Culver: Iowa budget balanced, no state tax hike

By James Q. Lynch

The Gazette

DES MOINES – Even as the state closes the books on the fiscal 2009 budget it appears the current budget year is shaping up to be a sequel.

The state balanced its fiscal 2009 $5.934 billion budget without raising taxes, Gov. Chet Culver announced Friday. It did require Culver to transfer $45.3 million from the state's Emergency Fund.

“In spite of the economic challenges brought on by the world-wide recession, and a projected shortfall for the fiscal year 2011 budget, Iowa not only has a balanced budget for fiscal year 2009 but a budget surplus of well over $450 million for the current fiscal year,” Culver said.

However, the governor already has warned department heads to be prepared for more budget cuts.

Culver's critics said it took more than his 1.5 percent across the board budget cut last fall and end-of-year transfer to make ends meet. Rep. Chris Rants, R-Sioux City, who wants the governor's job, charged Culver delayed about $30 million in corporate tax refunds that should have been paid in July, August and September.

“California at least had the courtesy to issue IOUs to taxpayers,” Rants said. “Iowa just kept their money. It's a really gimmicky, deplorable thing to do to small businesses that could have used that money to meet payroll of cash flow their businesses.”

And House Minority Leader Kraig Paulsen, R-Hiawatha, said the governor's use of the Emergency Fund was not only “irresponsible, but also puts Iowa's economic future for fiscal 2010 and 2011 in further turmoil.”

Senate Minority Whip Steve Kettering, R-Lake View, said Culver and majority Democrats “forgot about teachers and flood victims by choosing not to couple with federal income tax law. Apparently, the Governor forgot about them again today when he claimed he balanced the budget without raising taxes” by shifting funds to pay for the largest budget in state history.

They're simply wrong, Culver spokesman Phil Roeder said. The $30 million Rants referred to relates to corporate tax refunds that were not in the state system to be processed until after Sept. 1 and have nothing to do with the fiscal 2009 budget, he said.

State refunds are $43.9 million above the Revenue Estimating Conference (REC) projections and, Roeder said, “more refunds were issued sooner – not later – during 2009.”

The Culver administration expected it would have to transfer the full $50 million that governors are authorized by Iowa law to shift if necessary to balance budgets at the end of the fiscal year.

“I think that speaks well of keeping the fiscal house in order,” he said.

Based on projections by the REC and the Legislative Fiscal Bureau, there was speculation the Legislature would have to return to make budget adjustments before the books were closed on 2009. Culver insisted that wouldn't be necessary.

“We were always confident in the ability to balance the budget because we were dealing in real number, not estimates,” Roeder said. “That's not to say it was easy.”

Apparently, the same is true this year's $5.755 billion budget. Department heads have been put on notice that cuts could be coming again.

At a recent meeting of the Board of Corrections, a staffer said the department was bracing for a 3 percent to 5 percent budget cut in the current year, which ends June 30.

“We've certainly let our departments know they do need to be prepared for some degree of a budget cut,” Roeder said. As for an exact amount, that won't be known until after the next REC meeting, Oct. 7. “If the revenue estimates decline, the governor will very quickly decide what cuts to make.”

Culver hasn't decided whether he'll make across-the-board cuts again, Roeder said, but acknowledged “that's the option most readily available to the governor.”

That approach seemed fairest at the time, he said, and the state was able to restore some funding for public safety and use federal stimulus dollars to support education and Medicaid spending.