No special session, but big budget challenges remain
There will be no special legislative session needed to clean up an unbalanced 2017 state budget. The pool of red ink remaining as the books close turns out to be small enough that Gov. Kim Reynolds can sponge it up with a $13 million transfer from reserve funds.
A larger deficit would have pushed Reynolds to call the Republican-controlled Legislature back to the Statehouse. Not calling lawmakers back to further tinker with budget, and perhaps other issues, is probably good news.
Democrats and Reynolds’ Republican primary opponent, Cedar Rapids Mayor Ron Corbett, are questioning what sort of budgetary magic was used to turn what looked like a $104 million deficit in July and a $75 million shortfall just weeks ago into a much smaller problem Rey-nolds could handle on her own. Reynolds’ budget team insists revenues due in the 2017 budget year that ended June 30 but arriving later erased much of the shortfall.
Cooked books, skilled fiscal management or good luck? The debate continues.
What’s certain is the state had to borrow a grand total of $141 million from reserves to balance its 2017 budget. That’s on the heels of $118 million in midyear budget cuts spawned by slower-than-expected tax revenue growth. And the 2018 budget includes damaging cuts in key areas such as natural resources, human services and education.
We still don’t know how much Iowa’s privatized Medicaid program will cost as negotiations continue with managed care firms behind closed doors. But we do know Reynolds has embraced a new Republican-backed Obamacare repeal drive in the U.S. Senate that potentially could slice federal Medicaid funding to Iowa and dozens of other states.
How Iowa would afford such a change is a mystery, but cutting health coverage for tens of thousands of Iowans is a distinct possibility.
Reynolds has talked of tax reform, but has yet to explain what that would mean. It should include an effort to weed out some of the billions in tax cuts, exemptions and breaks bestowed on various special interests over the past two decades, sapping revenues, even in decent economic times, with scant proof of benefits. But the Reynolds administration’s use of more tax breaks to lure an Apple server farm suggests the giveaway culture remains alive and well.
So one budget has been balanced using the state’s credit card. The current budget, which fails to adequately fund key priorities, still could slide into red ink. The fiscal future, burdened by the growing weight of tax gifts and clouded by the murky politics of health care, is uncertain. Avoiding a special session is welcome, but it’s no reason to celebrate.
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