And now…the governor revises his proposed budget

This just in, shortly before five o'clock on a Friday afternoon.  Budget watchers, the governor's revised budget plan based on the recently-revised estimate of state tax receipts.

GOVERNOR CULVER:  DURING TOUGH TIMES, WE MUST BE FISCALLY RESPONSIBLE

Revised FY10 budget proposal calls for 7.9% cut to many programs

DES MOINES – Governor Chet Culver today released his revised budget recommendation for both FY2009 and FY2010. The recommendation required by State law due to revised revenue projections, calls for a 7.9% budget reduction for many state programs next year, and utilizes more than $674 million in funds from the American Recovery and Reinvestment Act to offset deeper cuts.

“As Governor, managing the seriousness of the recession, working to maintain a balanced budget and strengthening our economy have been and will remain my top priorities,” said Governor Culver.

Today’s revised budget proposal was triggered by Iowa Code after the Revenue Estimating Conference reduced its December projection of General Fund revenues by $129.7 million in FY2009 and $269.9 million in FY2010. The REC estimates that corporate income tax receipts will fall 7.6 percent, personal income tax receipts will fall 1.6 percent, and tax refunds will increase 8.0 percent in the coming fiscal year.

Noting Iowa’s triple-A bond rating and strong cash reserves, Governor Culver added: “While the economic recession is serious, it does not mean we abandon our confidence or give up our optimism. As Iowans, we can and will work our way out of this recession.”

The revised budget recommendation totals $5.928 billion for FY2009 and $5.896 billion for FY2010. The FY2010 budget recommendation is $301.6 million lower than the budget recommendation submitted in January.

Key points from the Governor’s budget recommendation includes:

FY 2009:
• Use $43.2 million in federal ARRA Education Stabilization funds to fully fund the appropriation for the school aid formula; and
• Use $110 million of Federal Medical Assistance Percentage funds to fully fund Medicaid.
• Maintain state reserves of $564.3 million
• Maintain an ending balance of $59.9 million.

FY 2010:
• Use $232.9 million of ARRA Education Stabilization funds to maintain school aid funding at the previously set 4 percent allowable growth;
• Use $145 million of Federal Medical Assistance Percentage funds to fully fund the Medicaid estimate.
• Use $56 million of ARRA Education Stabilization funds to avoid severe General Fund cuts for Regents institutions and Community Colleges.
• Use $86 million of ARRA Government Services Stabilization funds to avoid General Fund cuts for Regents Institutions, Community Colleges, Department of Corrections and the Department of Public Safety along with administration of ARRA funding.
• Fully fund Property Tax Credits Fund at the FY2009 level.
• Add back $42.6 million to fund priorities areas, such as public safety and workforce development, in order to avoid layoffs.
• Use up to $164.8 million from the State’s cash reserves.
• Maintain an ending balance of $72.2 million.

A complete copy of the budget recommendation is available at http://www.dom.state.ia.us/