The Week Ends with No Budget Agreement in Des Moines

From IowaPolitics.com

DES MOINES — Two weeks before the deadline to avert a state government shutdown, Iowa House Speaker Kraig Paulsen gaveled the empty House chamber into session at 9:06 a.m. Thursday, led the daily prayer and Pledge of Allegiance by himself, then quickly adjourned until Monday.

The Hiawatha Republican told reporters he planned to meet with three Senate Democratic leaders again Thursday, a day after negotiations reportedly stalled and took a step backward.

But across the rotunda in the Iowa Senate, the chamber was even emptier.

Senate Democratic Caucus Staff Director Ron Parker laughed when he heard that Paulsen thought they were meeting. That's a big "no," he said, noting that Senate Majority Leader Mike Gronstal, D-Council Bluffs, and Senate Appropriations Chairman Bob Dvorksy, D-Coralville, had gone home, and Senate President Jack Kibbie, D-Emmetsburg, was attending a funeral.

The situation at the Iowa Capitol on Thursday morning illustrated how the two political parties and two chambers of the Iowa Legislature aren't seeing eye to eye this year, even as the deadline approaches for them to agree on a state budget and go home. The seventh week of legislative overtime ended much like it started: With no agreement.

The Iowa Senate will return in session next week and plans to approve a budget that Democrats say will meet Republicans' three key priorities: A $5.99 billion state budget, a two-year spending plan and lower commercial property taxes.

While the Iowa House approved a whopping, 600-page omnibus budget bill June 8 that wrapped all budget bills into one, Paulsen said his understanding was that the Iowa Senate will start with all new budget bills next week.

But with no deal in place, the Senate's actions are expected to be another futile act.

"Republicans know that Senate Democrats took a significant step in the negotiations by agreeing to the general fund spending limit proposed by the Republicans," said State Sen. Bob Dvorsky. "Based on the refusal of Republicans to continue negotiating, we intend to move ahead with passing a budget next week that addresses many of the Republicans' concerns."

Paulsen said while Democrats talk about a $5.99 billion budget, their budget actually spends closer to $6.1 billion. That's because he said it underfunds certain areas like Medicaid, and would require lawmakers to come back and make up that difference later.

"Now they come back and say, 'We're at the Republican number,' but when you start digging through the details, they're not," Paulsen said. "That's why some of this takes awhile, because you've got to get past some of the sleight-of-hand that's going on."

Gov. Terry Branstad's staff and House Republicans this week accused Senate Democrats of continuing to demand new state spending. Branstad spokesman Tim Albrecht said in the past two meeting sessions, alone, the new spending demands have totaled more than $100 million.

Republicans declined to elaborate Thursday on what specifically Democrats were asking to spend more.

"It's just more," Paulsen said. "It's hard to identify the one thing, because it's all fundable within the general fund. It's a little bit here and a little bit there, so it's just kind of all over the place."

In turn, Dvorsky accused Republicans of failing to negotiate in good faith toward an honest budget deal. He said they've made it clear they are willing to risk a shutdown of state government, unless they get enormous corporate tax breaks for out-of-state corporations.

"After weeks of constructive budget talks, their stunning about-face … tells me that (the) governor and House Republicans are willing to play with fire by moving us another step closer toward a shutdown of key government services," he said.

One of the biggest sticking points between the two chambers continued to be property-tax relief. House Republicans continue to push for a plan that would cost $347 million when fully implemented in fiscal year 2018. The plan includes cutting commercial and industrial property taxes by 25 percent, and giving all property taxpayers some relief by the state picking up more of the costs for schools.

"We will fight for the taxpayer every single day," Paulsen said. "The proposal out there obviously has an emphasis on commercial property; we're comfortable with that. But we continue to remain very committed to making sure something happens on property taxes."

House Democratic Communications Director Dean Fiihr said there's disagreement even between Republicans on this issue. While House Republicans on June 8 voted for reducing commercial and industrial property taxes by 25 percent, Branstad continues to advocate for a 40 percent reduction.

Senate Democrats, meanwhile, are standing firm on their plan for a much more modest property-tax credit to businesses that would cost $50 million in fiscal year 2013 and would grow incrementally to $200 million over four years, but only if state revenue increases by at least 4 percent in each of those years.

Democrats said under their plan, at least 83 percent of all commercial property taxpayers would pay the lower residential rate. More importantly, they said the plan will not increase residential property taxes and would have no affect on local schools and services.

But Paulsen said Democrats' plan of using a tax credit to provide property-tax relief simply won't fly.

"There is no guarantee that that property-tax relief in the Senate Democrat proposal ever comes to fruition," he said. "There's no guarantee. The Legislature has a history of underfunding tax credits, and that's basically what they're creating. We want real, meaningful and guaranteed tax relief."

-- By Lynn Campbell