The Iowa legislature's budget subcommittees worked this week to craft budgets for various areas of state government that would cut an average of 12 percent after state revenue estimates were lowered by $269.9 million next fiscal year, making layoffs almost a certainty.

Iowa Senate Majority Leader Mike Gronstal called the decline in state revenues "the worst I've ever seen" in 27 years in the legislature and said everything is at risk of being cut.

"I wouldn't say there's anything off the table," said Gronstal (D-Council Bluffs). "These are incredibly challenging times. ... We will do, probably in some cases, across-the-board stuff. We will also make selective cuts."

More budget cuts are on the way in Iowa after the three-member Revenue Estimating Conference (REC) on Friday lowered estimates of state revenues by $129.7 million this fiscal year and $269.9 million next fiscal year.

"The economy continues to falter," said Holly Lyons, director of the Legislative Services Agency's fiscal services division. "We're witnessing more layoffs. We're witnessing reduced hours and furloughs. We may not even be halfway through this recession."

The lowered revenue estimates, combined with the $700-million budget gap the state already had for Fiscal Year 2010, make for a $1.1-billion gap between expenses and revenues over the next 15 months, according to Representative Scott Raecker (R-Urbandale), ranking member of the House Appropriations Committee.

Officials with the Iowa Public Employees Retirement System (IPERS) attempted to ease concerns this week about its $339-million investment with Westridge Capital Management that's been frozen during the investigation of Westridge owners Paul Greenwood and Stephen Walsh for securities fraud.

Donna Mueller, IPERS' chief executive officer, told the legislature's joint Government Oversight Committee that the frozen assets represent just 2 percent of the pension fund that serves about 300,000 current and former employees in state government, cities, counties and school districts.

"We're going to aggressively pursue every last dollar," Mueller said. "We maintain an additional cash balance so that we do not have to unnecessarily cash out investments. We are managing cash so we have a cash reserve to pay monthly benefits. It's only 2 percent, so we have other assets that are available to manage and to pay benefits. A greater concern, almost, is what's happening in the economy and impacting the entire portfolio."

The Iowa House was expected to approve Friday a controversial bill that would require contractors to pay workers the same hourly wages and benefits on public projects as they would on private-sector projects in the area. But during the vote, the Democratic majority fell one vote short of the 51 votes it needed for passage and left the vote open through the weekend in hopes one of the five Democrats who voted against the bill could be convinced to switch to a "yes" vote.

In what officials called the longest vote in Iowa Statehouse history, House Speaker Pat Murphy at 1:09 p.m. Monday closed the voting machine on the prevailing wage bill after 2 days, 19 hours and 14 minutes, declaring the bill had lost. The vote was 50-48, one vote short of passage. But then House Majority Leader Kevin McCarthy, D-Des Moines, switched his vote to "no" -- a procedural move that will allow him to bring the bill up for reconsideration later this session. So the final vote stood at 49-49.

Backers said the bill was aimed at helping middle-class families in Iowa.