|In his opening statement, State Representative Rod Roberts claimed state spending is at record levels, and "next year's budget gap is projected to be nearly a billion dollars." A few minutes later, former Governor Terry Branstad mentioned in his opening statement that Iowa has a "projected budget deficit of nearly a billion dollars for the next year."
These guys are working off the stump speeches they crafted months ago. In November 2009, the non-partisan Legislative Services Agency projected a large shortfall:
The budget statement shows 2011 appropriations are projected to exceed the expenditure limitation by $1.070 billion. The expenditure limitation is estimated at $5.396 billion and appropriations are estimated to total $6.466 billion.
Since then, state legislators convened for the 2010 session and adopted a budget for fiscal year 2011. On this page you can download pdf files with detailed information about the budget. The "general fund balance sheet" indicates that total funds available (expected revenues in fiscal year 2011) is about $5.46 billion. The legislature is not allowed to appropriate more than 99 percent of that figure, which would leave about $5.37 billion in available funds. In fact, legislators appropriated about $5.28 billion in general fund spending for fiscal year 2011, leaving a cushion of just under $92 million in case revenues fall below expectations.
Total spending in the 2011 budget is somewhat higher at $5.875 billion, but that does not represent any budget deficit. Iowa is receiving about $328 million in federal fiscal aid through the American Recovery and Reinvestment Act (better known as the 2009 stimulus), and legislators are drawing about $267 million from our state's reserve funds as well.
Even including the federal and reserve fund money, spending for the 2011 budget is well below what the Legislative Services Agency was projecting in November 2009, when Republicans came up with their "billion-dollar budget gap" talking points.
Three journalists were sitting there moderating the debate, but none of them asked Roberts and Branstad to explain why they are still talking about a billion dollar budget deficit when the Iowa Legislature has approved a balanced 2011 budget.
In all the debate recaps I've read this week, not one journalist has pointed out that facts do not support Republican rhetoric about a billion-dollar budget gap. Not Todd Dorman or Kathie Obradovich or Ed Tibbetts or Kay Henderson or Charlotte Eby or Jason Hancock. Branstad sat down with the Sioux City Journal editorial board after the debate, but no one appears to have pressed him on his budget assertions during that interview either. And he's the guy who really did keep two sets of books in order to run illegal deficits!
In a sense, you can't blame Branstad and Roberts for using outdated projections to give the false impression that Iowa has a budget deficit. Why shouldn't they, if no one in the media will call them on it? The truth is that independent observers at the Pew Center for the States consider Iowa among the states "least like California" in terms of fiscal problems. When Standard and Poor's reaffirmed last year that Iowa deserves the highest possible credit rating, analysts cited, among other things,
* Good fiscal management, with a demonstrated willingness to restrain spending and make midyear corrections to maintain fiscal integrity;
* Strong financial operations with "rainy day" reserves built up to statutorily mandated levels;
* Good income levels; and
* Very low debt burden.
Yes, "very low debt burden" even after the I-JOBS infrastructure bonding initiative had been approved.
Now, Republicans are bound to disagree with Democrats about appropriate levels of spending and taxation. Republicans don't like using "one-time federal money" to balance the state budget, even though supporting state budgets was one of the explicit goals of the stimulus bill. If state governments responded to the biggest revenue collapse in six decades with draconian budget cuts, the ripple effect would deepen the recession. It's also worth noting that most of the stimulus funds Iowa will receive during the 2011 fiscal year are in Medicaid. Would Republicans rather have declined those funds?
Some Republicans don't like pulling $267 million from our state's reserve funds to help balance the 2011 budget. Why even have a reserve fund if you don't draw on it in the aftermath of the longest recession since World War II and the steepest in terms of job losses? That's the whole point of a "rainy day" fund as far as I can tell.
Branstad and Roberts are entitled to opinions about the budget choices Governor Chet Culver and Democratic statehouse leaders made, but as the saying goes, they're not entitled to their own facts. There is no "billion-dollar gap" projected for 2011, or any budget deficit projected for 2011. If revenues come in too far below projections to be covered by the $92 million cushion built into the 2011 budget, mid-year spending cuts will be made, as they were in 2010. I hope we'll be able to avoid that outcome, but that's the reality.
I understand why journalists might feel reluctant to challenge Republican candidates during debates and interviews. They don't want to seem biased, and they don't want to burn bridges with someone who might be the next governor. Maybe journalists barely notice the chatter about the "billion-dollar budget gap"; when you've heard something a hundred times it can fade into the background. But the more voters hear "billion-dollar deficit" without any critique or follow-up, the more likely they are to believe something with no basis in fact.
Branstad, Roberts and Bob Vander Plaats will hold two more debates and many more public appearances and interviews before the June 8 primary. Here's hoping their false spin on state finances stops getting a free pass from the media.
I'll share other observations about Wednesday's debate in future posts. Any comments about the governor's race are welcome in this thread.