GOP spending cut plans begin to collide with reality

Iowa House Republican leaders rolled out their state budget cutting proposals yesterday. They plan to introduce the “Taxpayers First Act” immediately when the 2011 session begins next week. Rod Boshart covered the planned spending cuts here, repeating the House Republicans’ claim that the bill would “cut state spending by $114 million this year.” That figure doesn’t appear to correspond to the non-partisan Legislative Services Agency’s document spelling out how much each proposal would save in fiscal years 2011, 2012 and 2013. The first two pages of that document cover fiscal savings from proposals that would not require legislative action; the second two cover proposals that would require new legislation (and therefore support from the Democratic-controlled Iowa Senate as well as Governor-elect Terry Branstad’s signature). Click here to download that document as a pdf file.

If everything on the first two pages of the GOP wish list happens, general fund spending would actually increase by $23 million in the current budget year, while about $43 million would be saved from other state government funds, leading to net savings of around $19 million. Even if you assume everything on the second two pages also becomes law (very unlikely), at most $73 million would be saved from the fiscal 2011 budget. That’s way short of the “hundreds of millions” of dollars incoming Iowa House Speaker Kraig Paulsen promised Republicans would cut from the current-year budget.

What happened? The LSA analysis didn’t support the fantasy budget cut numbers House Republicans have been throwing around for ages. Six examples are after the jump.

I also cover some spending cuts that really would save about as much as Republicans have claimed, but in a penny-wise and pound-foolish way.

1. Republican lawmakers and gubernatorial candidates have long claimed the state could save more than $90 million by ending “direct benefits to adult illegal immigrants.” Bleeding Heartland explained here why that claim is false. The LSA also wasn’t buying the Republican spin, labeling the savings for that proposal “unknown.” A related GOP idea, “enforce residency requirements for all human services programs,” was judged to have “minimal” impact on the state budget in each of the next three years.

2. During the 2010 session, House Republicans suggested that $62 million could be saved by combining the administrative functions at the three regents universities. They got that number from an opinion column by Iowans for Tax Relief head Ed Failor, Jr., but it turns out he pulled it out of the air. The LSA analysts estimated that directing the Education Appropriations budget to “combine the administrative functions at the Regents universities to find efficiencies” would save nothing in the current budget year and only $6.2 million in each of the following two years.

3. The old Republican wish list included $18.5 million (or perhaps as much as $34 million) in savings from selling and privatizing the state vehicle fleet. The LSA estimated that banning “new vehicle purchases for general use” and creating “a new system for outsourcing the fleet and leasing vehicles” would save nothing in the current year and only $640,000 in fiscal year 2012.

4. Republicans have said $10.5 million could be saved by delaying implementation of the core curriculum one year. The LSA evaluated the latest Republican preference (eliminating the core curriculum and having the Education Committee set new standards as of July 1, 2011) and found it would save about $1.8 million in the current budget year, $3 million in fiscal year 2012 and $2 million in fiscal year 2013.

5. Republicans have said $6 million could be saved by canceling all sabbaticals at regents universities for one year. They stuck to that figure despite evidence suggesting sabbaticals cost well below $1 million while allowing faculty to bring in millions more in grants. The LSA considered the latest GOP proposal, canceling all regents university sabbaticals for 18 months. It would save nothing this year and less than $165,000 in fiscal year 2012.

6. In 2009, House Republicans called for saving $13.5 million by cutting in half the funding for library acquisitions at regents universities. The LSA analyzed the most current proposal, to “Reduce funding for Library material acquisitions at Regents by 50% of unencumbered appropriation,” and found it would save about $2.1 million in the current year, nothing in the following years.

Mind you, many of the Republican spending cut ideas would save money, especially in future budget years, but that doesn’t make them wise. For example,

1. Republicans would eliminate the voluntary preschool program for four-year-olds, saving nothing in the current year but nearly $70 million in fiscal year 2012 and $75 million in fiscal year 2013. They would enact a voucher system for “needy families” to get preschool, which is consistent with Branstad’s recent comments on the subject. Means-testing the preschool program could be a good compromise. However, defining the appropriate subsidy level will be tricky. Many middle-income families could not afford to pay the full cost of preschool for a four-year-old, which can easily run $500 to $100 per month. Pulling those kids out of the system could force many preschools to shut down. That will lead to a shortage of preschool spots even for families who qualify for the vouchers. Republicans should talk to some parents who tried to get their kids into Head Start a few years back. Before Democrats expanded the statewide voluntary preschool program, a lot of kids who qualified for Head Start in theory couldn’t get into a preschool.

