Branstad Finalizes Fiscal 2013 State Budget; Possible DHS Layoffs Loom

By Rod Boshart, Reporter

Iowa Gov. Terry Branstad speaks during an interview with The Associated Press, Wednesday, May 11, 2011, in Des Moines, Iowa. Branstad says Iowa has the best chance in decades to fix what he sees as a deeply flawed property tax system. He also said he is working behind the scenes to help resolve differences between the House and Senate on the issue. (AP Photo/Charlie Neibergall)

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By Kara Kelly

DES MOINES, Iowa – Gov. Terry Branstad put the finishing touches Thursday on a $6.244 billion state budget for fiscal 2013 by taking action on an infrastructure measure after returning from a trade mission to China.

The GOP governor used his item-veto power to strike several provisions of the infrastructure measure that was part of the overall spending plan slated to take effect July 1 that the split-control Legislature approved before adjourning the 2012 session last month. Branstad took action on most of the fiscal 2013 budget bills before he left on his Chinese mission, but didn’t finish work on Senate File 2316 until Thursday.

The governor’s action comes at a time when at least one state agency head said he may need to consider employee layoffs to stay within a fiscal 2013 allotment that was less than the governor recommended given lawmakers did not approve a separate salary measure to cover employee pay increases mandated by collective bargaining agreements that are in place through June 30, 2013.
Charles Palmer, director of the state Department of Human Services, said the $1.597 billion measure the Legislature approved for the health and human services budget areas fell short of the $1.616 billion the governor requested but was more than lawmakers were considering earlier in the session when it appeared that about 200 full-time DHS positions would be jeopardized during the fiscal year that begins July 1.

“We’re not at a place where we can say no layoffs,” Palmer said in an interview. “I’ll know that fairly early” in the new fiscal year, he added. But he noted that most of the expected shortfall could be managed by attrition, retirements and leaving positions unfilled to the point that fewer than 100 positions would be impacted if a reduction in force became necessary.

In a memo to the roughly 5,000 DHS employees last week, Palmer said the operating budget signed by Branstad “will enable us to sustain programs that support and protect vulnerable Iowans.” The DHS leader said he met with superintendents and business managers from the agency’s various institutions and, although “some of their budgets are very tight,” they will be able to use carry-over funds that will avoid the possibility of having to close beds next fiscal year. He said up to 56 beds were “at risk” during the budget negotiations.

“This was a challenging legislative session for us. We made it clear that the DHS budget should come as close as possible to the one recommended by the governor last January, and for the most part we were successful,” he told department staff members in his June 1 memo. Palmer noted that the changing political landscape at the state and federal levels in the November 2012 election and the U.S. Supreme Court ruling on the constitutionality of the federal Affordable Care Act were “a couple of important variables that could have a distinct impact on our department.”

In his item-veto message that accompanied the health and human services budget bill, Branstad noted that Senate File 2336 did not adequately fund the state’s share of Medicaid for the coming fiscal year – something he considered to be a bad budgeting practice that “should not be continued in the future.” He estimated the appropriated level would fall $30 million to $40 million “short of the low-range projections” for fiscal 2013, but he noted the state’s projected ending balance like would be large enough to cover any shortfall.

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