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Annual budgets best for economic growth

April 29, 2011
By State Senator Tom Rielly (D-Oskaloosa)
Right now in the Legislature, we should be finishing work on effective ways to create jobs in Iowa. We should be ironing out the last details on legislation to help our small and Main Street businesses grow. We should be crafting a compromise so that our local schools aren’t put on a starvation diet that will hurt student achievement and teacher quality.

Instead, Governor Branstad has created gridlock by insisting on a two-year budget.

In an effort to extend an olive branch, Senate Democrats are working on two-year budgets that fully fund the first year and provide half that amount for the second year. That way we can take state government off autopilot and require every program to justify itself each year. This approach provides time for the Governor’s new department heads and many new legislators to carefully review Iowa’s state budget line by line.

I believe that’s a compromise Iowans can live with, but the Governor does not see it that way, and he’s unwilling to negotiate.

I’m worried that the same Governor who has been criticized for keeping “two sets of books” is now making up numbers when it comes to the state budget.

Currently, our state budget is based on nonpartisan estimates of state revenue. These estimates are relatively good, but thanks to the great work of Senator Herman Quirmbach of Ames, and economics professor at Iowa State University, and other Senate Democrats, a review of budget forecasting revealed some evidence that two-year budgeting is a slippery slope that could cost Iowans in the long run.

Based on a review of actual numbers from fiscal years 1999 through 2011, six-month forecasting produced a 2.9 percent error factor, and 18-month forecasting produced a 5.6 percent error factor. Can you imagine how far off the Governor will be if he gets his 30-month forecast?

Let’s face it, the farther out you estimate, less accurate you are. The basis of Governor Branstad’s estimates for the second year of state revenue are unknown.

By insisting on two-year budgets based on shaky predictions, the Governor risks repeating the mistakes made the first time he was in office. Based on this evidence, I’m even more skeptical about moving to a two-year budget. We should pass a one-year budget and continue with working to create more jobs.

From the first day of this session, I’ve focused on jobs. That’s the best way to make sure Iowa continues to recover from the national recession.

In the Iowa Senate, we created a jobs package to jumpstart our economy by putting small business owners, workers and communities first. Every part has been approved by the Iowa Senate, often by large, bipartisan majorities. I’m now working to convince the Iowa House and Governor Branstad to join the Senate in our job creation efforts.

And here’s the first good news on that front: Senate File 209, legislation that provides a tax break to 240,000 Iowa families, creates economic activity in every Iowa community and encourages immediate business investment in Iowa, has gone to the Governor for his signature.

The remaining pieces of the Senate’s jobs package still await action in the House. Please contact your legislators and Governor Branstad and urge them to expand the tools that will encourage economic growth and job creation.





To contact Senator Rielly during the week, call the Senate Switchboard at 515-281-3371. Otherwise he can be reached at home at 641-673-5878. E-mail him at tom.rielly@legis.iowa.gov.



Senator Rielly is chair of the Transportation Committee and vice-chair of the Commerce Committee. He also serves on the Agriculture, Economic Growth, and Local Government committees.











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