2. Republicans would save $500,000 this year and $1 million in each of the next two budget years by eliminating the family planning waiver. I have my doubts about whether the Iowa Senate would approve that proposal, but if they did, think about the implications: the state would be making it more difficult for low-income Iowans to access birth control. That can only lead to more unintended pregnancies, leading to either more abortions or more children who would qualify for Medicaid and other benefits. How does that work out for conservatives who claim to be against abortion and government spending?

3. Republicans would save about $3 million by deappropriating money for an Amtrak depot and passenger rail. They would also save $8 million over the next two years by eliminating funding for a project to expand passenger rail from Iowa City with the Quad Cities However, that would cost our state about $81 million in federal funds allocated to that passenger rail project. There would also be a huge opportunity cost, because axing the Iowa City rail project eliminates any chance of passenger rail links continuing through Des Moines to the Council Bluffs/Omaha metro area. Business organizations such as the Greater Des Moines Partnership support expanded rail transportation options in Iowa. Their lobbyists have a tough job ahead during the legislative session. Getting Branstad on board would be helpful; he isn’t yet sold on passenger rail but hasn’t called for scrapping the project either.

4. Republicans would save $2.4 million this budget year and $6.7 million in each of the two subsequent fiscal years by eliminating all state-funded smoking cessation efforts. Those include Quitline Iowa and the Just Eliminate Lies advertising campaign, aimed particularly at preventing youth smoking. I haven’t seen Branstad comment on this idea, but he has talked extensively about the value of wellness programs. I find it hard to believe that a past president of a medical school would want to cut back smoking prevention efforts. Smoking is the number one preventable cause of early death in the country. Quitline gets about a thousand calls during the average month, and around 3,000 to 5,000 calls in January. About 20 percent of callers to the Quitline succeed in quitting smoking. If that program helps even a thousand people stop smoking over the course of a year, that could save millions of dollars in health care costs decades from now.

I would support a few of the GOP cost-saving ideas, like trimming the budgets of the Area Education Agencies and ditching the Grow Iowa Values Fund, which has mostly been glorified corporate welfare. Axing the Values Fund would save $18 million in the current year and about $37.6 million in subsequent years. I don’t think the Branstad administration will want to stop handing out money to corporations, however. That spending will probably continue under a different name.

Final note: Republicans want to force all state employees to pay a portion of their health insurance premiums, and have claimed $17.8 million could be saved by doing so. I’m not sure how that’s possible, since the largest state employee union just approved a new contract that keeps the current health insurance options. If Republicans get what they want, the LSA estimates that beginning in fiscal year 2012, this proposal could save $14.4 million from the general fund and $23.4 million from other funds.

JANUARY 5 UPDATE: It’s worth emphasizing that last year, as part of their myth-making about a nonexistent state “budget deficit”, Iowa Republicans endlessly talked up their so-called $300 million in proposed spending cuts. Most of the alleged savings were illusory, as the examples listed above demonstrate. Two groundless claims alone (halting “benefits” to undocumented immigrants and merging administrative functions at the three state universities) accounted for more than $150 million that Republicans wrongly asserted they could cut from the state budget.

I forgot to mention yesterday that House Republicans also proposed creating a Taxpayers First Fund to return surpluses to Iowa citizens. Todd Dorman notes,

The Taxpayers First Fund, Republicans contend, would return any budget surpluses to taxpayers. But we don’t know how that surplus will be calculated, especially with Gov. Terry Branstad pushing for two-year budget plans.

We also don’t know how it would be “returned.” Lawmakers said a surplus, for instance, could help with efforts to lower commercial property taxes. Branstad wants to cut corporate taxes, so perhaps it could be used for that. That raises a fairness issue. Should my excess sales/income taxes go to benefit other taxpayers? It sounds like a tax shift, but we’d love to see the final plan.

SECOND UPDATE: Meanwhile in Washington, DC, House Republicans acknowledge they won’t be able to “roll back government spending” by “at least $100 billion in the first year alone.”

THIRD UPDATE: Jason Clayworth posted more detail about the Republican plan for changing the family planning waiver:

BIRTH CONTROL: Scale back state money for covering birth control and other family-planning related services so that it covers only low-income Iowans, not moderate-income Iowans.

Under legislation approved last session in the Democrat-controlled Legislature, more men and women – with an income up to $66,000 for a family of four or $32,500 for a single Iowan – could get help paying for services.

Under the new Republican proposal, fewer Iowans would be eligible: Someone with a family of four would have to earn $29,300 or less, and a single person would have to make $14,400 or less. SAVINGS: $500,000 from the general fund for the current budget year; $1 million in each of the next two budget years.

A single person making more than $14,400 or a family of four earning more than $29,300 will now be considered “moderate-income”? That is a joke.  

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