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    Do Iowa's budget problems warrant a special legislative session?

    by: desmoinesdem

    Thu Jul 02, 2009 at 10:55:30 AM CDT


    Iowa's 2009 fiscal year ended on June 30, and if the Legislative Service Agency's projections are correct, net revenues will fall well short of what legislators anticipated when they approved the 2009 budget. The Legislative Service Agency puts the possible shortfall at $161 million, whereas Iowa's budget director Dick Oshlo says things don't look that bad:

    Total gross receipts for FY 2009 are $6.921 billion, which is only $57.7 million lower than the Revenue Estimating Conference's official estimate of $6.979 billion.

    Dick Oshlo, state budget director, said: "With yesterday marking the end of the fiscal year, we now know the state's gross receipts for FY 2009. While the state's tax receipts deteriorated more than expected during the last two months of the fiscal year due to the ongoing effects of the national economic recession, this is a manageable number. Fortunately, receipts improved during the final days of June.  At this point we see no legitimate reason for a special session to balance the state's budget."

    Meanwhile, Republican State Representative and gubernatorial candidate Chris Rants says Governor Chet Culver should call legislators back to the capitol:

    "It is time to quit worrying about the political ramifications of admitting that we have a deficit and get about the business of fixing it," Rants said. "Gov. [Tom] Vilsack put aside partisan politics and called a special session in 2001 and 2002 to balance the budget after revenues declined. Culver needs to do the same."

    I wasn't living here during Vilsack's first term and don't know how bad the projected shortfalls were in those years, compared to what Iowa is facing now. Culver's office argues that we won't know the real picture for a while yet:

    The LSA's figures are just estimates, and true net receipts won't be known until September when the Department of Management closes the books on the fiscal year 2009 budget.

    There is also revenue that will be collected within the next 90 days but allocated to the fiscal year that ended Tuesday, money that will improve the state's financial situation and is not included in the LSA projections.

    Culver Press Secretary Troy Price told the Iowa Independent last month that until accruals, expenditures and refunds are all taken into account there is no way of getting an accurate picture of the 2009 budget.

    Like Chris Woods, I felt a special session was warranted last year to address flood relief and recovery issues, but that never happened. Incidentally, many Iowa Republicans opposed calling the legislature back in response to the flooding.

    I'd like to hear from others in the Bleeding Heartland community. Should Culver call legislators back in light of the possible budget deficit?

    I'll update this post later today after Culver's press conference with State Treasurer Mike Fitzgerald. According to Lynn Campbell of IowaPolitics.com, they will discuss the budget and "new info" on state finances.

    LATE UPDATE: Forgot to update yesterday. As you can see from ragbrai08's comment below, Vilsack called a special session in October 2001. Like Culver, he waited until all the numbers were in (rather than calling the legislature back shortly after June 30). It's quite misleading for Rants to suggest Culver is being less prudent here than Vilsack.

    At yesterday's press conference, Culver said he is "very confident" the 2009 budget is balanced. He and Fitzgerald emphasized Iowa's AAA bond rating:

    "In a very partisan way, the Republicans running for governor are misleading people," Culver says. "...So I think it's very important to make sure that we hold those people accountable that are misleading Iowans. It's just not fair. It's not appropriate and there's no need for alarm." [...]

    Culver is also stressing that the Wall Street firm "Standard and Poors" just "reaffirmed" Iowa's triple-A bond rating.

    "What a timely testimonial from (Standard and Poors.)  They're just looked at our books inside and out," Culver says.  "They've looked at our debt.  They've looked at our revenue streams.  They've determined...that Iowa is one of the best-managed states in America."

    That triple-A bond rating (the highest on the Standard and Poors scale) means Iowa will be able to borrow money for the I-JOBS program at favorable interest rates.

    desmoinesdem :: Do Iowa's budget problems warrant a special legislative session?
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    2001/2002 (4.00 / 1)
    it appears that the projected shortfall was $158 mill, but this was based on a forecast made later in the year, 10/2001. So, perhaps there's some merit to the argument that this projection is premature, assuming the fiscal year hasn't changed.

