- Associated Press - Tuesday, January 12, 2016

DES MOINES, Iowa (AP) - Asking lawmakers to work with him on solutions, Gov. Terry Branstad pledged Tuesday to invest more money in K-12 education and water quality - a promise for the upcoming fiscal year that could hit roadblocks from legislators who disagree on how to fund those priorities.

The Republican is proposing a state general fund budget of roughly $7.4 billion for the fiscal year that begins July 1, a slight increase from the current fiscal year. He told the Iowa General Assembly in his 2016 Condition of the State speech that he would seek about $145 million in new funding for basic school aid and a teacher leadership program.

But tensions have been high since last summer, when Branstad vetoed several budget compromises negotiated between the Republican-controlled House and the Democratic-majority Senate. The governor nodded to such challenges on Tuesday.

“When we work together, challenges are overcome, results are delivered and Iowans have a government that works for them,” he said. “When we fail to work together, challenges become steeper, results are fleeting and the government fails the very people that we should be serving.”

Branstad stressed that it would be a tight budget year due in part to growing Medicaid costs. He is seeking to privatize the $4.2 billion program that provides health care to the poor, the elderly and some children, a move that has been opposed by Democratic lawmakers.

“If the state fails to implement managed care, the growth of Medicaid spending will virtually consume almost all of our revenue growth,” he said.

Another top priority for Branstad is funding water quality initiatives with the help of an existing 1-cent sales tax that’s currently marked for school infrastructure improvements. The tax has generated about $3.2 billion since 2008 and is set to expire in 2029.

Under Branstad’s plan, the tax would be expanded by 20 years and a portion would be diverted to a water quality fund. A water utility in Iowa has filed a federal lawsuit and is seeking monetary damages and clean water permits for agriculture drainage districts.

“We must significantly accelerate our water quality efforts in order to avoid eroding our path to prosperity,” Branstad said.

Still, adequate funding for K-12 education and water quality could face an uphill battle in the Legislature. Democrats want to provide more basic aid for schools, while Republicans support less new dollars. Democrats and Republicans are questioning whether to use that education funding source for water.

“Both of those issues to me are critically important,” said Senate President Pat Jochum, D-Dubuque. “They should stand on their own two feet and they each deserve their own funding stream.”

The budget, unveiled before Branstad’s speech, includes increased funding for state universities and community colleges. It also provides dollars to continue paying for a property tax cut and an education overhaul approved two years ago.

The budget does rely on a small amount of surplus fund dollars. Last year, House Republicans opposed such spending, which contributed to the delay in resolving the budget. Republican leaders were non-committal Tuesday when asked about this aspect of the proposal.

Among other topics covered were plans for Lt. Gov. Kim Reynolds to head an effort to develop a statewide energy plan that would involve business and government. Branstad also called for criminal justice reform in the state, noting the recent creation of an office that will review wrongful conviction cases. He said the state’s judicial court system would also review recommendations from a working group on issues such as fair racial diversity in jury panels.

Lawmakers must now review the budget plan while coming forward with their own ideas. Democratic priorities include seeking an increase to the state minimum wage, while Republicans have stressed their commitment to cautious budgeting.

“(Branstad) may have savings that we don’t identify, he may have other things that we haven’t identified at this point,” said Rep. Pat Grassley, R-New Hartford, the new chairman of the House Appropriations Committee. “So I think right now to say how his budget fits with what ours may look like is probably a little bit too early.”

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