OTTUMWA — Gov. Kim Reynolds offered hope Tuesday that the state would be able to “do more” in funding education in the new budget plan she is starting to assemble.
Fresh from a 2018 election in which she and other candidates called education a top priority, Reynolds said how much the state is able to spend on K-12 schools, regent universities, community colleges and other education areas will depend on how tax money the Revenue Estimating Conference decides in December will be available for budgeting.
The governor, who began budget hearings with state department directors at the Capitol on Tuesday afternoon, said the state is starting the process in “a very good place,” having ended the last fiscal year with a $127 million surplus and the state’s 10 percent cash reserve accounts full.
“We’ve done a very good job over the last eight years of a status-quo budget and finding efficiencies within, and so we’ll just have to take a look at that moving forward,” she said, pointing to education, public health and public safety as her top priorities.
“It’s a priority. It has been a priority,” Reynolds said in discussing state funding of education after lawmakers limited K-12 growth to a 1 percent increase of $32 million and pared funding for state universities to balance the fiscal 2018 ledger that ended in surplus.
“I refuse to accept the narrative that we’re not investing in K-12 education because we have been,” she said. “We’ve had very tight budgets. We didn’t cut them. We held them harmless.
“But if the budget looks better, then there’s an opportunity for us to do more,” she said, cautioning that “you have to be careful about measuring the quality of education by the sheer number of dollars that you put into it.”
Reynolds, who was in Ottumwa to highlight Iowa’s registered apprenticeship program that is considered a national model, said initiatives like Future Ready Iowa, work-based learning and others are key to growing the skilled workforce the state needs to fill jobs of the future.
In October, Revenue Estimated Conference members said state government ended fiscal 2018 on June 30 with revenue of about $7.38 billion, which was $298.4 million more than their growth estimate.
They expect state tax collections to grow by 4.9 percent to about $7.74 billion in the current fiscal year and then slow to an increase of about 1.7 percent, or $7.87 billion, for the fiscal 2020 budgeting year.
The panel will meet next month to revisit state tax collections. The numbers established at that meeting will become the basis for fiscal 2020 budget-making by the governor and the GOP-run Legislature.
“When I see the numbers, it will give us a better sense of what we’re able to do,” Reynolds said.
At the start of the new budgeting cycle, Reynolds administration officials asked state agencies to submit status-quo spending plans and most did, with the $7.26 billion currently being sought for the fiscal year that begins July 1, 2019, being about two-tenths of 1 percent higher than current-year numbers.
However, the projections at this point set a zero growth rate for K-12 state aid and other critical pieces that will be built into the numbers once Reynolds presents her two-year budget plan to the Legislature on Jan. 15.
Reynolds said state income tax cuts, which are slated to kick in Jan. 1, along with federal tax reform and “fair, predictable” regulations are helping spur Iowa’s economy.
She pointed to skilled worker training and efforts to lower Iowa’s corporate income tax rate as key elements to further encourage positive economic outcomes.
“We’re going to continue to look for ways that we can make our state competitive,” she said. “Right now, the corporate tax rate is the highest in the country, and we’ve got other states that are working every day to outmaneuver us and be more competitive, and so that’s something we need to take a look at in conjunction with tax credits.”
Also, she said “workforce is just critical, and it’s critical for us to grow the economy. I believe if we can get job creators and the workers that they need we’re going to see this economy just explode.”