    The LSA's figures are just estimates, and true net receipts won't be known until September when the Department of Management closes the books on the fiscal year 2009 budget.

    There is also revenue that will be collected within the next 90 days but allocated to the fiscal year that ended Tuesday, money that will improve the state's financial situation and is not included in the LSA projections

    This is consistent with the October 2001 timeline. I'd leave the door open to calling a special session down the road, but I wouldn't give Rants the satisfaction today.

    According to a RadioIowa report, the 2002 special session was called (5-28-01) to plug a $400 mill hole, split down the middle b/t FY01/FY02. Presumably the 10/01 forecast did not incorporate the fallout from 9-11, which is understandable.

    This is dangerous for Culver (and many other governors). The reality is that forecasting revenue from the usual sources, sales/income/property taxes has a national component -- and I consider the optimistic fluff coming out of Washington to be completely unreliable. For every day Culver waits, the gap may widen. So I'd throw down a plan of action now -- i.e., will make a decision on special session based on report in September. After all, even if there's a special session this month, there's some chance that they'll be back at it later this year/early next year, just like 2001-2002.

    The key thing is to not look like you're sniping at people or stumbling around cluelessly.


    thanks (0.00 / 0)
    It sounds like watching and waiting is prudent for now.

    On a different subject, I nominated you for a research project John Deeth lays out in this post. But any research you care to write up in a diary would always be welcome.  

    Invite other Iowa political junkies to join us at Bleeding Heartland.


    [ Parent ]
    Johnson (4.00 / 1)
    Fong should own the Asian-American vote in several IC precincts, which is normally outside of the supervoter universe. That's a couple of hundred votes to pad any crossover effect.

    While the primary date is 6-18, there should still be a few GenIowa types hanging around the campuses. Add a few more votes here outside the traditional GOP supervoter universe. Should Fong make it to the general, students will be a key part of his strategy, so I'd expect substantial outreach in the next year, independent of primary date.

    The top 5 counties for registered Repubs, in descending order:

    Polk
    Linn
    Scott
    Black Hawk
    Pottawattamie

    That he grew up in rural Pottawattamie is just gravy.

    If he's the GOP nom, this could very well be the most interesting gubernatorial race in the country, you know why?   Fong will go after core Obama precincts, like FIRE, students.

    This assumes that he doesn't implode like a noob early on, of course. More later, let's see if he's viable.


    [ Parent ]
    he certainly makes the race more interesting (4.00 / 1)
    I have a work in progress, but since I didn't finish it before the holiday weekend I think I'll post it on Monday. I agree with you that in a general, Fong would go after core Obama voters (students, independents under 50, well-off suburbanites).

    It's been a long time since eastern Iowa Republicans had one of their own running in a primary for statewide office. Will they move to Fong en masse while others split the western Iowa voters?

    His biggest challenge will be that the GOP primary-voter universe is relatively old. Can he convince them to support him now instead of in sometime in the future?

    My hunch is that Fong hurts Rants a lot more than he hurts Vander Plaats, because he will steal some of that business Republican support. Rants will probably go after him on tax issues.

    I wonder if Fong's entry makes it more or less likely for a central Iowa Republican (like Lamberti, or friend of Doug Gross) to hop in.

    Invite other Iowa political junkies to join us at Bleeding Heartland.


    [ Parent ]
    right (4.00 / 1)
    don't "waste" it over the holiday weekend.

    I listened to the Fong interview at Radio Iowa, which, by the way, is an outstanding site. I hope you address the following: how does this idea of 'needing a restoration' play in IA? I found it kweepy, but perhaps it's because I can't get away from association w/ Charles II and the restoration of monarchy/nobility, LOL. Fleshing out the "Iowa Dream" is potentially fascinating, but if it devolves into "tax cuts," well, Big Yawn.

    With respect to the GOP primary, some crude observations.

