Process is not the problem
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24 Hour Dorman
Ron Corbett is floating the wonkiest policy proposal I’ve heard so far in the 2018 race for governor.
As the Republican candidate for governor assailed Gov. Kim Reynolds’ budgetary management, the mayor of Cedar Rapids also took aim at the Revenue Estimating Conference. The conference is a three-member panel that forecasts how much revenue the state will take in through taxes. Lately, its predictions have been missing the mark. Corbett would tinker with its membership.
The REC is made up of designees appointed by the governor and the Legislature, who then appoint a third, private-sector member. Current membership includes Dave Roederer, director of the Department of Management, Holly Lyons, fiscal division director with the Legislative Services Agency, and David Underwood, a retired CFO from Mason City who has been on the REC for nearly 20 years.
The REC was created through a series of budget reforms enacted in the early 1990s. The Legislature holds the purse strings, but the REC sets the size of the purse. Each December, the panel estimates how much money it thinks the state will take in, and the Legislature and governor are bound to base their budget plans on that estimate.
REC estimates don’t get a lot of attention, unless the panel gets it wrong. Slicing overly optimistic estimates spawns budget trouble, spending cuts, depleted reserves and plenty of angst under the Golden Dome of Wisdom.
Last December, the REC lowered its estimate for Fiscal Year 2017, resulting in more than $100 million in midyear budget cuts. Then it lowered the estimate again in March by $105 million, forcing lawmakers to scoop from reserve funds. Now, it looks like those moves weren’t enough, as Reynolds faces the prospect of a $104 million shortfall when the books on fiscal 2017 close in September. A special legislative session might be needed.
Corbett pans Reynolds’ management. But he also is critical of the REC. He says it should be expanded to include more private sector members, from agriculture, manufacturing and other sectors.
“Not only are they getting it wrong, they don’t know why it’s wrong,” Corbett said during a speech last week.
Former Gov. Tom Vilsack, also famously wonky, leveled similar criticism of the REC amid budget woes 15 years ago. I guess it’s no surprise Corbett, a former House Speaker and chair of the budget-writing Appropriations Committee, also would want to pop the hood on the process.
But blaming the REC for lousy revenues seems about as useful as blaming weather forecasters for rain. REC members consult piles of economic data as they prepare forecasts. Lyons sent me an email listing the 21 sets of data she checks. Adding more perspectives might help, but the REC’s forecasts never will be 100 percent accurate. It’s always an educated guess.
And the process isn’t the issue. The REC didn’t approve the billions of dollars in tax cuts, exemptions and credits over the past two decades now sapping state revenues. The REC isn’t responsible for using temporary budget surpluses to fund ongoing obligations.
Candidates truly serious about fixing the budget need to get wonky on those issues.
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