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Governor
Item Vetoes Fiscal Year 2001 De-appropriations
Bill
On
Tuesday, March 13, Governor Vilsack sent his item veto message for
Senate File 267 to the Iowa Legislature.
This de-appropriations bill was drafted, voted upon and
sent to the Governor concerning the forecasted revenue shortfalls
in both 2001 and 2002.
The
Governor used his item veto on two sections of the bill.
The first section vetoed was a one percent across-the-
board cut, which would have reduced the budget by $17.4 million.
Due to the slowdown in revenues this fiscal year, our
budget is in the hole by $7 million.
In addition, the Governor’s action is violating Iowa’s
99% limitation law, which requires that 1% of the budget be left
over at the end of every fiscal year.
The
second section that was vetoed involved a reduction of the
Judicial Retirement Fund.
Prior analysis of the Judicial Retirement Fund has shown
that revoking funding for a single year would not have any
negative impact, yet the Governor refused to allow this section of
the bill the pass.
Thankfully,
the Governor signed the remainder of the bill, which contained $4
million in budget cuts and an additional $4 million in revenue
adjustments.
While these two exceptions will help Iowa’s budget
crisis, we still have a long way to go before our budget is once
again sound.
Budget
Cuts Are Only Solution
This
past Wednesday, March 14, the Revenue Estimating Conference (REC),
met to lower its revenue estimate for fiscal year 2001 and 2002.
This conference consisted of the Director of the
Department of Management (DOM) and the Director of the
Legislative Fiscal Bureau (LFB), as well as private sector member
David Underwood.
While
both the DOM and LFB directors had originally sought a revenue
increase of 3.5%, at the urging of Underwood, an increase of 0.67%
was eventually agreed upon.
For FY 2002, the REC settled upon $5.35 billion, or 4.3%
percent above FY 2001.
This is $152 million less than the December estimate.
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Using
these new estimates, the FY 2002 budget now has a shortfall of over
$332 million.
Budget
Points
Due
to Governor Vilsack’s item vetoes of Senate File 267, Iowa is now
facing:
·
An unnecessary $7 million deficit this year (FY 2001), and an
estimated $332 million shortfall next year (FY 2002).
·
Real cuts in the FY 2002 budget.
These won’t be small reductions in the increase of funding.
Agencies and departments will receive less money than they
did the previous year. Services
will be drastically affected.
The
sad truth is that if the Governor had adopted the proposed
Republican budget cuts listed in the de-appropriations bill, there
wouldn’t be a deficit in fiscal year 2001.
It will be interesting to see how department heads react to
the new, necessary budget decreases, considering their fearful
reactions to a less harmful de-appropriations bill.
Republicans
have stated that school aid payments (allowable growth) as well as
the $40 million lockbox for teacher pay are priorities that will be
kept safe from the budget axe.
Due
to his partial veto, by Iowa law Governor Vilsack is required to
submit his own proposed budget to the Legislature by March 28.
He claims that the new budget recommendations will contain
real cuts. If this is
the case, Vilsack should be easy to work with.
Only time will tell.
House
Concurrent Resolution Supports President’s Tax Cuts
On
Wednesday, March 14, 2001, House Concurrent Resolution 19 was
adopted.
This displayed the support of both the House and Senate for
President Bush’s proposed tax cuts.
The
hope of Republican Legislators is that the adoption of this
resolution will show Iowa’s own support for Bush’s tax
reductions, as well as urge Congress to adopt the proposed cuts.
Ways
& Means Update
Bills
assigned in the Ways & Means Committee this week:
No
committee actions this week.
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