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Branstad Takes Tough Stance On Balancing State Budget

Branstad Takes Tough Stance On Balancing State Budget

Iowa Farm Bureau applauds Iowa Governor Branstad's approach for balancing state budget, and his proposals for education spending, property tax relief and his plans to stimulate economic growth in the state.

The Iowa Farm Bureau issued a press release last week saying the state's largest farm organization supports many aspects of Iowa Governor Terry Branstad's proposed $6.1 billion budget for fiscal 2012. The $6.1 billion state spending plan stacks up against revenues that are projected to be $6.4 billion.

One thing Farm Bureau likes about Branstad's budget is the $160 million in direct property tax relief to Iowans. Property tax relief is an issue Farm Bureau members have sought from previous administrations and previous legislatures. Farm Bureau is glad to see property tax relief is in the proposed budget for the 2012 fiscal year which begins July 1, 2011.

Governor Branstad presented his budget Jan. 27 to the 2011 session of the Iowa Legislature. Emphasizing that it is time to clean up the state's financial situation, Branstad proposed a two-year budget. For planning purposes he says it's better to project expenses and revenues two years ahead instead of only one year ahead. His proposed budget for fiscal year 2012 is $6.16 billion in state spending and for fiscal 2013 it is $6.27 billion. The amount of the 2011 state budget set by previous governor Chet Culver is $6.35 billion.

Branstad wants legislature to make significant cuts in spending

If enacted by the legislature this year, Branstad's budget would make significant cuts in spending, reduce the size of government, provide direct relief for property taxpayers, cut taxes for small businesses and stop the practice of paying for ongoing programs with one-time revenues. "This is an honest budget that matches ongoing spending with ongoing revenue," Branstad said in his speech to the Iowa General Assembly.

The majority of Iowa's state budget is spent on education and human services. Here is what Branstad is proposing for spending on major budget areas in fiscal year 2012 and how it compares to what is being spent in fiscal 2011:

For administration and regulation, he proposes the state spend 18% less; for agriculture and natural resources, he proposes spending 7.7% less; for education, he proposes spending one-half of a percent less; for human services, he proposes spending 27.3% more; for the judicial branch he proposes spending 7.4% more; for justice systems, he proposes spending 7.1% more, and for the legislative branch, he proposes spending 18.9% more.

Governor unveils leaner budget aiming to fix state's finances

"This budget would fund our commitments to schools, health care for the poor and elderly, and would pay our state troopers with funding that won't evaporate in a year," Branstad told the legislators. "Fixing the state's financial situation won't be easy and will require difficult choices. But the pain we endure by fixing our budget today will lead to great opportunities for Iowa in the future."

Craig Lang, president of Iowa Farm Bureau, applauded Branstad's stern approach on state spending. "I think this is a bold statement our governor is making but one that we are ready to hear," says Lang.

"The governor, just like farmers, has made several tough decisions in order to correct our state's budget shortfalls. We all need to live within our means and our government is no exception," notes Lang, a dairy farmer from Brooklyn in east central Iowa. "Farm Bureau members across the state agree that small businesses are a key to Iowa's vital economic growth. Supporting them will help make Iowa more attractive for new employers and the jobs they offer."

Strong agriculture growth offers opportunity to fix state budget

Branstad was designated as a "Farm Bureau Friend of Agriculture" in the fall campaign prior to his election in November. In his speech when presenting his proposed budget to the legislature in late January, Branstad noted that strong economic growth in agriculture provides Iowa with a unique opportunity to fix its state budget. Property tax reform has long been the cornerstone of budget reform heralded by Farm Bureau, because in the past decade, Iowa property taxes have soared by $1.59 billion, or 60%.

Branstad says while tax policy reforms can help Iowa compete for new jobs, a bureaucracy that "fails to understand the critical relationship between burdensome regulation and job creation" can undo Iowa's economic progress.  Farm Bureau agrees and has long called for measures to strengthen the legislative oversight of Iowa's rule-making process. "Placing unnecessary regulatory and financial hurdles in front of responsible Iowa farmers impacts the success and diversity of Iowa's important agriculture sector," says Lang.  

Budget calls for fully funding schools, avoiding property tax hikes

Farm Bureau has long supported the state's academic and athletic programs. "Education has always been a top priority for Farm Bureau," says Lang. "The funding of education is shared between the State of Iowa and property taxpayers, and we stress the importance of the state funding their commitment to education." Branstad's 2012 budget calls for fully funding the school budget, which last year was underfunded by $156 million, leaving local school districts to levy additional property taxes to fill the void. 

"Farm Bureau looks forward to working with lawmakers and the governor during this 2011 legislative session to give Iowans what they want: a fiscally-responsible budget and a real chance for Iowa's statewide economic growth," says Lang.

Branstad's proposed budget for fiscal 2012 and 2013, if the legislature adopts it, would set Iowa on course for a "smaller, predictable and sustainable" state government. He says he would accomplish that by cutting spending, reducing the number of government employees and moving $770 million in spending that had been paid for by one-time revenues back into the general fund.

Making tough decisions, cutting spending and cost of government

"Costs must be reduced," says Branstad. "We can no longer afford to pay 46% more for public services." In addition, he is calling for a change in the way the state bargains with labor unions so the rights of taxpayers are protected. Branstad has criticized a union contract with state workers, which was approved by outgoing governor Chet Culver in late 2010.

Property tax payers would see $160 million in direct relief in the Branstad budget. "Iowa property taxpayers have paid a high price for the state's past practices and it's time to correct this," he says. A leaner government and an improved tax structure will help bring more economic growth and jobs to Iowa, adds Branstad. He's calling for cutting the small business tax in the state in half to a flat 6%.

"We all know that small businesses are the engines of economic growth. Yet our small businesses pay an income tax rate that is the highest in the nation at 12%," says Branstad. "Our small businesses in Iowa pay commercial property taxes that are as high as those in mid-town Manhattan."

Wants to cut burdensome rules, regulations on small businesses

In addition, the governor is calling for a reduction in commercial property taxes and wants a new investment tax credit adopted by the 2011 Iowa Legislature. Those tax cuts would be paid for by new economic growth in the state and a restoration of the state gambling tax to its original level, he says. In addition, he says the state government during his administration will take a hard look at all rules and regulations to make sure they do not hurt job creation.

"The emphasis on building up small business is good," says Lang. "If there is some relief from burdensome regulations, plus some tax breaks, we will see small businesses grow. And that is good for all of Iowa, both rural and urban."

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