We have reached the mid-point of the session. The standard schedule for a two-year General Assembly calls for a 110 day first session and a 100 day second session. This year, the second session of the 85th General Assembly, is scheduled to end April 22nd. We are just over half-way through the 2014 session, but this year seems different. The funnel deadlines were moved up two weeks, forcing a similar amount of legislation through the committee system faster. The first funnel, in which House-sponsored bills must pass out of a House Committee, put an end to many bills. The second funnel deadline on March 14th will put an end to any bill that started in one chamber but was not passed in the other chamber.
This system, forcing bills to compete for committee time and interest, usually dominates the first half of the session. Policy is the main focus of legislators and budget is secondary. In most years this emphasis on new bills over budget changes right after the second funnel. We start to look at Budget targets and how far apart the House, Senate, and Governor’s office are from each other. The first question to answer is just how large the entire budget will be, followed closely by which budget segments will get that money. Each chamber has a different answer for those questions.
As I mentioned earlier, this year is different. The high-level budget discussions started even before the session began. Appropriation Chairmen worked to find agreement on how much would be spent in the upcoming year. Instead of the usual statements and pre-positioning for negotiations, much of the ground work was laid while policy bills were working through committee, even as the deadlines were moved up.
This places us in an unusual position. Budget subcommittees are just about to pass their budget bills out and send them to the full Appropriations committee and we are only in the second funnel week. This usually happens closer to April 1. This year, we should see budget bills debated on the House floor in less than two weeks. I support quick, efficient government so this is not troubling to me. I am not a fan of growing Iowa code by a hundred pages each year so putting a priority on only the most desired legislation is good. The reason we are so far ahead at this point is best understood by looking at the larger picture.
Since the 2010 election the Iowa Legislature has operated under split majorities. The House majority party is Republican and the Senate majority is Democrat. This doesn’t mean we can’t work together, only that it takes longer to come to a compromise decision. I call this an issue of “Principles and Compromise”.
House Republicans established our budgeting principles immediately. You have seen them many times in this column:
Spend less than the state collects in revenue
Do not use one-time money for ongoing expenses
Do not intentionally underfund programs to balance the budget.
The Senate majority party approach, however, puts perceived needs above available dollars and their proposed budgets have been as much as $600 million ahead of the House Republicans.
Due to our differences in budgeting Principles – we must then have Compromise. An often heard complaint is that the parties won’t work together and while it is true that many pieces of legislation are set aside because two different perspectives cannot come together; this is simply not possible with the budget. It is crucial we pass a budget for the State of Iowa to keep government services running. At the end of the day, a compromise must be found between two widely-separate points of view.
The House Republicans made their principles clear in the beginning. We will not spend more than we take in. The Senate majority, however, intended to spend more than ongoing revenue by using ending balance dollars, federal dollars for state programs or relying on our cash reserves if dollars run out. Middle ground has been found in earlier years by splitting the difference. Senate Democrats have conceded to spending only ongoing revenue but insist on spending just under 100% of revenue while House Republicans agreed to increase spending to match increased takings but no more than the ongoing revenue.
Iowa has enjoyed a financial turnaround since these principles were implemented. As Iowa continues to thrive, record-setting amounts of tax revenue have been collected. Our budget shortfalls have disappeared, the cash reserve accounts are full and we are looking for more ways to return unused revenues back to the taxpayers. Iowa is in better shape financially now than four years ago but ongoing increases in revenue have been matched by increases in the size of government and the General Fund. When revenue takes its first dip we will have to start making hard choices again.
Overall, what makes this session different than the last three, leaving us so far ahead in the Budget process? Instead of each chamber starting miles apart as they have previously, the two chambers decided to start where they left off. Instead of working the policy bills until the budget season starts, we are moving a compromise budget at the same time and will not need the whole month of April to finish our business. This is the underlying reason to expect the session to end before the scheduled 100 days.