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Department of Transportation (DOT)
The Governor funds DOT operations for FY 2010 basically at their request level. This money is from the Road Use Tax Fund; it does not come from the general fund. It includes $302.4 million from the Primary Road Fund and another $51.4 million from the Road Use Tax Fund.
Infrastructure & Capitals
This budget bill contains no general fund dollars. It provides appropriations from the following funds:
1. RIIF (Rebuild Iowa Infrastructure Fund) – Created in FY 1996, receives revenues from the interest on the cash reserve and economic emergency funds (our rainy day funds), and taxes on gaming facilities. For FY 09, the Governor recommends $223.4 million; for FY 10, recommends $194.8 million.
2. TRF (Technology Reinvestment Fund) – Created in FY 07, receives revenues from a $17.5 million standing appropriation from the general fund (however, this was funded from RIIF in FY 09). For FY 10, Governor recommends $14.5 million from RIIF.
3. RCF (Restricted Capital Fund) – Created in FY 02, received $540 million in tax-exempt bond proceeds as a result of securitizing the tobacco settlement proceeds. Funded at $3.3 million in FY 09. For FY 10, the fund is basically depleted.
4. RC2 (Endowment for Iowa’s Health Restricted Capitals Fund) – Created in FY 06, received $100.5 million in tax-exempt bond proceeds as a result of refinancing the bond proceeds from RCF. Funded at $103.8 million in FY 07 (including the $37 million for the new state office building); $1.4 million for FY 08; and the Governor recommends $5.1 million for FY 09, which basically depletes the fund.
5. RC3 (FY 2009 Restricted Capital Fund) – Created in FY 09, to receive the net proceeds of securitizing the remaining 22% of the tobacco settlement. The bonds were not issued last fall due to the capital market disruption. The Legislature appropriated $182 million from this fund. The Governor is recommending appropriating $156 million of these projects from his $700 million infrastructure bonding proposal (see below).
6. PBF (FY 2009 Prison Bonding Fund) – Created in FY 09, to receive $131 million in tax-exempt bond proceeds as a result of issuing two series of bonds in 2009 and 2011. This fund will pay for the new prison at Fort Madison. The Governor recommends no changes to this fund.
For FY 2009:
- New State Office Building. The Governor cuts the $37 million appropriation for the new state office building from the RC2 fund and does not provide the $20 million from the RC3 fund.
- Transfers $37 million from RIIF to the general fund to help balance the budget.
- Moves FY 09 projects funded by RIIF to the RC2 fund (to replace the $37 million reduction), including the biomedical discovery building at the University of Iowa, the biorenewables building at Iowa State University, the accelerated career education (ACE) capitals, and the Department of Public Safety fire training facilities.
- Honey Creek State Park. Appropriates $4.9 million from RIIF, as a supplemental, to pay for the cabins at Honey Creek Resort State Park. This had been funded by the RC3 fund, but because the tobacco settlement was not securitized this past fall, there is no money. This appropriation ensures Honey Creek will get the money to pay for the cabins, which are set to open late spring/early summer.
- RC3 projects funded from $700 million bond proposal. The Governor’s $700 million bonding proposal (see below) includes most of the projects funded by the Legislature last year as part of RC3 (approximately $156 million). At this time, the remaining $544 million is not spelled out as to how the funds would be dispersed. The Governor’s office has said they should have a bill proposal soon. The Governor made the following changes from what the Legislature appropriated last year from RC3:
- Eliminates the $20 million for the new state office building.
- Eliminates the $4.9 million for Honey Creek Resort State Park (funds from RIIF).
- Eliminates the $100,000 for the Veterans memorial plaza in Dubuque (the Department of Veterans Affairs has already funded this through other unused moneys they had available).
- Adds $2.1 million for the Community Base Corrections facility in Davenport.
- Adds $3 million for the agriculture exhibition center at the State Fair (from $5 million to $8 million).
- Adds $500,000 for the Mercy Capital building purchase (from $3.4 million to $3.9 million).
