Budget discussion scares counties, cities

Tuesday, January 27, 2004

The pocketbooks of Iowans may get squeezed one way or another next year as legislative leaders continue to lean toward making cuts to balance the budget, which cities and counties say will mean property tax increases.

The other solution is Gov. Tom Vilsack's proposal which increases the cigarette tax, expands the sales tax to more services and closes corporate loopholes.

County supervisors attending an annual meeting in Des Moines last Friday made it clear that another round of cuts like last year will mean higher property taxes.

"Supervisors tried to convey to legislative leaders and to the governor to the extent that they cut funding for local governments they are forcing us to raise taxes," said David Vestal, Iowa State Association of Counties deputy director. "It's going to go up one way or another. Services are going to get cut or taxes are going to go up."

A $60 million cut to local governments late last budget year resulted in reductions for many local governments. Some cities laid off firefighters and police officers or cut back on services.

Budget discussions from the Statehouse this year already have cities worried.

With Republicans, who hold a majority in the House and Senate rejecting Vilsack's proposed new taxes and many lawmakers from both parties saying education is the highest priority and must be funded, the reality of a big squeeze is looming.

"It just doesn't add up," said Tom Bredeweg, executive director of the Iowa League of Cities. "Our concern is that we're going to be the likely target."

He said cities support Vilsack's plan because it's a way to avoid major reductions in local budgets which will lead to cuts in services.

"If we don't fund city and county resources at adequate levels, it will dramatically effect our services," he said.

Education costs start at $74 million if lawmakers fund only 2 percent allowable growth and climb to $116 million if last year's cuts are restored. School districts want 6 percent growth which would cost the state $218 million.

Democratic leaders, who also hesitate to support all of Vilsack's new tax initiatives, said they favor looking at closing the corporate loopholes, borrowing money for programs like the Iowa Values Fund and using cash reserves.

"We're willing to look at alternative," said Senate Minority Leader Michael Gronstal, D-Council Bluffs.

Democrats stressed their desire to fully fund education and health care programs and vowed to fight another round of cuts to local government.

Republican leaders said they will continue work this week in budget subcommittees piecing together their ideas for the fiscal 2005 budget.

Leaders suggested they're looking at a combination of ideas to get the state through another year of less-than-adequate revenue.

"We try to discuss every possible option and make our decisions from there," said Senate Majority Leader Stewart Iverson, R-Dows. "Our jobs are to consider and talk about all possibilities."

Republicans passed in the House Thursday a bill that allows the Legislature to spend only 98 percent of the available revenues in an effort to build up reserve funds and avoid late across-the-board cuts.

Democrats opposed the bill saying it's bad timing to put money in savings when the state already can't meet costs.

That bill will make it's way to the Senate this week.

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