# Iowa REC



Lower revenue projections to prompt more spending cuts

Three days after he announced plans to cut $40 million from the current-year budget and delay a planned expenditure of $37 billion, Governor Chet Culver said on Friday that he will announce a further $60 million in spending cuts next week. The total state budget for the current fiscal year is $6.1 billion.

Iowa’s Revenue Estimating Conference met the same day and “lowered this fiscal year’s revenue estimate by $99.5 million and next year’s estimate by $132.6 million.”

Iowa House Republican leader Kraig Paulsen slammed Democrats in a statement:

Democrats have put this state in a precarious position […] At a time when the national economy was on it’s way down, Democrats increased state spending by over $2,000 per family, over the span of two years they’ve hired more than 2600 new state employees, and loaded up budgets with pork projects for their preferred constituents. The only thing they have left to show for it is a gaping hole in the budget.

Give me a break. The Republican Party long ago stopped being the party of fiscal responsibility. John McCain himself admitted this:

We lost the election in 2006 because we lost our way. […] Spending lurched completely out of control.

Anyway, the New York Times reported last month,

At least 37 states and the District of Columbia have faced or are facing budget gaps totaling $66 billion in the 2009 fiscal year. Most states, which rely on sales, income and property taxes, are seeing a significant drop in such revenues or increases that are below the inflation rate, compared to the same period last year.

Click here to view a graphic showing which states have budget problems. If you look at that map, you can see that many states’ projected budget shortfalls are larger per capita than Iowa’s. This is a tough economy, and not only for states run by Democrats.

Meanwhile, House Speaker Pat Murphy promised,

We will take action in January to keep the 2009 budget balanced. There will be difficult decisions to make, but we will not balance the state budget on the backs of middle class families in these difficult times.

House Majority Leader Kevin McCarthy commented,

We have over $620 million in the state’s rainy day funds and we have a Governor and state legislature that are committed to fiscal discipline.

Yet, we need to be prepared for real cuts in budgets for both 2009 and 2010.  There will be real cuts and there will be real pain, but I do believe that Iowa is in a better position to weather this budget storm than almost any other state.  

Jason Hancock’s piece about the various budget projections for Iowa is worth a read. The most pessimistic scenario is quite grim.

Very tough choices will have to be made during the legislative session. I wouldn’t expect the return of much, if any, of the state money that was “swept” from other programs last summer to pay for flood relief.

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