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Big spenders in state government will hate this bill

Big Spending 1State Sens. Jake Chapman (R-Adel) and Bill Anderson (R-Pierson) have decided to take on the state’s big spenders in a way that will have them seeing a lot less red in the years to come – if their bill becomes law.

Senate File 95, offered last week and referred to the Senate Appropriations Committee, would rein in big spending by recalculating the annual General Fund expenditure limitation. Under current law, the limitation is 99 percent of the adjusted revenue estimate for the following fiscal year based on an estimate approved by the revenue estimating conference in a meeting held by Dec. 15.

The new calculation method in the bill is based on the growth in the average wage and salary component of the quarterly state personal income table for Iowa issued by the U.S. Department of Commerce Bureau of Economic Analysis.

Under the new method, the Iowa Department of Management and the Legislative Services Agency are directed to apply the component issued for the quarters of a two-year period to jointly calculate a wage and salary growth factor percentage. One-half of that percentage is added to the amount of the General Fund expenditure limitation for the prior fiscal year.

The lesser amount identified by the two methods is required to be used as the General Fund expenditure limitation in the budget process for the following fiscal year. Under current law, if a surplus is anticipated for the General Fund at the close of a fiscal year, any excess remaining, after the surplus is applied to bring state reserve funds to their maximum balances, is transferred back to the General Fund for the following fiscal year.

The original General Fund expenditure limitation for the following fiscal year must be readjusted to reflect the amount of excess anticipated to be transferred. SF 95 requires the excess to be transferred in the following order:

  • first to a “Safety Net” Fund created by bill, up to the maximum balance for the safety net fund which is established as 2 percent of the adjusted revenue estimate for the fiscal year;
  • next, to the Secondary Road Fund in an amount of up to 1 percent of the adjusted revenue estimate for the fiscal year;
  • next, to the Taxpayer Trust Fund, up to the maximum amount specified in current law;
  • and the entire remainder to the Personal Income Tax Rate Reduction Fund created by the bill.

The Iowa Association of School Boards is opposed to SF 95, while no lobbyist declarations have been made in support of the bill. However, the following groups have declared they are “undecided” on the proposed legislation: Central Iowa Building Construction Trades Council, Iowans For Tax Relief, Iowa State Building and Construction Trades Council, Iowa Association of Business and Industry, the Greater Des Moines Partnership, the Iowa Chamber Alliance, and the Iowa Society of Certified Public Accountants.