Policy Perspectives

March 7, 2014

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Joint Targets!!

Friday, March 7th marks Session Day 54 for the 2014 Legislative Session. At the moment, all signs point to the Legislature being pretty far ahead of their 100-day schedule. Some are even talking about a late-March adjournment, but that would assume the wheels don't fall off the wagon at least once. And they always fall off at least once. A safe bet would be that the Legislature, without any major hiccups, should be able to finish the session slightly before Easter.

One big development that occurred this week on the budget front was the release of joint targets. To the average Iowan, this statement has little meaning. But to the legislators and lobbyists and about 10 other Iowans, this is very exciting news! Targets are the first major step in the budget process when the majority party in a chamber designates how much total money they will spend in the upcoming fiscal year, and they divide that number among the seven appropriations subcommittees.

Typically, the overall spending numbers in each chamber are usually several million dollars apart, and each subcommittee in each chamber has a vastly different amount of revenue to allocate. Each subcommittee in each chamber assembles their appropriations bill, and the two chambers begin a process of negotiating between each chamber's version. First, one chamber passes their version. The other chamber usually replaces most of that bill with their own version. Then, after a long negotiation process, the final changes are made to each bill, and each chamber passes the final version.

The significance of joint targets to the budget process is that the House and Senate, for the first time in this author's memory, have agreed across chambers on both the overall spending number and the seven allocations. In theory, this means the appropriation bills that come out will be the same size in both the House and Senate, leaving only the individual line items inside over which to negotiate. While this could still be contentious, it's less likely to be nearly as time-consuming as when each chamber is starting from a different set of numbers.

Now that you know what the targets represent, here is what they show this year.The House and Senate have agreed to spend a total of $6.972 billion in the fiscal year 2015 (which begins July 1, 2014).That amount would represent a 7.4 percent increase (or $480 million) compared to the FY 2014 funding level of $6.492 billion.That $480 million is mostly used in four places - a 4% increase in allowable growth for education ($170 million), education reforms passed last year ($54 million), property tax reform "backfill" to reimburse local governments for revenue losses ($120 million), and to pick up a larger share of the state's Medicaid obligation that is not covered by the federal government ($86 million).

Budget

The release of the joint budget targets means that over the next week or so critical budget decisions will be made by the chairs of each of the appropriations subcommittees. Once those bills get drafted, there will probably be a lot less time or chance to make changes than in typical years.

We will be watching the Economic Development Appropriations budget for IEDA's administration funding. The tricky part for PDI members though is that we do not yet know what appropriations subcommittee will be in charge of allocating the IEDA's Business Development Incentives funds. This allocation has bounced around the state budget and ended up last year in the Education Appropriations bill as a component to a larger allocation called the Skilled Workforce and Job Creation Fund. In an ideal world, the Incentives Fund would be moved back into the Economic Development Appropriations bill alongside IEDA Administration.

All of this just means YOU need to speak up NOW with your legislators if you have items in the budget that are priorities to you. If you don't know who represents you, you can find your legislators HERE (plug in your address on the right side of the screen). A list of Senators' email addresses can be found HERE, and a list of Representatives' email addresses can be found HERE. The 2014 PDI Legislative Agenda can be opened and printed HERE.

A Collection of Other

Economic Development News

Tax Increment Financing

We continue to hear from the House Ways & Means Committee Chair that he is working on a TIF bill, and that we should see it soon. Be on the lookout for legislative alerts, as things tend to move quickly late in session.

Enterprise Zones

Legislation (HF 2305) to replace the expiring Enterprise Zone program had a subcommittee this week in the House and now will need to be considered by the full House Ways & Means Committee before being considered on the House floor.

In subcommittee, the Iowa Chamber Alliance offered an amendment that PDI is supporting to move the housing tax credit portion of the program out from under the IEDA's aggregate tax credit cap, and to allow a higher threshold of $30 million (as opposed to the $20 million cap currently in the bill). The three subcommittee members - Representatives Landon, Thomas, and Vander Linden - all seemed open to this idea.

We urge members to contact your legislators to share your support for HF 2305. The IEDA produced a summary of the proposal that you can view HERE.

Broadband Expansion

The Governor's Broadband Expansion bill (HF 2329) and a counterpart in the Senate (SF 2324) continue to be under discussion. The House bill is in the chamber's Ways & Means Committee while the Senate bill is in that chamber's Appropriations Committee. Expect to see more action on these after the funnel week (since these bills are both exempt now from the funnel deadlines).

Apprenticeship bill

The Governor's proposal to expand apprenticeships and reform the way 260F is managed (SF 2317 and HF 2407) continues to be hotly debated between the two chambers and the Governor's office. As you may recall, the Senate version was amended to completely strip the 260F program out of IEDA and move it to the Department of Education, an idea suggested in a House subcommittee by one of the lobbyists for the community college trustees. PDI will continue this as the discussion evolves. We will support the two sides coming together on a proposal that puts more money in job training programs.

Brownfield and Grayfield Redevelopment

The IEDA's legislation (SF 2256 and HF 2287) to make several enhancements to the Brownfield and Grayfield Redevelopment Tax Credit program has not moved very much only due to the fact that both bills are now funnel proof. We expect to see them advance after the 2nd funnel this week. A summary of this proposal is HERE.