DES MOINES — Iowa Gov. Kim Reynolds proposed the state use a portion of its cash reserves to pay for her $9.4 billion state budget proposal announced on Tuesday. 

The governor’s budget is more than the $8.7 billion in general fund receipts the state projects for fiscal 2026.

To fund the expenditures, Reynolds is asking lawmakers to approve a $351.4 million transfer from the state’s Taxpayer Relief Fund and use the state’s $2.1 billion general fund surplus from last year to increase the maximum expenditure allowed under state law. 

The state is required to have a 1 percent surplus to ensure the state does not overdraw its coffers with natural budget fluctuations. According to the governor’s office, under the proposed budget, spending is capped at $10.7 billion. 

Though the proposal is not the final bill, lawmakers will have to decide if they are on board with Reynold’s budget plan and pass it, or something similar, through both chambers and send it to her desk. 

Included in the $9.4 billion budget proposal is a $486 million increase from last year’s budget, or a 5 percent total increase in the budget. 

In that $486 million increase is a $240 million increase in education funding and a $223 million increase in medicaid spending. 

The education spending increase includes a 2 percent increase in per-pupil funding for Iowa school districts, a $14 million increase for regent universities, and a $96 million increase in spending on Education Savings Accounts. 

The $14 million increase in regent funding is $13.5 million less than the regents asked for and leaves out special funding requests for the University of Iowa’s Rural Iowa Health Care initiative and Nurse Innovators Program. It includes $1 million in funding for cancer research not in the regent’s request.