ChetChase Reality Check - Property Taxes

So Gov. Chet Culver is a big 'ol property tax raiser.

That's the shocking, shocking assertion coming from the Branstad campaign, backed up with real numbers from the non-partisan Legislative Services Agency.

I really meant to get to this last week. Extra work and the holiday intervened. But clearly, this is a charge we're going to hear over and over again throughout the campaign. So let's have a look.

First, the numbers:

The Department of Management has finalized the FY 2011 Schoolaid amounts. The General Assembly capped the FY 2011 State schoolaid appropriation at $2,499.2 million in HF 2531 (FY 2011 Standing Appropriations Act). Based on the Department of Management's official schoolaid amounts, capping the State school aid amount resulted in a State aid shortfall totaling $156.1 million (theadditionalState aid amount needed to fully fund an allowable growth rate of 2.0%). Despite the State aid shortfall, school districts maintain spending authority on the shortfall amount and have authority to spend those funds...

Total General Fund Levy: School district general fund levies totaled $1,646.6 million in FY 2011, an increase of $133.3 million (8.8%) compared to FY 2010. The statewide average general fund levy rate (expressed in $1,000 of taxable valuation) in FY 2011 is $13.1313, an increase of $0.5335 (4.2%) compared to FY 2010. The school district general fund levy consists of the uniform levy, the additional levy, the instructional support levy, the educational improvement levy, and the cash reserve levy.

• Cash Reserve Levy: School district cash reserve levies totaled $297.6 million in FY 2011, an increase of $104.2 million (53.9%) compared to FY 2010. The statewide average cash reserve levy rate in FY 2011 is $2.3732, an increase of $0.7634 (47.4%) compared to FY 2010. Cash reserve levies likely increased significantly due to State aid reductions in FY 2009 and FY 2010 and anticipation of a State aid shortfall for FY 2011. The cash reserve levy is included in the school district general fund levy.

I know, a lot to swallow. Basically, the state shorted school aid by$156 million due to plunging state revenues. But schools still kept the authority to create budgets based on what the state originally promised. Districts covered some of the state funding gap by raising local property taxes by $133.3 million. Lawmakers urged them to use reserves. Schools did, and then hiked the reserve levy to replenish them.

It's sort of budget whack-a-mole. Smack state aid and property taxes pop up.

Speaking of whacking, here's Branstad's take:

“Governor Culver's reckless and irresponsible management have amounted to massive property tax increases on Iowa's property owners. He ignored repeated warnings, claiming nothing was wrong. Now, taxpayers are forced to pay for his mismanagement, to the tune of hundreds of millions of dollars in higher property taxes.

“Iowa needs a government that is again as good as its people, not the steady drumbeat of mismanagement currently coming out of the governor's office.”

I have no problem with Branstad criticizing Culver for ignoring warnings that we had trouble ahead, trouble behind. `What me worry?' was the administration's official budget policy until the bottom finally fell out.

If he had headed those warnings, and pulled back the reins on spending even slightly before the economy tanked, the blow to schools may have been milder. And Culver refused to call back lawmakers in the fall of 2009 to craft a a more thoughtful response to the budget crisis. Instead, he pulled out a hatchet and cut 10 percent across the board.

Thankfully, he had tens of millions of federal stimulus dollars to blunt the impact of cuts. And there are signs the worst may be over.

But Culver can be fairly criticized for what happened on his watch, and while Democrats control the Statehouse. Sprinkle that with some embarassing lapses in oversight, film office, Alcoholic Beverages Division etc., and you got an incumbent in trouble.

But would this property tax picture be vastly different if Republicans were in charge? The evidence suggests not so much.

School aid was cut in a similar fashion when Republicans controlled the Iowa House and Senate, resulting in property tax increases. It's true Democrat Tom Vilsack was in office and signed across-the-board cuts, but certainly the GOP-led, purse-strings-holding Legislature shares responsibility.

