Iowa Budget Is Trouble

iowa-state-map.jpgI am fortunate enough to live in District 60 of the Iowa House of Representatives, represented by Libby Jacobs, whom I have tremendous respect for. And who is a Conservative Republican.

Libby provides a Legislative Update (as do some other representatives) in the Des Moines Register’s “West Des Moines” section. This week she provided some excellent insights into the Governor’s Budget. Central to her presentation is the State Auditor’s (David Vaudt) Review of the budget recommendations.

According to Vaudt, the governor’s budget “maxes out” Iowa’s charge cards by draining the funds used for the past several years to balance the budget. These funds include the Senior Living Trust Fund, various tobacco-related funds, and the Property Tax Credit Fund. He noted that it is ironic that the governor is taking credit for repaying $183 million to the Senior Living Trust Fund, while at the same time admitting that he is draining the fund in his fiscal 2009 budget.

“The depletion of these funds in FY 09 creates a $193 million hole for FY 2010,” commented Vaudt. “The question taxpayers should be asking is – how does the governor propose to fill that hole?”

There’s more, which all boils down to this: we continue to spend more money than we’re taking in. If I do that at home, I dig a hole I can never get out of. We have been committed to a “balanced budget” in Iowa for years now, but we seem to always find ways to manipulate what that means by using various funds as sources of revenue. This year, we need to stop that. I don’t have a problem with the Rainy Day Fund, but we can’t continue to dip into the Senior Living Trust Fund, or other sources not properly stipulated by the State Budget Process, which states in part:

Estimated revenue receipts of the General Fund are primarily from sales tax, personal income tax, corporate income tax, and use tax, as well as other sources of tax and fee revenue.

David Yepsen, Political Columnist for the Des Moines Register, in a Jan 16, 2008 column on the Governor’s budget, said [Bolded italic emphasis is mine] :

Gov. Chet Culver’s proposed budget is like an open pop can that’s been left out overnight. It’s drinkable, but it has little fizz.

The good news is Culver protects the state’s cash reserves. Many on the left in his party are hot to spend that money. With economic storm clouds developing, Iowa may need those dollars in the future. He’s smart to resist the temptation to use them now.

But Culver still spends too much. After promising us he’d be frugal – and telling state agencies to hold their spending-increase requests to zero – he proposes a 6 percent increase in state spending. That’s on top of a 10 percent increase last year.
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(I guess after you’ve increased spending by 10 percent, holding yourself to 6 percent is frugal. I’d still like to meet working Iowans who are getting 6 percent pay raises this year.) Republicans are noting that over two years, state spending on Culver’s watch will increase about 20 percent, or $1 billion.

I’m glad we have the State Auditor to depend on in analyzing the impact on cash reserves. Regardless, Yepsen reaches the same conclusion as Jacobs and as I have: we must cut spending. In an email to Libby yesterday (as part of replying to a survey she sent to constituents – full content here) I answered a question on “Most Important Legislative Issue” (which included Education, Jobs/Economy, Health Care, Taxes and State Government Spending, Crime and Drugs, and Immigration) to which I replied “Taxes and State Government Spending”, and included the following comments:

In my opinion, we’ve got a reasonably solid economic situation across our great state. I believe that years of substantial economic growth and prosperity have led us to an unfortunate situation where things that we’ve been able to add to our lifestyles that are truly luxuries (cell phones, nice cars, homes, elegant dining, electronic toys, computers, HD TV) have become necessities in our minds. Now that we are experiencing less economic success, we need to do some belt-tightening at home, in our businesses, and in our governments. What’s great about this is that we can do more of what we should always have been doing: ensuring that what we spend money on are things we really need. With government, this should always be the case, but we’re not structured that way, and as a result, everything appears to be a non-negotiable.
State government spending (and laws that address local government spending) needs to be addressed. The following revenue streams should be considered last resorts for improving revenue:

  • Income Tax
  • Corporate Income Tax
  • Sales Tax
  • Bottle Deposit
  • Gasoline Tax
  • Utility Fees

Fees, licenses and taxes tied to luxury entertainment (including gaming) should be explored. Taxes and fees that impact the day-to-day needs of average Iowans should be left alone.
More importantly, spending needs to be addressed. Administration department budgets need to be examined carefully and cut. Consultants should NOT be used to do this work (or any work, for that matter). Contract services for short term efforts are fine, but hiring expensive consultants to do work that should be done by the people we’re already paying is unacceptable. Let’s appoint and hire the right people in the first place.

iowa-state-capital.jpgI’m not oblivious to the fact that we’ve had some downturns that have impacted the job market, corporate profitability, cost-of-living gaps, etc., but we also have a society that has become grossly addicted to discretionary spending habits which if brought under appropriate discipline, could help those who are struggling. And it’s not just “having cable” or “buying cigarettes”, it’s a lifestyle that goes far beyond those luxuries and expects to be able to eat out every other night, every child’s whim is a critical issue to solve, the largest TV we can afford needs to be purchased (this year is gonna be a pain for people that feel a need to replace their TV with the biggest HDTV they can afford because of the dropping of analog broadcasting) or every weekend at some entertainment destination. And worse than that, the addiction has always been alive at the legislative level, with entitlements driving areas that don’t necessarily deserve that level of treatment.

One area of discussion (based on Libby’s survey) appears to be increased spending in road/bridge repairs/upgrades. Libby’s question was “where should we increase taxes to pay for this” (options: gasoline tax, vehicle registrations, drivers license fee). I answered “gasoline tax”, but followed up with the question of “why are we needing to increase these expenses?”. I’m sure the answer is the bridge collapse in Minneapolis, and though I’m a big fan of safety, I see this as another opportunity for the Legislature to increase our tax burden in a manner that will creep up and never come back down.

My wife made an excellent point while she was reading Libby’s report today: what Culver is recommending will be a model for the US Congress to do the same thing… which they’ve done before, and probably are still doing now. We’ve seen it with the Social Security Fund, and I’m sure other funds are being manipulated to support the illusion that the budget is not as bad as it really is. We’ve had a lot of arguments in the past about how to account for revenue, and frankly this should be simple, but deception is never simple. If the business you work for ever tried to run their books like the Governments, they’d be shut down and people sent to jail.

I’ll end with this, and I want you to read this carefully. I think Libby is doing a great job, and representing our district with aplomb. I could just sit back and not say anything to Libby about it, and everyone who thinks she’s doing the right thing can just sit back and say “no problem, Libby’s got it under control”. Then the only feedback she would get is the negative, which, although I think she has the leadership skills to handle, could give her the impression that she’s not representing her constituents properly. Only if we all participate, whether we agree or disagree, does she get the message she needs to hear. Sure, the ballot box tells our representatives that they are doing “okay”, but more meaningful interaction with constituents can help bring clarity to what is needed both conceptually and specifically, and is more effective than a lot of complaining. Talk (or write) to your representatives at every level. Let them know they’re doing a good job, or not, and how you think about the issues in front of them.

Hat Tip: Des Moines Register.

About the Author

Mr. Smith is the Publisher of The Conservative Reader. He is Partner/Owner of Ambrosia Web Technology as well as a Systems Architect for Wells Fargo. Art hold a degree in Computer Science from Drake University in Des Moines, Iowa, and is a political blogger at the Des Moines Register. Art's views are purely his own and do not necessarily reflect the views of Wells Fargo.

 

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