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Overview of the Budget
• The Governor is proposing a general fund budget of $6.2 billion, with an ending balance of $75.7 million. The FY 2010 budget represents an increase of $115.2 million over the adjusted FY 2009 budget. The general fund budget grows over FY 2009 because the Governor recommends mov-ing $203.7 million in spending into the general fund that was previously funded from other funds outside the general fund. He is doing this to improve budget transparency. However, if you ad-just for the shifts in spending growth, his budget is actually $88.5 million less (or 1.4% less) than in FY 2009.
- ANALYSIS OF BUDGETS:
- LSA Preliminary Summary of Governor’s Budget Recommendations New!
- Analysis of the FY 2010 Budget and Department Requests
•The Governor builds this budget with no tax increases and by imposing a 6.5% reduction to 207 of the 253 line items in the state budget.
• Certain key areas of the budget are protected from the effects of the 6.5% reductions. These in-clude such areas as disaster relief funding, public safety, prison guards, workforce development, human services, victim compensation funds, the teacher quality program, and preschool funding.
• Preliminary figures showed a $680 million gap between the current revenue estimate for FY 2010 and estimates of built-in and anticipated spending increases. The Governor recommends closing this gap by continuing $180 million in reductions that were made in FY 2009; implementing 6.5% reductions to most of the budget for FY 2010, which saves approximately $400 million; and using $200 million from the state’s cash reserve fund.
• The Governor plans to save $20 million in FY 2010 through government reorganizations and ef-ficiencies.
• This is a collective bargaining year for state employees and even though a settlement has not been reached, the Governor is not building an increase in the budget for funding the contracts.
• In an effort to improve budget transparency, the Governor reduces the amount of operating ex-penses funded off-budget and brings them back to the general fund. The Governor proposes the following $203.7 million in transfers to the general fund:
- o $95 million of expenditure from the Senior Living Trust Fund.
- o $33.7 million of programs previously funding from the Healthy Iowans Tobacco Trust Fund.
- o $3.2 million of grants funded from the Victims Compensation Fund.
- o $900,000 of expenditures from the Attorney General’s Forfeiture Fund.
- o $61.8 million in expenditures from the Property Tax Credit Fund.
- o $6.5 million in expenditures from the Gamblers Treatment Fund.
- o $2.6 million in expenditures from the Child Care Tax Credit.
• The Governor is proposing a $700 million Rebuild Iowa Infrastructure Investment bonding pro-gram, which will tie into the Federal Stimulus effort to spur economy and create jobs. These funds will go for real bricks and mortar projects such as housing, highways and bridges, sanitary sewer systems, storm sewers, water towers , mass transit, trails, flood rebuilding, and energy in-frastructure.
• The Governor’s budget for FY 2010 will show $247.9 million in revenue adjustments, most of which is the transfer of $200 million from the cash reserve fund to the general fund. The other adjustments are as follows:
- o $800,000 in Innovations Fund payments.
- o $15 million by capping tax credits at $200 million.
- o $13 million by capping the Research and Activities Tax Credit.
- o $2.6 million by eliminating the diversion of the Child Care Tax Credit, this is the revenue side of the appropriation that was off budget.
- o $6.5 million in transfers from the Gamblers Treatment Fund, this is the revenue side of the appropriation that was off budget.
- o $10 million by sweeping the remaining balance from the last Federal Economic Stimulus and Jobs Holding Fund from the last recession.
Recommended Changes to FY 2009
• The Governor is recommending $63 million in additional spending to backfill and meet shortfalls in the budget. The Governor is also proposing $56 million be expended from the Economic Emergency Fund to provide additional funds for disaster assistance. (This is consistent with the $56 million appropriated by House File 64.) The Governor is also proposing $30.8 million in se-lective reductions or de-appropriations, to help keep the FY 2009 budget balanced. (These are part of the $77 million in reductions the Governor proposed back in December.)
• The supplemental appropriations recommended are as follows:
- o $47 million for the Department of Human Services for Medicaid.
- o $6 million to the Department of Natural Resources for flood disaster relief.
- o $992,915 to the Department of Public Health for flood costs to replace vaccines.
- o $5.6 million to backfill funding to the Department of Corrections.
- o $1.4 million to backfill funding to the Department of Public Safety.
- o $312,604 to backfill funding for Iowa Workforce Development.
- o $2 million to fund the Rebuild Iowa Office.
• The Governor proposes shifting $66 million in funds from other funds into the general fund, to help maintain the general fund balance. The funds shifted are as follows:
- o $18 million from the Tobacco Master Settlement Agreement payment.
- o $4.5 million from the Innovations Fund.
- o $800,000 from the Local Government Innovations Fund.
- o $5.7 million from the Underground Storage Tank Fund.
- o $37 million from the Rebuild Iowa Infrastructure Fund. (Funds that had been committed to the new state office building.)
Staff Contact: Joe Romano
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