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Legislative Report (Vol. XXV No. 16) April 28, 2006

April 28, 2006

Agreement Reached

A budget agreement was reached late Friday afternoon between Iowa lawmakers and Gov. Tom Vilsack for the budget year beginning in July.

While most other policy issues, with the exception of education, have been resolved, Democrats, Republicans and the Governor have been at a stalemate over the budget, mainly over how much to spend to increase public school teachers’ pay and how quickly to implement a $100 million tax break for seniors.

According to the information at hand, highlights of the budget agreement include:

AEA funding: We are fairly certain that the final legislation will include some additional funding for AEAs as part of an effort to restore some of the budget reductions of the past several years. We do not know the official figure at this point and may not know until next week when more of the particulars are released. The figure will be sent out as soon as we have official word on the amount.

Growth factor: A growth factor of 4 percent in the 2007-2008 school year, which amounts to about $82 million in additional state funding.

Senior tax cuts: The first part of the plan to reduce state income taxes on social security and other income for people 65 years and older would be phased in by 2009 and it would apply to seniors earning less than $24,000 for a single filer and $32,000 for a joint filer. In the first two years, the threshold would be set at $18,000 and $24,000 for single and married filers, respectively. Currently the exemption is set at $9,000 for singles and $13,500 for married couples. Income taxes on social security income will be phased out over eight years.

Teacher salaries: $35 million will be allocated each year for three years to increase teacher pay. This would generally increase teacher salaries by about $1,000 per year.

Preschool: A $15 million increase for early childhood education in 2007 and a $5 million increase in 2008.

Pay-for-performance: Funding will be provided to set up pilot programs to create a way to pay teachers based on how well they do educating their students. Next year, $1 million will go to set up pilot programs. In 2008, $2.5 million for 10 school districts to test the programs and $5 million in 2009 for 20 school districts.

While the budget figures have been tentatively agreed to there is still work to be done on the policy issues that have yet to be resolved. It appears that further meetings will be held on those issues today.

The agreements must still be reviewed with the individual caucus groups on Monday for their approval. Barring any unforeseen circumstances adjournment should now take place sometime next week.

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