This is the third week of the 2009 legislative session, and we are finally getting down to serious business. On Wednesday morning, Governor Culver released his budget recommendations for FY 2010. The Governor proposes a 6.5 percent budget cut, shifting $200 million from the Cash Reserve Fund (CRF), and no increases in income or sales taxes.
Unfortunately, this is the equivalent of putting a band-aid on a gun shot wound. Instead of proposing a 1.5 percent across the board (ATB) cut for FY 09, the Governor should have done a larger ATB cut, thus spreading the pain across two fiscal years.
Now he is proposing a 6.5 percent ATB cut in FY 10, which is like taking an axe to the mid section instead of taking a scalpel to trim the fat. And even the 6.5 percent cut is not enough. Not only does it require the Governor to use $200 million from the CRF to balance the budget, there is also a very good possibility that the March Revenue Estimating Conference (REC) estimates will come down by another $100 million. If that happens, a much bigger cut than the 6.5 percent will be necessary. Which means that his decisions to only cut 1.5 percent late last year and then cut 6.5 percent now are bad budgeting decisions.
Additionally, going into the cash reserves may be necessary, but it should be a last resort, not a first step.
There is also the issue of taxes. The Governor claims that his budget does not raise taxes. However, several of his budget actions will result in property tax increases. For instance, the Governor recommends cutting the funding for allowable growth from 4 percent to 2 percent. However, he wants to leave the spending authority at 4 percent, which will result in a shift to property taxes.
The Governor also cuts the funding for the property tax credits by $40 million, which under current law means a tax
increase for homeowners. Finally, the Governor cuts funding for county mental health programs, which will put more pressure on the state to allow property taxes to make up the difference.
The Governor and the Democrats have talked about wanting to do something about the state's high property tax rates, but the Governor's budget will make the system worse and increase taxes on property owners. When the Governor claims his budget doesn't raise taxes, he is not talking about property taxes.
In addition, the Governor cuts tax credits by $15 million and the research and activities credit by $13 million. This will increase taxes on Iowa businesses that depend on these credits to create jobs. I believe it is shortsighted to cut these incentives to create new jobs in Iowa at a time when the unemployment rate has increased.
The Governor has a reduction of $20 million for reorganization savings. He does not identify how the savings would be achieved but mentioned purchasing consolidation as a possible cost savings measure.
House Republicans will be closely examining the Governor's budget and will suggest savings by prioritizing spend ing, identifying wasteful or unnecessary spending.
One of the proposals that have been offered to address the budget problem in our state was unveiled in a press conference held by the Iowans for Tax Relief Organization and legislative Republicans. This proposal is the first of several proposals to improve your ability to understand and participate in the creation of the state's budget. One bill is the Iowa Taxpayer Transparency Act, which would require the state to develop a website that would allow you to get a list of where state tax dollars are going.
The inspiration for this is our new president. When he was still in the United States Senate, President Obama was part of a bipartisan coalition that pushed for the creation of a similar website at the federal level. They succeeded in bringing some sunshine to the federal budget process. The website is www.usaspending.gov . I want to thank the President for setting the example of what budget transparency should be like here in Iowa.
Another step was getting more specific information now, so we can make sound budget decisions for the next year. At the first meeting of the Ag & National Resources Appropriations Sub-Committee, I asked the departments covered by our committee to answer five questions.
1) How many new employees have been added since 2007, how much do those new positions cost, and how many are unfilled today;
2) How will each department implement Governor Culver's 1.5 percent across the board cut;
3) What were the departments' suggestions for potential cuts, which they submitted to the Governor before he decided to do the 1.5 percent across the board cut;
4) How would each department implement a 10 percent cut in the next budget year, which the Governor said was possible when he met with the Des Moines Register; and
5) What assets does each department have that can be leases or sold and what services do you provide that could be privatized or outsourced.
The answers to these questions will give legislators and Iowans a lot of ideas as to where we can find savings and efficiencies in our state government. When we get answers to these questions, you can be assured that you will get to see them.
The race to balance the budget and shine a little sunshine on the process is about to begin. Hopefully the people of Iowa can cross the finish line and claim victory.
I would appreciate your input. My phone number at the Capitol is 515-281-3221, or e-mail me at
I would welcome visitors at the Capitol, too!