Gov. Tom Vilsack rolled out a nearly $5 billion state budget plan Tuesday that triples the cigarette tax to pay for health care priorities, pumps more money into Iowa classrooms and envisions a massive economic growth effort.
Vilsack, a Democrat, would raise Iowa's current 36-cent per pack cigarette tax by 80 cents as of April 1, raising an additional $123 million annually. Much of that new money would be spent on health care for the poor, elderly and disabled enrolled in the cash-strapped Medicaid program.
Without such a tax increase, Vilsack warned that 14 health care initiatives, both new and existing, would see their funding slashed or eliminated. Those cuts, he argued, would hit seniors struggling to pay for prescriptions, persons with disabilities and those in need of hospice care.
Rejection of the controversial tax hike also would jolt the rest of Vilsack's fiscal year 2006 budget plans. He is seeking a $147 million funding increase for K-12 education programs, $5.2 million in additional state aid for community colleges and more than $40 million for Iowa's state universities.
``Without a tobacco tax increase, the Legislature's faced with some very difficult choices,'' said Vilsack, who argued only eight states have a lower tobacco tax than Iowa's. ``They can choose to pit grandparents against grandchildren.''
Republican legislative leaders charged that Vilsack's $4.96 billion plan spends far too much, insisting that Vilsack would boost state spending by 10 percent, although budget experts said actual new spending would jump roughly 3 percent in Fiscal Year 2006 starting July 1.
GOP leaders also point out that a new state worker contract under negotiation isn't figured into the bottom line.
``The end result is it's a huge increase in spending,'' said Senate Republican Leader Stewart Iverson of Dows. ``I've been very consistent. I don't think it's appropriate to raise taxes on Iowa's, period.''
Iverson's counterpart in the evenly divided Senate, Democratic Leader Mike Gronstal, was more upbeat. But he did not embrace the tobacco tax plan.
``I think that's obviously one of the issues in the governor's budget that meets some resistance,'' said Gronstal of Council Bluffs. ``Overall, his priorities are right.''
Medicaid faces a $65 million shortfall this year and a more than $120 million gap next year as client rolls and health care costs grow. Vilsack covers both of those shortfalls with the help of tobacco tax proceeds but without cutting the number of Iowans eligible for the program.
Health care providers who treat Medicaid clients would see a 3 percent increase in reimbursement payments.
``When you take people out of the system, it's not as if they magically don't get sick,'' Vilsack said, arguing that hospitals forced to treat charity cases pass the cost on to consumers.
Republicans contend it is short-sighted to use a tax increase to fund Medicaid while doing little to stem its growth. They argue eligibility and service cuts should be considered first.
``We know (Vilsack's plan) is not sustainable,'' said Rep. Bill Dix, R-Shell Rock, chair of the budget-writing House Appropriations Committee. His Senate GOP counterpart, Sen. Jeff Angelo of Creston, predicted a ``fiscal train wreck.''
Education programs
Vilsack said his proposed $147 million increase in K-12 education spending would be the biggest boost in a decade.
Included in the package is a $47.4 million increase in spending on teacher pay and training and a promised $93.9 million hike in basic state school aid. The governor would also offer $6 million to high schools that explore sharing arrangements and beef up course offerings.
Regents' universities would get a $40 million increase, including $20 million for operations and roughly $20 million for salary increases. Community colleges would get $5.2 million more for operations.
Legislative leaders said they couldn't assess the proposals until they have a chance to pore over details.
Values Fund plan unveiled
Vilsack would create an $800 million Iowa Values Fund over five years, financed by gambling revenues flowing from a fleet of new riverboat casinos.
A $255 million share of the money would provide incentives to new and expanding businesses. Another $245 million would be spent on state and local government infrastructure projects.
Research programs at Iowa's state universities would get $67 million and community college job training programs would receive $67 million.
Regional economic development would get $40 million; Vision Iowa and the Community Action and Tourism programs would get $69 million; and water quality grants account for $50 million.
Source: Article originally published in WCFCourier.com