    Fong should be at least competitive in Pottawattamie and will go for vote share in the higher-income Woodbury precincts, leaving Rants/VP to fight over the rest of the Sioux City spoils. That's the two large population centers in the west.

    Let's assume the NW is VP territory. There's still an intangible. In my area at least, there is a serious Christian ministry effort (various denominations) focused on Asian-American immigrants. I would describe it as theologically conservative. Don't know the details on his family story, but the potential is there to present it as an affirmation of ministry efforts. If that's the case, don't discount the ability to peel off some votes in older conservative areas.

    The rest of the counties in the west and along the northern & southern tiers - you're talking sparsely populated, relatively speaking, over great distances. That's a lot of town halls for VP/Rants, with the additional annoyance of candidates floating around from places like Carroll or Lucas counties.

    Generally speaking, affirmation is core to Fong's message, the whole came back after tasting the supposed good life for no other reason than the love of Iowa. In my interaction w/ Iowans in and outside of the state, I have found affirmation to be very important. His challenge is not to get all drama queen about it.

    Crossing the experience barrier will be most challenging in greater Des Moines. There's not much yet to make a judgment on his poise/presentation skills. I expect the same Johnson County hat trick in Story.

    I think Linn is a lock for Fong unless he's a total dud.

    If VP's base is capped at that 31.7% in the '02 3-way, well, there's no polite way to put it, but some fraction is no longer with us. I just don't see how he expands his share based on pledging to fall on his sword during the first days of his administration. Honestly, I've already stuck a fork in him.

    Experience vs Change/Restoration. LOL, not this again!


    [ Parent ]
    came back for the love of Iowa (4.00 / 2)
    An appealing narrative indeed.

    I don't see a clear path for Rants, especially if several of his statehouse colleagues favor Fong or BVP. If I were Rants I would be incensed that Failor is going all-in for Fong.

    Other than his youth and alleged inexperience, I think Fong's biggest problem will be his position on taxes. Failor may be able to insulate him from this criticism, but a lot of Republican primary voters are not going to like hearing that Fong was for raising the sales tax and would end federal deductibility under certain conditions.

    If Fong wins the nomination, he will go for the change/restoration message, but Culver's nowhere near as unpopular as the Republican brand was in 2008. If Bush had not been so extremely disliked, I don't know if Americans would have rolled the dice on a candidate as inexperienced as Obama.

    Invite other Iowa political junkies to join us at Bleeding Heartland.


    [ Parent ]
    On Fong (0.00 / 0)
    Fong's bread and butter has to be the young professional 25-35 demographic, with 18-25 "GenIowa" as a secondary group. After all, it is the YP circle he moves in.

    It seems that Fong is having trouble initially convincing the base that he is a "real Republican". The party is so deep into this V for Vendetta type "strength through purity" thing right now that the fact that Fong gave a small amount of money to Tyler Olsen, Elesha Gayman and ActBlue makes him persona non grata. Krusty Konservative in particular hates his guts.

    Read the Iowa Republican on any given day, particularly the comments. It's a terrifying peek into the state of the Republican Party right now.


    [ Parent ]
    but those contribs (4.00 / 1)
    work in his favor in a GE. It's all about getting past the GOP primary, and I think he's going to be wrapped in a "only one who can beat Culver" package.
     

    [ Parent ]
    bingo (0.00 / 0)
    He's a post-partisan, willing to cross party lines to work with good people kind of guy. That will play well with Obama voters.

    Invite other Iowa political junkies to join us at Bleeding Heartland.

    [ Parent ]
    Rants (4.00 / 2)
    I don't have a clear picture on him yet, just a "low-info" gut feeling that his pit bull demeanor is not attractive.

    I tried to listen to his interview via the link at Price's site, but I gave up after 5 minutes of commercials. I even heard your rabbi hawking his internet show.

    Failor may be able to insulate him from this criticism

    I think the heavy-hitters will try to build the "only one who can beat Democrats" narrative for him.

    Win or lose, his entry is a win for the IA-GOP, even if only a party-building exercise with Gov Fong scheduled for 2014. That's not to say that they won't fight aggressively if they see a path for 2010, but laying the groundwork is a decent second prize.

