DES MOINES – Gov. Kim Reynolds announced Wednesday that no special session is needed for Fiscal Year 2017.
The expected shortfall for Iowa’s FY 2017 budget is $14.6 million. Gov. Reynolds will combine $13 million from the state’s economic emergency fund with the $1.6 million ending balance. This is the final action on the FY 2017 budget, which ended June 30, 2017. The state has $605 million in reserve funds after closing the FY 2017 books.
“This has been a difficult budget year, but I am pleased we were able to manage lower-than-expected revenues without cuts to education or Medicaid,” Gov. Reynolds said. “We have been monitoring funds daily since the end of the fiscal year on June 30 and took a measured approach in dealing with the state’s finances. We continue to closely monitor the current fiscal year’s balance sheet and do not believe action is needed at this time.”
Department of Management Director Dave Roederer held a budget briefing for members of the media Wednesday morning. He shared more with reporters, including:
- The Revenue Estimating Committee (REC) estimated 2.7% growth in the FY 2017 budget.
Actual growth was 2.5%.
- Accruals (tax payments due June 30, 2017, that came in after June 30, 2017) totaled $73 million.
- After stalling earlier this year, Iowa’s corporate income taxes came in stronger than expected at 5.6% vs. the REC estimate of 0%.
- Corporate taxes make up 6.5% of Iowa’s general fund.
- Projected FY 2017 revenue from the REC: $7.106 billion
Actual FY 2017 revenue: $7.095 billion
- Projected FY 2017 net appropriations: $7.254 billion
Actual FY 2017 net appropriations: $7.258 billion
Following the Governor’s announcement, liberal Iowa Representative Marti Anderson released a statement:
The Governor is not going to call a special session. Somehow, the deficit still standing for the year that ended June 30, 2017 (FY17) has gone from an estimated $104 million to $14.6 million today. Governor Reynolds will borrow that from the Emergency Funds, guaranteeing a deficit in FY18 because first money in must go to repay the Emergency Fund. Below is Rep. Chris Hall’s statement. Rep. Hall is Ranking Member (top Dem.) on the House Appropriations Committee.
From Rep. Chris Hall, Ranking Member of House Appropriations Committee
“For the third time this year, Gov. Reynolds is making Iowans pay for borrowed money and corporate giveaways. The numbers don’t add up. The state was $104 million short on June 30 and only $14.6 million today. Taxpayers deserve to know whether Governor Reynolds and Republicans cooked the state’s books to close the fiscal year and avoid a special session.
The announcement today means the budget crisis created by Governor Reynolds and the GOP will continue through next year. We do know today that the GOP is no longer managing a checkbook budget like the average family, they’re borrowing money on a credit card and leaving Iowa families with the bill.
Students are now paying higher tuition. Fewer at-risk kids will attend preschool this year. Nursing home inspections and elder abuse claims are going without investigation. Homeowners are paying higher property taxes.
It’s bad news for Iowa families and it will be even worse next session.”
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Here are the key questions Republicans need to answer about how they closed the state’s books without a special session:
1) When the 2017 Fiscal Year ended on June 30, the non-partisan Legislative Services Agency (LSA) said the budget was short $104.4 million.* How was that number reduced to borrowing just $13 million to close the state’s books?
2) Since thousands of Iowans had their refunds delayed this year because the state didn’t have money to pay them,** how many refunds for tax year 2016 still need to be paid?
3) The Legislature appropriated $1.587 billion for Medicaid in FY17 and the MCO’s are losing millions of dollars. What is the final dollar amount spent on Medicaid in FY17? Have all payments for FY 17 services been paid to the MCO’s? If not, how many payments have been delayed and must be paid out of the FY18 budget?
4) What other invoices from FY17 have not been paid to date? What is the total amount of the FY 17 invoices that will have to be paid in the FY18 budget?
5) The REC estimated the state’s net accruals in March would be $29.1 million this year. Over the last four years, accruals have ranged from $-16.2 million to a $19.6 million. To close the books this year, the state is now reporting net $73.5 million in accruals, which is the highest number in the last decade. Why is that number so high over the estimate?
