How to finance Iowa's massive flood costs

There seem to be two distinct ideas emerging for financing the massive reconstruction project Iowa will have to enact to deal with the tragic and disastrous floods we’ve experienced this spring (on a quick side note, I sure hope that summer fares us better).  The first is to tap into the state’s so-called “rainy day” fund (no pun was intended, I’m sure) and the other is to borrow money and essentially create debt.  Both are the logical responses to a natural disaster of this magnitude.  I think it was a Johnson County emergency management official who said this was “our own Katrina.”  Whether he meant that in terms of sheer destruction or bad planning or reactions to the event, I’m not sure.  But the statement still leaves an impact.

Once we get beyond the human and emotional costs of the flooding, we will ultimately have to deal with the political ramifications of financing the reconstruction.  Governor Culver seems to prefer using the state’s rainy day fund.  Senate Majority Leader Gronstal says he’s open to incurring debt.  So what are we to do?

At first glance, Gov. Culver’s idea would seem to the most politically feasible and publicly attractive option on the table.  The state and taxpayers won’t have to incur debt or use their taxes to pay off the bills because they’ll just use the extra money they have right now to reconstruct Iowa.  But I think there should be serious consideration of incurring debt to finance the reconstruction.

To me, the root of the problem is whether we want to rebuild or reconstruct what has been destroyed.  Those mean different things.  Rebuilding implies we’ll bring things back to the status quo, maybe with some minor improvements.  Reconstruction implies a step forward and desire to plan and implement improvements and to change the way we do things.  Iowa needs the investment in the future and needs to show that the state has the ability and capability to plan effectively, plan efficiently, and act with speed to solve problems and fix what has broken.

Incurring debt isn’t such a bad thing, as David Yepsen told us yesterday.  There are reasons to consider it.  Tapping into the rainy day fund isn’t a bad idea either.  But will either one be enough?

The special legislative session to deal with this issue is going to happen; it has to.  But the debate will be a lengthy one.  And it will result in tough decisions.  Contrary to what others argue, waiting to see what the federal government will pay for is not an option.  If this truly is “our Katrina” then we all know that federal disaster response is horrid.  The state must act soon.

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  • good to see you!

    What are you up to this summer?

    I can’t imagine that the rainy day fund would be sufficient. I see no way around going into debt to rebuild our infrastructure.

    • Job searching

      I’ve spent the last few months prepping for graduation and trying to find a good job…as well as getting engaged and relocating to West Des Moines.  So far, no luck on the job front.  Getting back to blogging seemed like a fun thing to do for now.

      And you’re right about the lack of money.  $600 million simply won’t be able to pay for all of the reconstruction costs…we’re going to have to look at debt.