CHICAGO -- A $400 million tax and revenue anticipation note issue for Iowa was still on hold after Gov. Terry Branstad took steps Wednesday that left the state's fiscal 1993 budget in question.
Gov. Branstad balanced the state's $3.47 billion budget with line-item vetoes of more than $391 million in spending, including $276 million for Medicaid programs. But he plans on calling a special session of the legislature to ensure funding for Medicaid and other programs considered essential, according to Richard Vohs, the governor's press secretary.
Though a date for the special session has not been set, Mr. Vohs said it would be held before July 1, the start of fiscal 1993.
Michael Fitzgerald, the state treasurer, said the state needs a "workable" budget before the Trans can be issued. The one-year notes, scheduled to be sold July 1, are issued annually to fund school aid payments and other expenditures.
"With a balanced budget, we could technically proceed to market and sell the notes. But in the real world, common sense tells us we have an upheaval situation," Mr. Fitzgerald said.
He added that lack of a "workable" budget could make getting credit enhancement on the Trans difficult. The state plans to seek a letter of credit for the issue.
The governor had been working on alternatives to help finance the budget since his veto last month of a proposed one-cent sales tax increase. The rise would have generated an estimated $272 million in fiscal 1993 and enabled the state to set aside $60 million for reducing its $338 million deficit, as measured by generally accepted accounting principles.
Mr. Fitzgerald said quick resolution of the budget problem is essential so work can begin on calculating the Trans, a process that takes two to four weeks. Delaying the issue could force schools to make budget cuts and pay more interest on their bills, Mr. Fitzgerald has said.
The schools have been counting on the state to help them catch up with three months of bill payments in July, according to Ted Davidson, executive director of the Iowa Association of School Boards.
"They've got to get the state budget under control so that schools can do their financial planning," Mr. Davidson said.