    If Bush had not been so extremely disliked, I don't know if Americans would have rolled the dice on a candidate as inexperienced as Obama.

    See my response to American007 below ... yes, by next year, the smarty-pants brand may lose some of its luster.

    It's a very odd situation, but in a Culver-Fong matchup, Culver will be running against a post-partisan technocrat, but his field organization will be in the hands of the same. Silver lining -- good situation for unions getting some legislation through.



    [ Parent ]
    Failor and the brain trust (0.00 / 0)
    Supposedly, Fong is Failor's man now. It's doubtful that he'd run interference for Rants.

    As far as "brain trust" fatigue, I don't see that happening on the state level at least. Culver's public image is definitely more "big lug" than "big brain". I think a "best and brightest" candidate would do very well in 2010.


    [ Parent ]
    two things (4.00 / 2)
    1. I did a quickie back-of-the-envelope calculation of mortality in IA b/t 2002 -> projected to 2010 (*). The actual number will fall between 200K and 250K.

    2. To be fair, the budget shortfall June 2001 was only about 8 mill, so it was a lot easier not to hit a panic button.

    BTW, there was a special session 6/2001, but for redistricting, primarily.

    (*) IRL I'm all kinds of fun, really.


    [ Parent ]
    On Culver (4.00 / 1)
    I agree that a wait and see approach is prudent at the moment, but why is Culver so adamantly rejecting the non-partisan LSA numbers? I don't understand that part of his budget strategy.

    [ Parent ]
    yes, (4.00 / 1)
    why does Culver always act like he's under siege?

    Fact is, almost every state is facing similar problems. In MD, our numbers are worse, but it is viewed as a consequence of national conditions. Gov O'Malley is already talking about targeting cuts (unlike Culver, he can do this w/ the approval of the Public Works Board). It's not a matter of if, it's when.

    Unless Culver has specific knowledge of late receipts, he should not fall into this trap. I read a Business Week article yesterday that the latest UE figures indicate white collar losses. I would not put my money on a happy recovery around the corner. He should just put out his timetable for addressing the inevitable.

    I will say that a potential problem for Fong down the line is that by next year, people may be totally fed up with the 'best and the brightest' managing our affairs. It's the aloofness.


    [ Parent ]
    I agree with you (4.00 / 1)
    I think he's mainly trying to reject the Republican spin on the LSA numbers, but it comes across as trashing the work of this non-partisan agency.

    That said, there's a long tradition of presidents and governors ignoring CBO or LSA numbers they don't like.

    Invite other Iowa political junkies to join us at Bleeding Heartland.


    [ Parent ]
    by the way (0.00 / 0)
    Iowa's fiscal year has not changed.

    Invite other Iowa political junkies to join us at Bleeding Heartland.

    [ Parent ]
    Independent Interested in Fong (0.00 / 0)
    Hi gang,

    I read an article in the Waterloo Cedar Falls Courier about Fong - seems interested.

    As you know, I was a good Obama supporter but didn't vote for Harkin or Greenwald in the 4th because of their support of bailouts. Our country cannot afford all those bailouts.  Live or Die trying is my economic mantra.  We don't need to be propping up failing corporations.  Since when is the Democratic party the party of corporations?  

    That said, this Fong guy is interesting because he has a lot of Obama-like characteristics to him.  I think he's probably a little green (inexperienced) but I'm willing to give him a look.

    If I like him, I'll register as a Republican and vote for him in the primary and then go back to being an independent.


    deception does not become you (0.00 / 0)
    Come on, Bill. Your comment history at this blog shows consistent praise for Republicans and criticism of Democrats. You were never going to vote for Greenwald and were bashing her here months before the bailout votes.

    Not much of an "independent." But thanks for tipping us off that you'll be directing your troll energy toward showing that Fong can attract lots of independents.

    Invite other Iowa political junkies to join us at Bleeding Heartland.


    [ Parent ]
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