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Gov. Kim Reynolds proposes $8.1 billion budget
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Gov. Kim Reynolds proposes $8.1 billion budget

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DES MOINES — Gov. Kim Reynolds on Tuesday proposed an $8.1 billion state spending plan for fiscal 2022, a 3.7 percent increase that would fund priorities in broadband expansion, K-12 and higher education and mental health programs for adults and children.

The governor submitted a two-year budget plan to the Republican-controlled Legislature that seeks to boost general-fund appropriations by $331.4 million.

The bulk of the new money would go toward a three-year, $450 million plan that would expand accessibility to affordable broadband — “the biggest build-out in the country.”

The pandemic, she said, exposed the lack to broadband, which the governor proposed to tackle in public-private partnerships.

Along with a $150 million installment for broadband in fiscal 2022, Reynolds proposed a 2.5 percent increase in state aid to K-12 schools and community colleges, $38.7 million more for Medicaid and human services, an additional $15 million for regent universities, $15 million more for mental health and a $5.9 million increase for the Department of Corrections.

“Iowa isn’t facing a massive budget shortfall like many states,” Reynolds said in her evening televised Condition of the Speech address, citing “conservative budgeting practices, Iowa’s diverse economy, the decision to keep over 80 percent of our businesses open and the tenacity of our people. ... Iowa’s coming back, and we’re coming back strong.”

In the coming fiscal year, state officials project enrollment in Iowa’s public-school districts will decline by about 6,000 students due to parents keeping their young children home to learn online — a factor that means the state budget impact of a 2.5 percent boost in state aid would translate into a $20.7 million yearly increase.

Also, the governor is seeking $20 million — as part of a $41 million supplement to this fiscal year’s budget — to help selected districts deal with pandemic-related issues.

Reynolds’ budget experts said, however, they expect the state’s K-12 spending to balloon to a $140.2 million increase in state aid to schools in 2022 fiscal year, as students presumably return to in-person learning as more Iowans are vaccinated for the COVID-19 virus.

Higher education

The $15 million for each of the next two fiscal years for Iowa’s three state universities will be allocated at the discretion of the state Board of Regents.

Community colleges would be in line to receive increases of nearly $5.22 million next fiscal year and nearly $5.35 million in fiscal 2023, according to budget documents issued by the governor’s office.

The overall higher education hike totals $24.3 million.

While human services will get a $38.7 million boost in state funding, much of the increased funding for Medicaid will come from the second installment of $1.25 billion in federal COVID-19 relief assistance, Reynolds aides noted.

Child care, housing

Other elements of the governor’s spending plan seek to expand child-care tax credits, affordable housing in places with pent-up demand and workforce skills training.

The governor said she was allocating $3 million to jump-start public-private partnerships to provide more accessible and affordable child care.

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“I’m also using $25 million of child care development block grants to further promote child care start-ups,” she added. “Let’s remove the obstacles to high-quality, affordable child care so that Iowa families can nurture their kids while parents maintain the maximum freedom to enter and remain in the workforce.”

Mental health

Reynolds, who signed expansive bills for mental health services provided mostly via county property tax levies, is asking legislators to provide $15 million in state money to help fund those programs for the next two fiscal years. But she put on hold any plans to lower county levies or change property-tax policies.

Also on hold for another year or two, Reynolds’ aides said, is Reynolds’ tax-swap plan that would have cut income and property tax burdens and boosted the state sales tax to fund environmental, mental health and other needs.

Tax triggers

But the governor said she supports removing triggers imposed in 2018 tax reform legislation to keep plans on track to eliminate Iowa’s federal deductibility, reduce the number of income-tax brackets and lower income tax rates beginning in the 2023 tax year.

“Unlike many states, we’re starting from a good financial position,” Reynolds told Iowans. “We aren’t looking at tough budget cuts, and we’re certainly not looking at raising taxes.

“If anything, we need to continue the conversation about cutting taxes, and we can start by getting rid of the unnecessary triggers that were put in place in 2018,” she added. “Let’s make Iowa more competitive and guarantee our taxpayers that they can keep more of their hard-earned money.”

Reaction

After the speech, Rep. Chris Hall, D-Sioux City, ranking member of the House Appropriations Committee, said, “Democrats have been focused on investments in child care, broadband and the state’s mental health system for years. We stand ready to work with our colleagues to improve the lives and economic well-being of working families.

“What was true of the governor’s tax cut proposal in 2017 remains true today. The dollars are tilted heavily toward a small segment of Iowans at the top, while working families wait,” he added.

Senate Majority Leader Jack Whitver, R-Ankeny, said, “We’re going to have to look at the budget as a whole” but that he expects GOP legislators will support more in investments in broadband, especially in rural Iowa.”

“The governor and Senate Republicans share many of the same priorities, and I look forward to working with my fellow senators to implement that shared agenda,” he said. “We are eager to work with her and the House of Representatives to ease the tax burden, implement a balanced budget and improve education by ensuring parents and students have a choice to attend school 100 percent in-person.”

Reserve funds

Under the budget proposals, the state general fund is expected to post a surplus of $396.6 million by the end of the current fiscal year (June 30, 2021) and $340.9 million at the close of fiscal 2022 (June 30, 2022).

Also, the governor’s budget plan projected the state’s cash reserve and economic emergency funds will stand at $783.7 million next June 30 and $825.3 million the following year.

Collection: Read about the 2021 Iowa legislative session

2021 Iowa Legislative Session Preview Series

Sunday, Jan. 3: COVID-19

Tuesday, Jan. 5: Redistricting, tax policy and the budget

Wednesday, Jan. 6: Higher education

Thursday, Jan. 7: K-12 education funding and policy

Friday, Jan. 8: Criminal justice reform

Saturday, Jan. 9: Hot-button issues

Sunday, Jan. 10: The digital divide, and demographics of the new Iowa Legislature

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Legislative leaders face a balancing act of conducting the business of the Iowa Legislature with transparency while attempting to protect the health of themselves and any Iowans who come to the Iowa Capitol during the session.

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Statehouse Republicans — fortified by 2020 election successes — are hoping this year to resume revamping state tax policy against a backdrop of revenue uncertainty as Iowa works to rebound from a deadly pandemic and damaging derecho.

Comments: (515) 243-7220; rod.boshart@thegazette.com

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