decrease the size of the FY 09 increase. The original FY 08
increase, when supplemental appropriations were factored in, was $585
million, or 11 percent above FY 07. Adding in the additional $178 million
will make the FY 08 increase $763 million, or a whopping 14 percent above FY
07. Even using the Governor's numbers, that would mean a two-year increase
of 20 percent above FY 07.
Tax the Poor and Middle
class
Even with revenue running at a
whopping 10 percent growth rate, the Governor proposes $100 million in tax
and fee increases. The "bottle bill" tax increase is projected to bring in
another $20 million. It will be difficult for the majority party to pass
either of these tax increases and if they don't, they will have a huge hole
in their budget if they want to appropriate at or above the Governor's
level. That leaves them two choices – cutting spending or dipping into the
cash reserves.
Tax the Job creators
Combined corporate income tax
increase, projected to increase revenue by $25 million last year, is
projected to bring in $70 million now.
Despite the tax increases, the
Governor offers no proposals to deal with high property taxes. With
property owners facing a $500 million tax increase over the next six years,
House Republicans will push for property tax reform including having the
state picking up the tab for the property tax increase associated with
allowable growth.
With revenue increasing by over 10
percent and nearly $100 million in tax increases, the Governor still cannot
balance the budget without raising the cap on gaming revenue going into the
general fund. In FY 08, the cap will increase from $60 million to $90
million. In FY 09, the cap is raised to $180 million. That means he
triples the amount going into the general fund and not going to
infrastructure projects.
Then, the Governor recommends using
a convoluted "sub-prime" way of funding the new infrastructure projects -
issuing "interest-only" bonds where the state would not pay off any
principle for the first four to five years. He also wants to securitize the
remaining 22 percent of tobacco proceeds and use two-thirds of the proceeds
for the new prison in Fort Madison and deposits one-third into the general
fund. For more information from the non-partisan Legislative Fiscal Services
Agency log on to:
http://staffweb.legis.state.ia.us/lfb/docs/BudgAnalysis/BudgAnalysis.htm
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