Farmers have joined the group as more or less public servants like the school teachers union and their chant (cry) more money – poor farmers – by the way YOUR fkn property tax is criminal – you don;t have to pay property taxes -or at a reduced rate according to your yearly income – you make no money YOU PAY NO PROPERTY TAXES – wish we had FRIENDS like that in the Iowa legislature (elected officals) You farmers are well off and when it comes to paying property taxes your in a corrupt group of your own swamp rats.
Here’s the real reason that Iowa’s economy is on the red. The current farm economy is operating deeply in the red at the rate of an $80 to $120 per acre loss due to the inverted numbers of production costs vs revenue sales. So expect the same until those numbers flip and the farmer has money to spend.
Correct ! The more money you can steal from the private sector the more public servants can become greedy fat cats. By the way – why don’t your start paying for your own health insurance you shyster.
Commercial property tax reduction was for SMALL businesses (50 employees or less) it now taxes at the same rate as residential property – why was commercial property taxed at double the rate of private citizens. Were not talking about small business owner GROWTH were talking about small business owners SURVIVAL ! The first group to complain about the tax adjustment were the democratic controlled teachers union taking away (lowering) annual raises and benefits.(fat cat public servants) the teachers union voted 95% for the slimy clinton in the last election and could give a chit about the small business owners in Iowa that actually pay their fat cat wages. I do see a point on TIF/Grants/tax abatements for Large corporations which the taxpayers of Iowa will be burdened with.
Totally Incorrect. There was a commercial property tax credit for small businesses and a commercial property rollback applied to ALL commercial property (and the rollback is significant).
Low taxes don’t create a environment conducive to luring new businesses because most businesses have other needs that trump tax environment (see widget example explained earlier). And cities are often better equipped to meet those needs through taxation (there is no free lunch).
I would like to see one of the supporters for the Gov respond to the figures on Medicaid. The money the state owes the MCOs is going to be one heck of a mess when it comes due.
Please define MCO’s?
MCO = Managed Care Organization. Iowa turned over Medicaid administration to three MCOs–AmeriHealth Caritas, AmeriGroup, and United Health Care Systems. The only consumers retained by Iowa Medicaid Enterprise (IME) were (I think) American Indians.
The MCOs signed contracts, hired staff, and said they would help Iowa save money by making Medicaid recipients more healthy, thus not needing as much care. That hasn’t happened–the only way they have been saving money is by cutting needed services, which is why they are being sued by a group of disabled Iowans.
The MCOs collectively have been losing money–Iowa has already kicked in additional millions with matching additional millions in Federal dollars. Currently the MCOs are negotiating new contracts with the State with higher capitation payments.
I agree that the commercial property tax cut is a large part of the issue. When a company such as DuPont takes more in credits than it pays in taxes, resulting in a net revenue loss, there is an issue.
But another tax cut was the one on multi-residential property–apartment buildings. I don’t know of anyone whose rent went down as a result of the property tax cut to the owners of the apartments–the funds just went from taxpayer pockets to the pockets of the landlords. And, interestingly enough, Terry Branstad benefited personally from both of these tax credits that he pushed through.
It’s not a ‘large part’. It is the entire reason. All commercial property (rental units are commercial property) recieved a property tax reduction under the guise it would spur job growth.
A low Tax environment does not spur job growth.
You are correct–multi-res used to be classified as commercial. Now it is a “stand alone” class.
What is the Iowa property tax?
The Iowa property tax is primarily a tax on “real property,” which is mostly land, buildings, structures, and other improvements that are constructed on or in the land, attached to the land, or placed upon a foundation. Typical improvements include a building, house or mobile home, fences, and paving.
The following six classes of real property are evaluated:
•Residential
•Agricultural
•Multiresidential
•Commercial
•Industrial
•Utilities/railroad [This class is assessed at the state level.]
I don’t see the big crisis here. The economy is turning around and Kim has a handle on it. We still have plenty in reserves, that is what reserves are for. No need to raise taxes for a problem we don’t have. There is still plenty of spending I would like to see cut in duplication of services.
