Budget overview
The second week of session has started, and another heated debate over school funding has begun. It is important to understand the facts upon which the budget is built and the context in which the discussion occurs.
The difference between FY 2016 actual spending and the FY 2017 revenue estimate is $153 million (2 percent growth). Therefore, revenue growth is $153 million, and any additional spending ideas from the legislature must fit within that $153 million figure.
The 2016 Legislature arrived in January with several “built-in” spending increases totaling $207.8 million already approved by the legislature and the governor or required by the code. They include things like Medicaid, teacher leadership and compensation system and business property tax credit.
On top of the “built-ins” and “anticipated expenses,” there are the yearly increases in funding requested by various entities. Some of those are supplemental state aid for K-12 schools and additional funding for the Regents universities and community colleges.
All of that must fit within the $153 million of growth and within the overall ongoing revenue amount that is projected to be collected in FY 2017. The process we are going through is finding a way to provide K-12 schools with the most responsible increase possible while not sacrificing other priorities like public safety and economic growth.
The tax-coupling bill
The tax-coupling bill has an impact on the FY 2016 ending balance and the FY 2017 ongoing revenue levels. Any agreement will impact discussions on school aid and budget targets.
The House begins discussing how to move forward on tax-coupling with the Internal Revenue Code in tax years 2015 and 2016. That decision affects the revenues the legislature will use while determining the FY 2017 state budget.
Until a decision on tax-coupling is reached, the level of available revenue growth remains at $153 million.
The coupling bill updates Iowa law to conform to certain tax changes enacted by Congress. It is always important that this bill is passed quickly as tax preparers and accountants need to know what deductions Iowans can take on their 2015 income taxes.
The governor’s plan is to not couple at all for tax year 2015. That means taxpayers would not be able to take advantage of any of the tax extenders Congress just passed that have an Iowa component when they do their taxes this April.
House Ways and Means Chair Tom Sands has an idea that couples with everything except bonus depreciation, which would include Section 179 depreciation, in tax year 2015. It also does not add the permanency of the governor’s plan. There is a $95.7 million impact on FY 2016 revenue. That money goes directly to taxpayers. Additionally, $86.5 million is added to FY 2017 ongoing revenue with roughly $55 million of that available for appropriation under the state’s expenditure limitation law.
Caucus
As you likely know, the Iowa Caucuses are 7 p.m. Feb. 1 at your respective polling location.
It is important to note your Caucus location might be different than your typical polling place. To determine your Caucus location, visit www.sos.iowa.gov. The "Caucus locations" web link will help you determine your precinct, which will lead you to your Caucus location.
If you have questions, you may contact the Secretary of State at 515-281-5204.
What do you think? Email me your thoughts. My email address is: cecil.dolecheck@legis.iowa.gov. The number for the House switchboard is 515-281-3221, seat 65. Information about my legislative forum schedule, past newsletters and biography can be found at www.iowahouserepublicans.com/members/cecil-dolecheck.