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Budget reflects sensible choices

By Staff | Jul 15, 2011

Terry Branstad decided to come out of political retirement to seek a fifth term as governor of Iowa because he was appalled that the Hawkeye State’s finances were a mess. The central theme of his campaign was a promise to manage state budgets in accordance with sound fiscal policies.

Voters rehired Branstad as the state’s chief executive. His Republican Party also won overwhelming control of the Iowa House of Representatives. Democrats, however, narrowly retained control of the state Senate.

That meant the governor’s game plan for revamping Iowa’s approach to budgeting could not prevail unless he was able to craft some measure of bipartisan cooperation in the Legislature. The difficulty of achieving enough common ground to pass a budget was one of the reasons the legislative session that ended late last month was the third-longest in state history – 172 days.

The good news is that despite some hard bargaining between the parties, Iowa now has a budget that largely reflects the prudent financial priorities Branstad outlined to voters last year and has championed consistently since reclaiming the governor’s office.

“Iowans asked us to fix this fiscal mess and we made historic progress toward that goal this year and we will continue that work as we move forward,” Branstad said in a statement providing his assessment of the 2011 legislative session. He pointed to the following accomplishments regarding the state budget:

  • “The FY 12 budget spends less than it takes in and state spending was held to about 96 percent of available revenue – a significant accomplishment after years of spending every penny the state received and then some.
  • “For the first time since the early 1980s the state has a biennial budget with 85 percent of funding for FY 13 already set and key areas such as school aid and entitlement programs fully funded in the second year.
  • “No entitlements have been purposely underfunded in FY 12.
  • “In both FY 12 and FY 13 the state fully funds its commitment to school districts, providing an additional $156 million in FY 12 to provide property tax relief and an additional 2 percent allowable growth for schools in FY 13.
  • “Significant progress was made to ensure ongoing state programs are paid for from ongoing state revenue sources.
  • “This budget balances for FY 12, FY 13, and is projected to balance over the entire five years of our long-range plan.”

Unfortunately, however, lawmakers couldn’t agree on how best to reform the state’s property tax system. Branstad sought to reduce substantially the tax on commercial and industrial property. Iowa has the second highest tax rate in the nation for such property. That seriously inhibits the willingness of corporate investors to locate job-creating enterprises in Iowa.

The governor has pledged that he will continue to pursue aggressively modifications in the property tax system. That should be a high priority when the Legislature next convenes. This issue is of such great importance that there should be serious consideration of a special session to address it.

Even though the failure to pass property tax reform is disappointing, Farm News congratulates the governor and leaders in the Legislature on achieving a budget plan that restores sanity to state finances. That is a major accomplishment and warrants widespread praise. It is especially commendable that major partisan disagreements were not allowed to derail passage of a well-crafted budget.

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