Capitol Letters: Fiscal year 2025 budget ready for implementation as governor signs appropriation bills

With Gov. Kim Reynolds signing all this year’s budget bills, the state’s spending plan for the new fiscal year is now set. The Fiscal Year 2025 appropriations bills were signed on May 9. The governor chose not to use her line item veto authority on any of the 10 appropriations bills that comprise the FY 2025 budget. The newly enacted budget will spend $8.9132 billion over the next 12 months, starting July 1. That is a 4.22% increase in General Fund spending when compared to the current year’s budget of $8.5520 billion. Fiscal Year 2025 revenue is estimated to be $9.3596 billion after the enactment of Senate File 2442, which lowers the income tax rate to 3.8% in tax year 2025. After these adjustments, the FY 2025 budget will spend 95.23% of the projected ongoing revenue for the year. Next year’s budget includes a number of priorities that Iowans brought to the Legislature. They include:

• 2.5% increase in state aid to schools, which is projected to be an additional $87.2 million given to schools next school year;
• $66.3 million in new funding to raise teacher salaries and an additional $14 million to increase pay to paraeducators and other school support staff;
• An additional $51.3 million for second year of Educational Savings Accounts;
• $11.9 million for improvements and salary increases within the Department of Corrections, including raising correctional officer base pay to $24 an hour;
• 5% increase in salaries for all judicial officers;
• $7.1 million increase for the Department of Public Safety;
• $107.2 million increase in funding for the Medicaid program, including in provider rate increases for a number of different services; and
• Additional $7 million for Iowa community colleges.