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How much of our money does state government really need?

Chronicle Guest View - In The Public Interest

May 7, 2014
By Deborah D. Thornton - Research Analyst- Public Interst Institutue , Toledo Chronicle, Tama News-Herald

The FY 2013 report on Iowa general fund revenues shows that government taxing and spending is at an all-time, record high, and keeps going up. The FY 2013 appropriations were $6.413 billion, up over $450 million from FY 2012. The budget has grown from $4.8 billion since 2005. This is an additional $1.5 billion per year of workers' money, their hard-earned, private-property, that they no longer control.

This has resulted in a "record" surplus of $927.9 million almost $1 billion more collected than is required. This is about $333 per person, or about $1,300 for a family of four. My family could have used that money last year.

According to the report, "From FY 2004 to FY 2013, General Fund appropriations increased $1.9 billion (from $4.5 billion to $6.4 billion), an average annual increase of 4.0 percent." Question: Has your salary increased four percent per year for the last 10 years? Mine hasn't.

The vast majority of our taxes went to the government schools $2.7 billion, followed by state employee salaries and benefits at $1.38 billion. The next highest category was Medicaid at just under a billion dollars.

School funding has increased at about 5 percent per year, though from the complaints from the Iowa City Community School District delegation (100 percent Democrats) one would think books are being taken right out of children's hands.

The greatest increase has been in Medicaid which went up 12 percent, even before Obamacare kicked in. Again Democrats take the position that people are being dragged from their doctor's office and pushed into the grave.

However, state government isn't actually spending all the money they take from us. The Cash Reserve Fund and Economic Emergency Fund (the "rainy day" funds) have both been completely replenished following the 2008-09 economic down-turn and now have a balance of $611 million. These funds are a necessary reserve and appropriate buffer.

In addition, the Legislature set up a Taxpayer Trust Fund in 2012. As the Revenue Report says, "created for the purpose of providing tax relief to Iowans from the surplus that exceeds the amount necessary to "fill up" the state's Cash Reserve and Economic Emergency Funds.the moneys to be used solely for tax relief." As of today the Taxpayer Trust Fund balance is $120 million. The important thing to know about this Trust Fund money is that you will not get it back. When you file your 2013 state taxes, you will be eligible for a "non-refundable" tax credit of about $54. You don't get a refund, only a credit.

Yet liberal organizations such as the Iowa Fiscal Partnership (IFP) do not think you should even get that. They recently lamented the fiscal irresponsibility of property tax cuts for small businesses and workers, and argued for additional spending, calling it a "budget dilemma." The only budget dilemma is how Iowa families are going to pay their bills with the money left after the government takes over $6 billion of it. The IFP, based at the University of Iowa, receives a substantial part of their staffing and funding fromstate and federal government.

We, the workers who are paying these taxes, need to continue to ask, "How much of our hard-earned money does state government really need?" My answer continues to be, "Not this much!"

Maybe if the government did not take private-property from businesses and workers in the first place, businesses could pay their workers more, workers could afford to buy and invest more, and none of us would need the government to "take care" of us.

The views expressed in this column are those of the author and not necessarily those of the Public Interest Institute. They are brought to you in the interest of a better informed citizenry.

Deborah D. Thornton is a research analyst for the Public Interest Institute at Mount Pleasant.



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