Lawyers for the Governor and for Republican legislators were in court this morning in the continuing legal fight over Governor Tom Vilsack’s item vetoes. A judge heard arguments from both sides this morning. Republicans say Vilsack, who’s a democrat, overstepped his authority when he x-ed out tax cuts and regulatory reforms from a bill that set up the new state economic development fund. If Republicans win, it will make an already difficult state budget situation worse because it will put back in force a 36 million dollar tax cut. There’s already about a quarter of a billion dollars in built-in spending increases in next year’s state budget — most of it an already-promised increase in state aid to public schools. G-O-P lawmakers say he union contract calls for about 84 million dollars in salary increases and since union workers won’t accept a pay freeze, there’ll be layoffs. The two Republicans who are in charge of drafting next year’s state budget say it’s too soon to say how many state workers will loose their jobs, and Representative Bill Dix, a Republican from Shell Rock, is not ready to say Republicans would delay implementation of the 36 million dollars worth of tax cuts should they win their lawsuit against the Governor. Dix says it’s too early to speculate on what action would be taken. Senator Jeff Lamberti, a Republican from Ankeny, expects the state to collect about 10 million more in taxes next year, and he says the budget can be balanced.Lamberti says he finds it hard to call the situation a crisis when there’s going to be a bit more money in the state till. He calls it a “management problem” rather than a crisis. Dix calls it an opportunity.The largest state employees union, AFSCME , is calling for a state tax increase to balance the budget and ensure state workers don’t get laid off. AFSCME president Jan Corderman says with about 10 percent of the state workforce laid off over the past couple of years, the workers who remain are doing more and deserve that pay raise, which averages over six percent.