by CBI Lobbyist
Overview / Major Events
The House and Senate both took major steps forward in implementing the agreement reached last week that resolves a number of key tax concerns regarding coupling with federal tax changes along with setting the amount of new money for our K-12 schools in FY17 (beginning July 1, 2016).
WHAT GOT DONE?
March Revenue Estimate: When More is Actually Less
On Wednesday the Revenue Estimating Conference (a committee of three individuals who set the official revenue estimates for state government) met and made significant adjustments in the amount of available money for spending in FY17. Initial media reports suggested the new estimate was GOOD news (in that it set new revenue for FY17 at a figure $30 million higher than the same estimate in December). However, in the famous words of ESPN’s Lee Corso, “not so fast my friend.”
What was initially lost on those making quick assessments was the impact that the coupling bill (HF 2433) would have on the overall financial picture of state government. The revenue estimate (and the spending limit that is derived from it) is a combination of the ending balance from the prior fiscal year and the actual revenue generated in the next fiscal year. Thus, with the impact of HF 2433 meaning an $80 million REDUCTION in the ending balance for FY16, the estimated $30 million revenue increase in FY17 means the NET revenue available for spending in FY17 is $50 million LESS than was estimated in December.
New Estimate on FY16 Ending Balance: minus $80 million
New Estimate on FY 17 Revenue: plus $30 million
Net Available Revenue for FY17 Spending: minus $50 million
How this will impact the education spending deal and work on the entire state budget is yet to be determined. However, this reduction will require Governor Branstad to submit adjustments to his proposed budget and House and Senate leaders will need to consider impacts on budget targets.
What seems clear, if the House and Senate keep their K-12 spending deal (and, since the tax part of that deal is already done it doesn’t seem logical they will walk back the second piece of the agreement) then there will be virtually NO new money for spending increases in any other part of the state budget.
Efforts on Behalf of Community Bankers of Iowa: