A review of the budget that was released last week shows we spend more than we take in. In addition to General Fund appropriations of $5.32 billion, the Governor’s budget uses $488 million in one-time money to meet his total budget proposal of $5.71 billion-which includes:
$207 million from the Cash Reserve Fund
$37.7 million from the Senior Living Trust
$48 million of stimulus money for education and general purpose
$94.2 million in stimulus monies for Medicaid expenditures
It appears that the budget will raise taxes. The Governor proposes to increase K-12 education funding at 2% allowable growth this coming year, using $233 million from the General Fund and $100 million from the Cash Reserve Fund. The Legislative Service Agency (LSA) says the 2% allowable growth will cost $514 million. Where is the Governor going to find the $170 million difference? This would be left up to the school districts to either fund the remaining state share with their reserves or raise property taxes. If we take into account the Governor’s 10% across the board cut this last fall, property taxes for schools could rise by $270 million this tax year.
Property taxes could also increase because the Governor funds the property tax credits below last year’s level. If we were to fund the Highway Patrol from the Road Use Tax Fund, as he proposes, this could also push up local property taxes because of reduced funds to maintain our rural roads and local streets.
Because of the use of one-time funds, our “road” will have a bigger hole to fill next year. The stimulus money from the Feds will be gone. Our Senior Living Trust fund will no longer exist. Our cash reserves, once 10% of our budget, will be dangerously low.
Yesterday, LSA met the House Appropriations Committee, which I serve on. Their message was dauntingly clear. With the Governor’s use of $488 million of one-time monies in this year’s budget, (as of today), the Legislature next year will face a shortfall of this amount. Add to it Allowable Growth for K-12 school and the shortfall could approach $1 billion. This is the reason I am pledging not to vote for a budget that spends more than it receives in revenue.
The Governor responds by plugging in $341 million in re-organization savings that have been recommended by out-of-state consultants hired to come up with savings proposals. This week we got the bad news. The Governor’s Re-Organization Bill actually saves only $75 million, according to LSA, rather than $371 million. Much of the savings are in other areas, so they do nothing to help the General Fund.
This budget could potentially have a “black hole” that could amount to hundreds of millions of dollars. As the ancient story by Hans Christian Anderson says, “The Emperor has no clothes.”
In the weeks ahead, this Legislature is going to have to balance this state budget, either by raising taxes or reducing spending and creating a smaller government that can be sustained by our citizens who are struggling to make ends meet.
Government Reorganization Bill
Senate File 2088 is the State Government Reorganization Bill. To increase the savings in the bill, House Republicans offered 14 ideas that will save taxpayers $290 million in general fund dollars:
1) Eliminate Power Fund and Office of Energy Independence - $25 million
2) Eliminate the RIO office, give responsibilities to Homeland Security — $1 mil
3) Eliminate taxpayer-funded lobbyists — $4 million
4) Cancel all Regents sabbaticals for FY 2011 - $6 million
5) End all state benefits to illegal immigrant adults — $92.3 million
6) Shift voluntary preschool responsibilities to Empowerment — $45 million
7) Combine administrative functions at Regents universities — $62 million
8) Eliminate funding for empty shelter care beds — $2 million
9) Delay implementation of core curriculum for one year — $10.5 million
10) Eliminate the family planning waiver - $2 million
11) Sell and completely privatize the state vehicle fleet - $18 million
12) Sell or lease the Iowa Communications Network — $15 million
13) Cut funding office supplies, service contracts, equipment purchases – $5 million
14) Eliminate the Just Eliminate Lies (JEL) program — $2.25 million
Please don’t hesitate to contact me during the interim. I can be reached at 641-634-2227, or email@example.com
State Rep. Betty De Boef
Fact BoxQuestion of the week: One of the things being pushed this year is a mandate requiring all diesel fuel sold in Iowa to be 5% bio-diesel. Would you support this idea?