State should put surplus to work for Iowans
By The Des Moines Register
When the economy was in trouble and Iowans were losing jobs, families knew what they had to do: Search for another source of income and spend less money. That may have meant getting a part-time job, putting off a roof repair or suspending savings for retirement. When Iowa lawmakers were facing budget deficits during the same years, they did nothing to bring in more revenue, but they did cut spending. That resulted in fewer state workers and a reduction in the services Iowans depend on.
Now that the economy is improving, families with extra money might finally repair that leaking roof or get the eyeglasses they couldn’t afford last year. Some will save money for the future. A family would not hand any extra money back to their employer. Yet this is exactly what some lawmakers want to do now that the state has an $800 million budget surplus.
Legislative Republicans have proposed using hundreds of millions of “extra” dollars to give Iowans a one-time tax refund.
The credit amounts to $375 for individuals or $750 for couples who file taxes jointly. House Republicans are so eager to get rid of the money, they rolled out the plan in House File 1, the very first bill they introduced this year. Senate Republicans are working on an identical bill.
While we understand the sentiment behind these proposals, they should not be pursued.
Iowans wouldn’t see the money for a year, when they file their returns for the 2013 calendar year. A bump in the size of their tax refunds isn’t going to stimulate the economy. The proposal unnecessarily drains the state treasury at the very time Iowa needs to restore some vital government services that have been pruned away in recent years.
Anyone who has arrived at a court clerk’s office only to find the doors locked or thought about taking their own lawnmower to a favorite state park knows this. A family trying to pay for college at a state university could give some advice to lawmakers about how to put $800 million to use for the public good. So could a boater who refuses to swim in this state’s filthy lakes or rivers.
Lawmakers often talk about job creation. If they want to use the surplus for that purpose, they should listen to Iowa State University economist David Swenson. The government directly spending $780 million would create 2,000 more jobs than giving Iowans each a few hundred bucks and hoping they spend it. Or lawmakers could invest in recreation, which studies have shown also stimulates the economy.
And if lawmakers don’t want to spend the money, another option is to save it. With uncertainty over the economy and the federal budget, our elected officials should have the foresight to realize the state just might need a few million extra dollars next year.
A family whose finances improved might pay off debt, insulate the attic or save more for a rainy day. They know there are problems to take care of and a future to think about. State lawmakers should be so wise.