Taxpayer group gives state budget mixed reviews

DES MOINES – A nonpartisan taxpayer watchdog group Friday gave Iowa elected officials mixed reviews on the state's fiscal 2011 budget plan.

Ed Wallace, president of the Iowa Taxpayers Association, said the Democrat-controlled Legislature and Gov. Chet Culver made improvements in a number of areas, but violated three key principles of sound budgeting that likely will push tough decisions onto local elected officials that could result in higher property taxes.

The ITA took issue with legislative action that funded ongoing expenses with time-limited or one-time revenue sources topping $600 million, diverted money authorized for vertical infrastructure needs to other purposes, and “drastically” shifted costs to counties and schools by underfunding state commitments to local property-tax credits and K-12 education. The fiscal 2011 state budget also is projected to spend more money than is collected via tax revenue through next June 30, ITA officials said in their budget review.

“The Legislature's budget actions this year will negatively affect taxpayers,” Wallace said.

“While the Legislature deserves credit for a notable improvement in some areas of ITA's sound-budgeting principles, concerns still remain regarding the Legislature's refusal to abide by its own spending limitation, the use of one-time money for ongoing expenses and the shift of the tax burden to property taxpayers,” he said. “We're fairly certain that we're going to see some of these counties change their levy rates come 2011.”

Wallace commended lawmakers and Culver for avoiding the practice of implementing new programs for a partial fiscal year, avoiding multi-year accelerating spending commitments, and not establishing new automatic “standing” appropriations. State elected policy makers also worked to establish more accurate estimates of projected spending and revenue collections for the fiscal year that began July 1, he added.

Wallace acknowledged that some of the spending from infrastructure and reserve accounts was earmarked for disaster recovery in communities still rebuilding from the state's unprecedented 2008 weather-related destruction. But he said that the state could have avoided a $875 million bonding plan had lawmakers over multiple years not diverted money from the Rebuild Iowa Infrastructure Fund – including about $95 million in the current budget year.

The ITA review also criticized lawmakers for underfunding local property tax credits by about $55 million. Wallace said the state commitment to local governmental entities for the homestead tax credit was underfunded by nearly 36 percent and the ag land property tax credit was nearly 19 percent below the level demand to fully fund the relief.

“Counties are going to see less money from the state,” Wallace said. “If they want to maintain services, they're obviously going to have to presumably change their levies at the start of next year. It's our feeling that we kind of pushed the apple cart down the road with regard to property taxes.”

Reaction to the nonpartisan group's review quickly turned partisan, with Jeff Boeyink, manager of the Branstad/Reynolds campaign, saying the report mirrors former Gov. Terry Branstad's criticism of Culver's budget work and the need to re-establish state government on “sound fiscal footing” that is stable and predictable.

Ali Glisson, communications director for the Culver/Judge campaign, countered that Iowa is on track to end the fiscal year with a balanced state budget and about $500 million in surplus and reserves.

“It makes for a cute campaign tag line to rail against one-time funding, but it doesn't make for good budgeting practices,” said Glisson, who questioned whether Branstad would rather lay off teachers than use federal stimulus money or bank emergency reserves rather than help the state through economic downturns or rebound from historic flooding.

Senate Majority Leader Mike Gronstal, D-Council Bluffs, said majority Democrats approved a fiscal 2011 budget that was balanced without raising taxes, but did not “give up on Iowa's next generation” by maintaining commitments to education, renewable energy, job creation and disaster recovery.

The ITA review is available at the www.iowataxpayers.org Website.

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