Also from the non-partisan Legislative Services Agency:

FY 2002: The Governor ordered a 4.3% General Fund across-the-board reduction that reduced State school aid by approximately $77.5 million in FY 2002. Despite the reduction, school districts maintained the spending authority.

FY 2003: The General Assembly capped the State aid appropriation at $1,784.1 million resulting in a State aid shortfall of approximately $13.5 million for FY 2003. School districts maintained spending authority on the shortfall.

FY 2004: The Governor ordered a 2.5% General Fund across-the-board reduction and later restored 10.0% of that reduction (result was a 2.25% across-the-board reduction for FY 2004). State school aid was reduced by approximately $40.0 million as a result of the reduction, but school districts maintained spending authority on the reduced amount.

The cash reserve levy had a relatively large increase in FY 2003 (35.0%) which may have been a result of the FY 2002 across-the-board reduction. The following fiscal years (FY 2004 – FY 2006) did not have large increases (ranged from 1.4% to 3.2%). There are many reasons that school districts levy for cash reserve and it is difficult to specify with certainty a reason for annual changes in the levy amount.

It's also worth noting that in 2003, the GOP Legislature balanced the state budget, in part, by cutting aid to local governments by $60 million. I suspect that had a property tax impact.

And what was it that happened in the 1990s that contributed to the budget problems faced by Vilsack and legislative Republicans? Oh yeah, it was the $300 million income tax cut and $400 million in spending increases approved by folks who figured a big budget surplus would last forever and the economy would never turn sour ever again.

Who was governor when that happened? Terry Branstad.

So here's your choice, folks. The Democrat who spent too much and then had to cut too much when times got tough, leading to property tax increases, or the Republican who cut taxes a lot and still spent too much and laid the ground work for big cuts and property tax increases when times got tough?

Take your pick.

The bigger problem is that neither one of these guys has given us any sign that they're willing to have a serious,  fundamental conversation about what government should and shouldn't be doing.

When I asked Republican candidates at a May debate what they think government should stop doing in the interest of budget savings, Branstad said he's stop funding groups that provide abortions and look at slicing AEAs. Not exactly blockbusters in a $6 billion budget. He also signed onto the dubious estimates of how much the state would save by catching illegal immigrants who get state services, many of which are required by federal law.

Branstad has reform ideas, but they're hardly new and I'm skeptical they'd do much good.

 He'd do two-year budgets. That sounds great.

But unless he's willing to bar lawmakers from meeting in even-numbered, off-budget  years, (his plan doesn't) and give up an Iowa governor's vast authority to move tens of millions of dollars around without legislative approval, a two-year budget is as vulnerable and changeable as an annual one.

Branstad also wants five-year state financial plans. Swell.

But how valuable would a 5-year plan crafted in, say, 2007 be today, after a recession, natural disasters, etc.? It's tough enough to guess what tax revenues will do in the next six months. So other than maybe propping up a short-legged couch, I'm not sure what a five-year plan would do.

Culver touts his own consultant-crafted government reorganization plan that did result in significant short-term savings, but I'd argue it did not fundamentally alter what government does in the long run. And he was forced to make changes only after the budget tanked.

I'm looking for a little political courage. Adult supervision, maybe.  

I'd like to see Culver stand up and say, "I feel we truly need preschool for four-year olds. And to make sure we can afford it, I'm willing to sacrifice the Iowa Power Fund. I know, the Power Fund was a big priority for me, but preschool is more important right now and I think we can promote renewable energy in other ways. It's not easy, but sacrifices are in order."

I've got nothing against the Iowa Power Fund. But government can't do everything.

Maybe Branstad says, "I want  commercial property tax reform, but in exchange, I'm willing to accept fundamental changes in the structure of local governments. It may be politically smart to cling to expensive, outdated traditions, but it's not in the best interest of the state. So here's my plan, and I'm sending my running mate, a former county official, around the state to help me sell it."

But that's not what's going to happen.

Instead, we have every reason to expect that these guys will continue the faith-based, binge-and-purge budgeting. Spend in good times. Spin in bad times. Repeat.