- Reduces capital complex electrical distribution by $3.62 million (from $4.47 million to $850,000).
- Reduces capital complex utility tunnel system by $3.76 million (from $4.76 million to $1 million).
For FY 2010:
- Bond Repayments. The Governor recommends dedicating $56 million of gaming tax receipts for bond repayments on his $700 million infrastructure bonding proposal. This funding would be taken off the top prior to the money being deposited into RIIF. This appropriation is needed every year for 20 years to pay off the bond debt.
- Highlights from RIIF:
- There were numerous items funded in RIIF in the past that are not being funded in the Governor’s budget for FY 10. The Governor’s office said these items could be funded from their $700 million bonding proposal.
- New State Office Building. Appropriates $5 million (new appropriation; recommends de-appropriating all previous money).
- Capitol Shuttle. Not funded (funded at $170,000 in FY 09).
- Historical Preservation Grant Program. Not funded (funded at $1 million in FY 09).
- Battle Flags. Not funded (funded at $220,000 in FY 09).
- Great Places. Funds at $1.9 million (funded at $2 million in FY09).
- Community Attraction and Tourism (CAT) program. Funds at $10 million (funded at $12 million in FY 09).
- River Enhancement Community Attraction and Tourism program. Not funded (last year earmarked $10 million for this new program).
- Grow Iowa Values Fund. Funds at $47.5 million (funded at $50 million in FY 09).
- DED Targeted Industries Infrastructure. Not funded (funded at $900,000 in FY 09).
- DED/Community Colleges Workforce Training and Economic Development. Not funded (funded at $2 million in FY 09).
- Wastewater Financial Assistance Grants. Not funded (funded at $3 million in FY 09).
- Environment First Fund. Funds at $42 million (same as FY 09).
- Watershed Improvement Review Board (WIRB) Grants. Not funded (funded at $5 million in FY 09).
- DNR Floodplain Management/Dam Safety. Appropriates $3 million (new appropriation).
- State Housing Trust Fund. Funds at $3 million (same as FY 09).
- Enrich Iowa Libraries. Funds at $1 million (same as FY 09).
- Regents Tuition Replacement. Funds at $24.3 million (same as FY 09).
- Recreational Trails (DOT). Not funded (funded at $3 million in FY 09).
- Rail Assistance. Not funded (funded at $2 million in FY 09).
- County Fairs. Not funded (funded at $1.59 million in FY 09).
$700 Million Rebuild Iowa Infrastructure Investment Program
The Governor recommends creation of this program to stimulate the economy, create jobs, build and rebuild much needed infrastructure throughout the State, and continue to provide relief to those areas hit by the 2008 natural disasters. The program would be financed through the issuance of 20-year tax-exempt bonds, secured by $56 million in gaming tax receipts. He said this takes advantage of an all-time low interest-rate environment. He also said this is being done at a time when Iowa enjoys its highest bond rating and has one of the lowest amounts of public debt of any state in the nation.
This program is to provide funding for the construction of ready-to-go projects such as housing, trails, highways, roads and bridges, mass transit, railways, airports, water quality and wastewater treatment improvements, flood control improvements, flood rebuilding, energy infrastructure, disaster-relief infrastructure, public education facilities, university facilities affected by the natural disasters, public buildings, and other public infrastructure projects.
Eligibility criteria for new projects would include:
1. Readiness to proceed with project.
2. How quickly can the project be started and completed.
3. Number of jobs to be created by the project.
4. Contribution to sustainability.
This program also includes those projects intended to be funded from the tobacco securitization not completed last year due to the capital market disruption (RC3 – FY 2009 Restricted Capital Fund).
Governor Culver recommends the creation of a Rebuild Iowa Infrastructure Authority to administer the program. It would include five members: State Treasurer, Director of the Iowa Finance Authority, Director of the Department of Management, and two public members. The Iowa Finance Authority would staff the program and distribute the grants.
Staff Contact: Mary Braun
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