House Republicans propose higher budget target with goal of aiding nursing homes

By: - March 23, 2023 5:58 pm

Domes at the Iowa Capitol. (Photo by Kathie Obradovich/Iowa Capital Dispatch)

House lawmakers are aiming for a higher budget target than the governor’s and Senate’s proposals, House Speaker Pat Grassley said Thursday.

House Republicans are aiming for nearly $50 million more in general fund appropriations for the 2024 fiscal year than other Republican leadership’s proposals. Grassley said the additional spending would address other issues GOP representatives hope to put funding toward this session.

“We have other priorities that we would like to have conversations about within the caucus, like mental health rebasing (reimbursements) or rebasing for nursing home mental health issues,” Grassley said. “We have workforce issues … we wanted to make sure that those are all reflected, some of the priorities that are still out there, within our budget.”

The increase to “rebasing” costs would give nursing homes caring for residents enrolled in Medicaid a higher reimbursement rate. The current Medicaid reimbursement rate is based on nursing home costs in 2018, before the COVID-19 pandemic, Grassley said, and raising that rate could help communities that are seeing nursing homes close across the state.

According to the Center for Medicare Advocacy, 17 Iowa nursing homes closed in 2022. While House Republicans have not landed on an exact increase in the reimbursement rate, Grassley said GOP representatives want to address the rising costs and workforce issues at nursing homes in light of inflation and the pandemic.

“We recognize that there is that need,” Grassley said. “I don’t know if we can fix it in one year. … I don’t know what that number ends up being, but there is a willingness in the caucus to provide support there.”

The $8.58 billion target would be an increase of 4.5% from FY 2023’s estimated spending level of $8.21 billion. It’s also roughly a percentage point higher than Senate Republicans’ budget target of $8.486 billion.

Gov. Kim Reynolds’ initial budget proposal was $8.489 billion, but the projected cost savings from the government realignment bill, which Reynolds is expected to sign, would put her proposal in line with the Senate’s target. Grassley said there are already measures signed into law this session that have added additional costs not factored into her plan published in January: the 3% increase in supplemental state aid for public schools, and the law fixing a property tax assessment error, add nearly $45 million more in state spending.

Iowa is expected to see state revenues decrease in 2023 and 2024. Earlier this month, the Revenue Estimating Conference predicted Iowa would see a 0.5% loss in revenue for fiscal year 2023, bringing in $9.75 billion, and a 1% decrease in revenue for fiscal year 2024 at $9.65 billion.

Iowa law prohibits lawmakers from spending more than 99% of that estimate, and Grassley said their budget still keeps state spending within Republicans’ personal, lower limit of 89%.

“That still maintains our principles of being around that 89% (of) ongoing revenue, maintains that principles that we’ve had of not using one-time money in the budget,” Grassley said.

Senate Republicans introduced their budget target a week prior to the House. Senate Majority Leader Jack Whitver said the Senate’s proposal accounts for a loss of revenue from tax cuts implemented in previous sessions.

“This budget target ensures the tax cuts implemented last year are sustainable,” Whitver said in a statement. “Iowa has increased funding for K-12 schools every year, it has an ongoing surplus, and income taxes are falling every year for Iowans, including the elimination of the tax on retirement income this year.”

While budget discussions are gaining traction, there is still more legislation up for consideration that could change the state’s spending and revenue estimates. Both chambers have released property tax cut bills, House File 1 and Senate File 356, with differing approaches to property assessment limits and levy reductions, to cut property tax costs for Iowans. If the House’s property tax legislation becomes law, Grassley said that loss of revenue would be taken from the Taxpayer Relief Fund and would not impact the state budget.

House Democrats said they plan to meet Monday with Republicans to get more details on the budget proposal. But Rep. Timi Brown-Powers, D-Waterloo, said Republicans’ budget proposals continue to put “politics over people,” pointing to this year’s spending on the governor’s private school scholarship program and the cost of corporate tax cuts from previous sessions.

She said she plans to proceed with caution going into budget discussions with Republicans and called for more funding for state mental health services.

“Where (is) the money for the things that people are needing at this point?” Brown-Powers said. “And that really has to be the focus, and I’m hoping that we can have a good conversation as we look at the budget setups.”

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Robin Opsahl
Robin Opsahl

Robin Opsahl is an Iowa Capital Dispatch reporter covering the state Legislature and politics. They have experience covering government, elections and more at media organizations including Roll Call, the Sacramento Bee and the Wausau Daily Herald.