Gov. Chet Culver on Wednesday sent the Legislature a $5.3 billion state budget that maintains a 10 percent spending cut that he imposed last month but includes more money for schools.
“We have taken steps to anticipate the current economic downturn and still meet our commitment to education, health care and public safety,” Culver said in a statement accompanying the spending plan.
Culver’s proposed budget for the fiscal year beginning July 1 includes savings of $341 million identified by a consultant hired by the governor. It also cuts $52.5 million from tax credits, although alternative energy programs would be protected.
“Our efforts to reform tax credits should hold harmless the current programs that make the state more energy efficient,” Culver said.
The tax credit issue flared last year when it was discovered that tax credits designed to lure the movie industry to the state had been abused, prompting a long look at all such credits that the state issues.
The proposed 2011 budget is a little more than the current $5.29 billion budget, but Culver noted it’s $64 million less than the 2007 spending plan, reflecting a lingering recession that’s dried up state tax collections.
Key education proposals include increasing state aide to local schools by $233 million for the school year beginning in September, and fully funding a 2 percent budget increase for those districts approved by the Legislature last year.
In past budget crunches, the state has allowed local school district budgets to grow, but not paid for all the increase. That has left schools with the option of increasing property taxes to make up the difference.
As he pledged in his Condition of the State speech, Culver also dips into the state’s reserves to find an additional $100 million for elementary and secondary schools. He said that move was essential to heading off property tax increases.
Reaction by legislative leaders to the Democratic governor’s budget split along party lines.
“The plan outlined today by Governor Culver responds to the concerns of middle-class Iowans who want a responsible state budget that doesn’t raise taxes,” said a statement from House Speaker Pat Murphy, D-Dubuque, and Senate Majority Leader Michael Gronstal, D-Council Bluffs.
House Minority Leader Kraig Paulsen, R-Hiawatha, countered: “The governor’s budget spends more money than it takes in and will increase the burden on property taxpayers.”
The governor’s spending plan also includes $150 million for the job-creation measure he pushed through the Legislature last year, and another $25 million as part of a four-year plan he pushed to expand the state’s alternative energy industry. The budget also includes $16.3 million for a plan approved by the Legislature expanding health care insurance to most Iowa children.
The governor said his budget for next year would have a $117.3 million surplus and would leave $265.2 million in cash reserves.
“We are confident that our department directors will successfully manage their departments and agencies within this tight budget,” Culver said.
His spending plan also increases Corrections Department spending by $25 million “in order to avoid layoffs within the department,” Culver said. Prison officials had said the governor’s across-the-board spending cut could force big layoffs of prison guards, leaving those remaining at risk.
Culver’s budget management will undoubtedly be a central theme in his re-election campaign this year. His potential Republican challengers have criticized his performance as Iowa had endured the recession and seen unemployment remain higher than 6 percent. That’s far below the 10 percent national figure but the worst in Iowa in decades.
The governor hasn’t formally announced he’ll run, but has made clear he wants a second term.
Culver must send a budget proposal to the Legislature by the end of January, and his spending plan will set the agenda for lawmakers.
Lawmakers who convened earlier this month have been awaiting details of Culver’s spending plan before seriously tackling the budget, but there are already signs that some of his proposals face tough sledding.
While the governor is basing his budget on cutting $341 million in spending by reorganizing state government, early proposals floated in the Legislature would cut significantly less.
Culver labeled his budget “balanced” and fiscally conservative,” and added that it doesn’t raise sales or income taxes.
Associated Press Writer Mike Glover wrote this report.
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