Mt Pleasant News
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Neighbors Growing Together | Mar 28, 2017

Heaton faces some tough budget cut decisions

Jan 10, 2017

BY BROOKS TAYLOR

Mt. Pleasant News

State Rep. Dave Heaton (R-Mt. Pleasant) is feeling a considerable amount of apprehension regarding the 2017 session of the Iowa Legislature.

There are needs to be met, but no money to meet those needs, he said.

Iowa is facing a $130 million shortfall in the fiscal 2017 budget and House and Senate leaders have asked committee chairpersons to take out the scissors and start snipping.

Heaton, who has been either the ranking member or chairman of the House Health and Human Services Committee for 18 years (he has been chairman during recent sessions), has been told that $13.5 million must be cut from his budget.

In addition, education faces a $22 million cut, the justice system $9 million and various other agencies/programs about $1 million each. Other steps being taken are a hiring freeze, a 50-percent reduction in ongoing spending (government operations), reduction of $4.5 million in property tax credits and the commercial property tax backfill is being cut $24 million. The latter cut will reduce what the state will pay cities under terms of the commercial property tax system reform two years ago.

When the state granted commercial property a rollback, cities were told the state would backfill the amount of tax revenue cities lost due to the tax cut.

The veteran state representative said the cuts would be announced early in the session. “The first thing we are going to do is have a de-appropriations bill that proposes these reductions.”

Culprits in the downturn of the state economy, Heaton said, are agriculture and online sales. Some of the sales tax revenue, however, will increase as Amazon has announced that it will charge Iowans sales tax on items purchased. Amazon started charging Iowans sales tax this month and projections are the state will receive $25M from Amazon sales tax.

Large online companies, such as Amazon, do not have to charge state sales tax. The federal law says that companies do not have to charge state sales tax unless they have a physical presence in the state.

The rise in online sales, the legislator said, and subsequent lack of sales tax paid to states “is killing the states,” he said. “Plus, local businesses are also suffering because of online sales.”

Heaton is guaranteeing that a school supplemental aid (allowable growth) funding bill for state school districts will be passed within 30 days. State law said the legislature must pass a school aid bill within 30 days but in past years, the legislature never has been close to meeting its deadline.

“It has been a political thing (lack of action on school funding),” Heaton said. “This year, we will send a school funding bill to the governor in the third week of the session.”

However, he would not guesstimate the percentage of funding for school districts, only saying that Gov. Terry Branstad is recommending 2 percent.

Giving school districts 2 percent funding would amount to $105 million, and Heaton said he needs $130 million more in his committee’s budget. “Put that (school aid) with mine and that takes care of the money available.”

He stated he is basing his budget increase on a 2.5 percent increased cost in the expansion of Medicaid and the rising cost of Medicare supplemental policies for dual eligible people (residents who are eligible for both Medicare and Medicaid).

“My biggest problem is mental-health funding for non-Medicaid services,” he noted. “Funding for that is the county’s responsibility and mental-health funding for counties is capped. Some urban counties, such as Polk and Scott, are at their cap and can’t generate additional funding.”

Because the mental-health delivery system is now regionalized and some regions include both urban and rural counties, there is pressure on rural counties to raise their mental-health property tax levy to make up the difference for urban counties that are at their funding cap, he commented.

“This is threatening the continued existence of regions,” Heaton remarked. “Rural counties (who are in regions with urban counties) are threatening to pull out of the region which would break down the system.”

In addition to the concern over the continued presence of mental health regions, Heaton also said some problems in the Medicaid system need to be fixed.

Another problem facing Iowa is the opioid epidemic. Heaton said 91 Iowans died in 2016 from drug overdoses. “The opioid epidemic that other states have been experiencing is coming to Iowa. We have to work on legislation to control the opioid drug prescriptions to patients.”

The state representative said he would also be working with the insurance industry to allow applied behavioral analysis (ABA) treatment for autism.

Heaton’s final desire for health care is promoting the further development of the health-care workforce. “We are becoming short of people in all aspects of health care,” he reflected. “We need to do things to get young people interested in working in the health-care industry.”

A longtime proponent of removing school transportation costs from the school district’s general education fund, Heaton says he is hopeful for some action on the matter. “Rural school districts have an inequitable spending that punishes education. There is no reason purchasing a new school bus should cost you a teacher. I think transportation costs should be covered through a separate levy, but we just keep kicking the can down the road.”

Heaton also sees possible action on a minimum wage bill and a water quality program. He said he thinks the legislature will pass a bill that pre-empts individual cities and counties from setting their own minimum wage and possibly a state minimum wage bill that gradually increases to $10.25 per hour.

“I think we will visit the water control bill that surfaced last year,” he predicted. “Funding for water control in that bill was $30 million with the funding coming from gambling, a sales tax on retail water and general fund monies.”

 

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