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IowaPolitics.com: Culver Asks For 8.6 Percent Spending Boost
1/30/2007

By IowaPolitics.com Staff

In his first budget address to the Iowa Legislature, Iowa Gov. Chet Culver rolled out a 2008 proposal with an estimated 8.6 percent increase in expenditures over the current budget.

The new Democratic governor called on legislators to:
*increase the state cigarette tax by $1 a pack, bringing in $170 million to fund new health care initiatives;
*allocate $190 million in new funding for education, which includes a $70 million infusion to increase teacher pay up to the national average and an additional $37.5 million to universities and community colleges;
*spend $100 million over four years on a new Iowa Power Fund;
*and spend $12.5 million to create the "Center for Regenerative Medicine at the University of Iowa" after lifting the state ban on stem cell research.

Overall the Department of Management said Culver's budget includes $5.74 billion in net '08 appropriations, compared to an estimated $5.33 billion for the current budget. His budget also has $50.3 million in additional appropriations proposed for this fiscal year. "This is our time," Culver said. "The are our priorities. We can do this and keep our fiscal house in order."

That is something House Minority Leader Christopher Rants, R-Sioux City, questioned after Culver requested a $25 million supplemental infusion into this year's budget to help create the Iowa Power Fund.

"This budget doesn't work," Rants said. "(The new spending) is problematic. He is breaking his first principle of spending more than you take in."

On top of the Power Fund spending, Culver's budget calls for another $25 million in supplemental spending this year, including $8 million for increased Medicaid expenses, $3.4 million to staff the Oakdale prison and $2.5 million in start-up funding for a new stem cell research center.

Culver's proposed budget would leave the state with a year-end balance of $189.1 million. He stressed it was important for lawmakers to budget efficiently, like Iowans are expected to do home, not spending more than what is in their checkbooks.

"Simply put, we can’t spend more than we take in," Culver said in his prepared remarks. "We are expected to balance our checkbook and put money into savings the same way Iowans do." 

Senate Majority Leader Mike Gronstal, D-Council Bluffs, said he anticipated his caucus supporting 90 to 99 percent of the governor' requests, but he didn't give any specifics about the parts his caucus would not support.

"We will be reviewing his budget," Gronstal said. "His priorities are in the right place. We campaigned on the same issues as education and health care and that is what this budget is about."

Recently House Speaker Pat Murphy, D-Dubuque, had said a cigarette tax hike lower than Culver's $1-per-pack proposal was more likely to pass, but today he said now that he's seen what the money will go for, he is more open to considering the full request.

Culver addressed Murphy and others in his speech: "I know some legislators only want to increase the cigarette tax by 30 to 60 cents.  But half-measures will only produce half the results.  The fact is, we have hundreds of millions of dollars in health care related needs.  I am not willing to ignore any of the important priorities I just outlined."

A cigarette tax hike effective April 1 would bring in an estimated $170 million -- $32 million by June 30 of this year and $138.4 in the '08 fiscal year.

Culver's budget also estimates $25 million more in corporate tax collections in the next budget by "clos(ing) certain out of state corporate tax loopholes" and requiring corporations to file combined reports for Iowa corporate income tax purposes. Further, the budget estimates that additional auditors at the Department of Revenue will bring in a net of $4.6 million. A new DOR tax amnesty program is estimated to bring in $16 million in fiscal year '08. Culver said in his speech that the additional revenue would help pay for $25 million in "immediate commercial property tax relief."


Prepared Text of Culver's Budget Address
Read The Full Budget Report
Culver Release: Historic Opportunity To Improve Quality Of Life; Be Fiscally Responsible


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