Budget deficit to dominate Iowa legislative session

2010-01-03T02:00:00Z Budget deficit to dominate Iowa legislative sessionRod Boshart The Quad-City Times
January 03, 2010 2:00 am  • 

It will be short.

But it will not be sweet.

Iowa’s 2010 legislative session will be cut short, from the usual 100 days to 80, to save money for the cash-strapped state.

During those days, the governor and legislators will be sculpting a cost-cutting budget. A free fall in state tax collections means a spending gap of $400 million to $1 billion.

“It will be a tough, tough budget year. I think this is probably the toughest one that I’ve dealt with,” said Sen. Robert Dvorsky, D-Coralville, chairman of the Senate Appropriations Committee. Dvorsky has been a legislator since 1987.

“The revenues are low, and the needs are still high,” Dvorsky said. “I think everything is going to be status quo or less.”

Before lawmakers left Des Moines in April, they passed a $6.3 billion spending plan. It was built on nearly $5.8 billion from the general fund and $529 million in federal economic stimulus help.

After that, the worldwide recession hit the Iowa treasury hard, sending state revenues spiraling nearly $533 million below expectations. That forced Gov. Chet Culver to implement a 10 percent across-the-board cut that whacked $564.5 million from executive-branch agencies.

When lawmakers return to Des Moines on Jan. 11, they will be greeted with a budget that has a $5.235 billion baseline for general fund spending in fiscal 2011 and an estimated $5.403 billion in expected available revenue. Built-in commitments and anticipated spending increases are estimated at $1.23 billion, but budget-makers say those will be pared considerably.

“The fiscal state of affairs, which is self-inflicted I might add, is pretty dire,” said Paul McKinley, Senate Republican leader from Chariton.

Culver and majority Democrats say the path to a balanced fiscal 2011 budget is likely to entail saving up to $250 million by implementing an unprecedented set of government cuts, tapping a share of the projected $541.6 million in state reserves and earmarking the leftover $141 million in one-time federal stimulus aid to state needs.

“I’m confident that we will have a balanced budget again in fiscal 2011, but no one’s suggesting it’s going to be easy,” said Culver, who plans to deliver his spending plan to lawmakers by the end of January. “It’s during tough times that you’ve got to provide leadership and make some difficult decisions and sometimes unpopular decisions.”

The governor ruled out raising taxes. He implemented changes proposed by a consulting firm. He hopes those changes will save $128 million in one year and nearly $714 million over five years. He also proposed legislative action that could save another $207 million in one year and $942 million over five years.

“I expect that we will have the political will to move forward on the majority of these recommendations because the alternative is not good,” Culver said. “The alternative is more cuts, more pain, perhaps reducing the ability to provide essential services.”

House GOP Leader Kraig Paulsen of Hiawatha applauded some of the proposals he said his minority caucus suggested last session.

Paulsen was disheartened that some of the ideas he touted, such as allowing gambling devices in adult businesses, sought to generate more revenue for spending, rather than streamlining. Also, property taxpayers are in line to shoulder a state funding shift that could top $240 million, he said.

“I think looking for ways to take more money out of the pockets of Iowans to solve our budget problem is the wrong solution,” Paulsen said.

McKinley said a better solution is for lawmakers to halt the overspending, grow-state-government approach of recent years. Instead, he would like to see the state head down a path of reform that spends within the state’s means and empowers private-sector businesses with less regulation and lower taxes.

“While you might get a temporary sugar high on some of these things, it really is not going to lead to meaningful reform, which is what we need in government. We’ve created more government than our economy can support,” he said. “I believe it will be kicking the can down the road. I’m concerned about that.”

Dvorsky said that structural challenges for matching ongoing expenses with available revenue date back to former Gov. Terry Branstad’s time in office and now “the can has been kicked to us.”

Senate Majority Leader Mike Gronstal, D-Council Bluffs, likened the state budget to a vehicle traveling a very bumpy road that needs realignment to function properly.

“I think we’re going to do some real things that are going to produce some very real savings,” he said. “There’s going to be cuts and real cuts in every department. We’re going to do our best to preserve the things we think are important — education, health care and job creation. We’ll try to cut those areas less than in other areas of state government.”

 

 

Copyright 2015 The Quad-City Times. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.

No Comments Posted.

Add Comment
You must Login to comment.

Click here to get an account it's free and quick