The economy is turning around?!?!? The national economy has been quite strong for several years now. Why is Iowa having such a hard time paying its bills despite this strong national economy? The answer: Commercial property tax breaks.
Was their really anyone out there that believed reducing a company’s property tax bill would result in more jobs????
go check the stats. more jobs have been created. I don’t know if that is because of commercial property tax cuts or not but I do know that I don’t pay any commercial property tax on my commercial property at all.
I pass it on to the consumers in the price of the products I sell. What I don’t think you realize is, people like me are really only a bill collector for the government.
Whatever jobs have been created in Iowa (and that number is substantially lower than most any other state in the nation) have not been because of commercial property tax reductions. Its totally boneheaded to think that reducing property taxes would this powerful job creator that Branstad advertised it as being.
You are the only boneheaded one here. At the end of the day you don’t know what you are talking about.
OK smarty. You say I don’t know what I’m talking about. Give a specific instance where I have been wrong…
After reading your logic and re: job growth, it is easy to conclude you are a liberal. Free enterprise takes care of business needs. Government on the other had puts up barriers to business. Taxes are a barrier!
Access to revenue should never be a function of government, although since the advent of “public private ventures” government has stuck it nose in that too.
Your logic that “cities with more revenue (tax dollars) can PROVIDE more “things” is telling. It tells me you are the liberal government progressive socialist that has royally screwed up this country.
You are on the wrong side of history and sound economic policy and that my friend is really really boneheaded!
Political affiliation has nothing to do with it. If you own a business that makes widgets and require access to a raw material, say widgetoniun….what is the more meaningful criteria to determine where you locate? Taxes or access to widgetonium. It’s access widgetonium – can’t even be in business without it and taxes are just the cost of doing business. Sure, every business would like lower taxes, but there are almost always other needs that trump taxes.
We see this a lot with new economy employers who need a skilled workforce more than anything. The cities which fund training programs (through taxation) will have more success luring new economy employers than the city that is only concerned with creating a low tax environment.
ya, political affiliation has everything to do with job creation. Democrats want everyone to work for the government and tell you what you can and can not have. The Democrats have taken their agenda so far to the left that it bears no resemblance of the Democratic Party I used to belong to. Your liberal agenda has brought this country to the brink.
You do realize that over 40% of my Social Security check that is mailed to me every month is borrowed money don’t you?
This can’t go on forever!!!
Political affiliation has nothing to do with what I’m talking about. I’m identifying the needs of a business and recognizing which needs are critical to a business operation and which needs are pretty secondary (only smarts are needed for this, political affiliation is irrelevant).
This really is the difference between a dying town like Mason City where the town curmudgeons fixate on creating a low tax environment and a growing town like Owatonna which recognizes what businesses need and responds,
The difference between Owatonna and Mason City is the ATTITUDE of the community leaders. Every town has their curmudgeons!
You obviously are not originally from Mason City. This town has a rich history of keeping meaningful jobs out. There has been more than one pitch to a prospective business that were told, “we keep unions out”. That was one of Tom Jolas’s top sales pitch to a prospective employer when he was active in economic development as the lead spokesman for Mason City back in the 70’s and 80s.
In 1975 Armour Deckers were soundly encouraged to fold up and leave town in the 70’s. They did and took 2500 jobs with them. I know this to be a fact. I was at the meetings and was very close to the Armour upper management.
The “no growth” attitude goes way back to the 1930s. Control of growth was even written into one our past comprehensive plans. This town suffers from a hangover from very negative leadership in the area of economic development.
Sadly, Mason City has no one with the courage to confront that and go out and build consensus to point Mason City in a positive direction.
You have no proof that reducing commercial property taxes DIDN’T create more jobs. Your basing your opinion on “assumption”, and that my friend is what I would call boneheaded thinking. We have to deal in facts and reality.
Think of all the needs a business may have….access to labor, access to raw materials, access to customers, access to capital, tax environment. Of all the various needs, tax environment is usually ranked pretty low relative to the others. So, low taxes does not equal more jobs. In fact, the reverse tends to be true because cities with more tax revenue can provide the more important things to a business like better transportation networks or capital.