CHICAGO — The Iowa Legislature adjourned this week after passing a $5.28 billion budget that relied on cuts, reserves, and savings from a reorganization plan to offset shrinking revenue, and included a $45 million increase in the state’s bond-financed Iowa Jobs capital program.

Spending in the budget for fiscal 2011 that begins July 1 will total nearly $5.9 billion when federal stimulus funds and using nearly $270 million from state reserves are counted. About $200 million in reserves will remain.

“Working with the Democratic majority, we kept our commitment to job creation by fully funding the I-JOBS program and creating more opportunities that will put Iowans back to work … We reached across party lines to enact historic government reform,” Democratic Gov. Chet Culver said in a statement. The Legislature is controlled by Democrats.

About $2.5 billion of the budget will go to school aid, up slightly over fiscal 2010, though schools complained they would still face an overall loss in funding due to the drop in remaining federal stimulus aid. The government reorganization proposed by Culver and passed by lawmakers is expected to save about $270 million.

Lawmakers also agreed to allocate the $105 million approved last year as part of the Iowa Jobs public works-infrastructure program and agreed to an increase of $45 million to boost the overall program to $875 million. Culver sold lawmakers on the increase as an affordable way to pay for additional flood mitigation projects and to create jobs. Parts of the state are still rebuilding after devastating spring floods in 2008.

“Their vote was a vote for disaster recovery. It was a vote for smart growth for communities still affected by the storms of 2008. It was a vote for economic growth and job creation — at a time when Iowans need it the most,” Culver said.

Treasurer Michael Fitzgerald said yesterday the $150 million of debt would be sold in mid-May. The bonds will be backed by the same special obligation pledge — gaming revenue with a backup pledge of liquor taxes — that secured the state’s first installment of $600 million of borrowing under the program last year.

“The program’s costs won’t really increase over our original estimates with the increased size of $45 million because of interest rate savings we achieved on the sale last year and the low current interest rate environment,” Fitzgerald said.

Structural details are still being discussed, including whether to issue taxable Build America Bonds. The state also has not yet named an underwriting team.

Iowa does not issue stand-alone GOs, but it carries a Aa1 issuer rating from Moody’s Investors Service, an implied GO rating of AA-plus from Fitch Ratings, and a AAA from Standard & Poor’s.

Iowa’s ratings are supported by low debt levels and conservative fiscal management that has kept fully funded budget reserves in place, analysts said.

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