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BUDGET PROGRESS CONTINUES

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It may not seem like a big accomplishment, but it was big news when the Democrat-controlled Senate and the Republican-controlled House announced they had reached an agreement on how much money to spend in the next year on state government operations and services.  It's been a long time since there were joint targets.  It's hard to do a budget when you don't have agreement on how much to spend, let along how to spend it.  You can argue with your kids about the merits of a trip to Disneyland versus a trip to the Omaha Zoo, but you can't make that decision until you know how much money you have to spend on a vacation.

There are eleven budgets that the Legislature must pass to fund state government. Of those eleven budgets, the Transportation, Judiciary, Justice Systems, Agriculture/Natural Resources, and Administration/Regulation Budgets have advanced out of subcommittee or committee.  We are still waiting to see the other six in writing: Education, Health/Human
Services, Rebuild Iowa's Infrastructure Fund (RIIF), Economic Development, Standings and a catch-all bill that is being referred to as the Debt Reduction Initiative (because part of this bill will pay off part of the state's debts, called bonds). We anticipate seeing three or four of those six bills by the end of this coming week.  As always, it appears the Health/Human Services Budget, which is starting in the House this year, will be one of the final ones negotiated.  You can see details of these bills as they become available here.

On Thursday, one hurdle to the swift passage of the budget bills was removed when the Revenue Estimating Conference (REC) announced their March budget projections.  The reason Iowa is always ranked high in "good budget practices" is that the Legislature and Governor are only allowed to spend 99% of what they expect to take in each year in revenues (from taxes, fees, fines).  So unlike other states, we do not spend more than we have in the bank, and we actually set aside a little each year to put into a savings (rainy day) fund.  To make sure the Legislature doesn't exceed the 99% spending rule, the Legislature established a REC made up of economists who predict how much money the state will take in that year, based on guesses and on how much has been taken in to date.  

So the REC met this week, and looked at how things are going, and basically said things are looking good, and may be even better than expected.  If the REC announcement had made a large adjustment, that could have slowed the Legislature's budget process considerably.  The House said they would definitely cut budget targets if revenues had fallen.  If revenues had increased, the Governor's office and both chambers would have felt increased pressure to invest more in some priorities.

So the REC basically gave the Legislature and Governor the green light to move forward on with their current budget targets, clearing the way and most likely picking up the pace of budget negotiations.