Capitol Update: Week 3

House Passes Increased Funding for Education

The House this week passed a proposed increase of $143.1 million in state aid to schools for the 2016/17 school year. This is a 2% increase in the per-pupil amount sent from the state to school districts, increasing the state’s portion of the per pupil cost from $6446 to $6575, a $129 increase.

The House made these efforts in only the second week of the session. In recognition of the need for schools to set their budgets in the next few months, the Education Committee pushed the bill out of committee last week making it eligible for Floor debate on Monday.

The increase pushes the total state spending on K-12 education to just shy of $3.1 billion. Coupled with increases over the past 5 years, House Republicans have increased school aid by nearly $650 million.

The $143.1 million increase includes $53.4 million for the Teacher Leadership program, making it the second year in the 3-year ramp-up investment in this transformative reform initiative. It also includes $9.2 million meant to relief the pressure on property tax payers by having the state pick up the property tax increase that is part of the school funding formula.

Additionally, a 2% increase provides additional property tax relief by taking 38 districts off the Budget Adjustment, a local option property tax levy designed to help districts dealing with declining enrollment. This is a $4 million reduction in property taxes over last year.

The proposal on the table from the Senate is a 4% increase, which equals a $227.9 million increase in state aid. Available additional revenues over last year’s spending equal just over $153 million.  A 4% increase violates the budget principles the House has abided by since 2011, specifically spending more than the state takes in.

The Senate rejected the House’s 2% proposal after receiving it meaning the two chambers will come together in a conference committee to find a final consensus.

The Tax Coupling Bill

The tax coupling bill has an impact on the FY 2016 ending balance and the FY 2017 on-going revenue levels. Any agreement will impact discussions on school aid and budget targets.

The Governor has already recommended a plan for coupling that has a negligible effect on FY 2016 revenue while adding an additional $48.5 million to FY 2017.

One thing that can change the level of the state’s ending balance and the amount of on-going General Fund revenue is the coupling bill. The coupling bill updates Iowa law to conform with 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 that 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.

On Thursday the House passed a plan couples with everything except bonus 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/ending balance.  That money goes directly to taxpayers.  Additionally, $86.5 million is added to FY 2017 on-going revenue with roughly $55 million of that available for appropriation under the state’s expenditure limitation law.

The Senate has given no indication on their plan for tax coupling which complicates and slows down the budget process this session.

News from District 96

We’ve finished the finished the third week of the session and the last full week before the Presidential Caucus. Being in Des Moines this week I realize that the eyes of the nation and the world are looking at our state for leadership and clarity when we cast the first votes in the 2016 Presidential Election.  I encourage all of you to go out and Caucus this coming Monday and help Iowa have an impact on this year’s Presidential election.  If you’re reading this after Monday I hope that you took the opportunity to attend and participate.

One of the highlights this week included Major General Timothy Orr giving the Condition of the Guard Address to the General Assembly on Wednesday. During his speech he commented on how the Iowa National Guard has been involved in operations around the globe over the last 15 years.  He also touched on the Guard’s readiness to handle in-state operations and disaster relief.

This week I was also excited to be joined by students from the District and surrounding area. On Tuesday some students from the Monticello FFA and their Advisor Eric Schmidt came to the Capitol.  I spoke with them about the legislative process and how they can get involved.  Thursday I spoke with students from both Kirkwood Community College and Northeast Iowa Community College.  We visited about the Presidential Caucuses and how I became involved in our democratic process.

During the week I also spoke with various trade groups and associations. The Manitoba Pork Council General Manager, Andrew Dickson, and their Chairman, George Matheson, came to speak at the Agriculture Committee Meeting on Tuesday.  They were also joined by the Consul General of the Canadian Consulate in Minneapolis, Jamshed Merchant.  They spoke on Canadian Pork Production and the impact of trade between Iowa and Canada.

Tuesday evening I met with members from the Iowa Soybean Association at their legislative reception. Wednesday evening I attended a banquet for the Iowa Pork Producers and spoke with some of their members as well.  It was great to meet folks from the district who represent the commodities groups and discuss issues that are important to them.

If you want to visit with me back in the District there will be a couple of forums this upcoming week. On February 5th I will be at the Delaware County Economic Development Forum from 10:00-11:00 am at the Manchester Farm Bureau Office.  February 6th I will be the Jones County Farm Bureau Forum from 9:00-10:00 am at the National Motorcycle Museum in Anamosa.

As always if you have any comments or concerns don’t hesitate to reach out to me. My cell is (319)480-1997 and my email is lee.hein@legis.iowa.gov.  Happy Caucus!

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