Iowa auditor: State’s finances in good health, but surplus dwindling

DES MOINES - Iowa is in good fiscal health, the state's auditor said Monday.

But Mary Mosiman also cautioned lawmakers to put a pause on new expensive, multi-year programs like the 2013 education reform and commercial property tax cuts that have depleted the state's budget surplus.

Mosiman delivered her annual audit of the state budget on Monday. She said good budgeting principles have helped keep the state's reserve accounts full and state spending within available resources.

When asked by reporters for a grade rating of the state budget, Mosiman offered a B+.

'This year's budget is stable, and it is responsible,” Mosiman said. 'We have ongoing challenges and opportunities in Iowa's fiscal forecast, as we always do.”

Among those challenges are the ever-increasing cost of educating Iowa's children and providing health care for older and lower-income residents.

According to Mosiman, education and health care spending chews up three-fourths of state dollars budgeting for the fiscal year that starts Friday. In fiscal 1995, those were just less than half of the state budget.

Mosiman also noted that although lawmakers and the governor have spent state revenue responsibly, the state's budget surplus in two years has fallen from more than $400 million to $80 million. Mosiman said that decline largely has been because of the state's commercial property tax cuts and education reform, both passed in 2013.

The state has reimbursed local governments for revenue lost from the commercial property tax cuts, costing the state $136 million in fiscal 2015, $253 million in fiscal 2016 and $280 million in fiscal 2017.

The education reform package cost the state $50 million in 2015, $100 million in 2016 and $150 million in 2017.

Mosiman said that with the state budget surplus almost completely spent, it would be 'challenging” to enter into any new multi-year programs.

'I would think additional laws that add significant multi-year accelerated financial commitments would be challenging until our revenues rebound again,” Mosiman said.

The state budgeted $8.574 billion for the coming fiscal year, $200,000 less than was legally permitted, according to Mosiman's analysis.

Mosiman also noted more than $5.4 million in misspent funds found as the result of state audits in this past fiscal year.

The most egregious examples were $1.9 million diverted to the personal account of an orthopedic specialist at the University of Iowa, $1.6 million in misspent funds by the state's Sixth Judicial District and nearly $1 million in erroneous unemployment benefits payments made by Iowa Workforce Development due to a telephone system malfunction, scammers and overpayments.