Iowa lawmaker wants budget special audit

DES MOINES - The top Democrat on an Iowa House budget panel Tuesday asked State Auditor Mary Mosiman to conduct a special audit to assure taxpayers that no 'shell games” were used in calculating the final balance sheet on the state's fiscal 2017 budget.

That final balance sheet showed a shortfall as expected, but one small enough to avoid the need for a special legislative session.

Rep. Chris Hall, D-Sioux City, ranking member of the House Appropriations Committee, wrote the Republican state auditor seeking a special review of the closing of the 2017 fiscal year, citing a section of state law providing for such a request.

Hall's letter came less than a week after officials in Gov. Kim Reynolds' administration said the state closed the books on the fiscal 2017 budget year with a $14.6 million shortfall that would be balanced by using a $1.6 million projected ending balance and borrowing another $13 million from the state's economic emergency fund.

If the shortfall had been larger than $50 million, the governor would have been forced to call a special legislative session to address the situation. Iowa governors have authority to withdraw up to $50 million from the emergency fund for a deficit without approval.

The state will have $605 million in reserves when the latest $13 million IOU is combined with the $131 million Reynolds and lawmakers already borrowed earlier this year with the promise of paying it back in two years.

David Roederer, director of the state Department of Management, said the final outcome was the product of the normal procedure used in tabulating accrual, transfers and other financial aspects of the budget, but Hall said the numbers don't appear to add up and he wants assurances decisions were made based on proper accounting procedures and not political factors.

Reynolds is up for election in 2018.

'On June 30, the state was $104 million short of closing the books with a balanced budget. On Sept. 21, the Reynolds administration said the state only needed $14.6 million to close the books on fiscal year 2017,” Hall said.

'Iowa taxpayers deserve to know whether the Reynolds administration used budget gimmicks (delayed payments), shell games (transfers), or kept two sets of books to close the fiscal year and avoid a special session,” he said in requesting the audit.

Hall noted that Reynolds and the GOP-led Legislature were forced to make $249 million in budget revisions through cuts, transfers or borrowing over the last budgeting cycle and will have to repay $144 million taken from reserves.

During a media briefing last week, Roederer said about $70.6 million in past-due payments were made to the state after June 30, dramatically reducing a projected deficit. Hall said those accruals were considerably higher than normal, and the non-partisan Legislative Services Agency also recommended additional investigation into substantial revenue growth after June 30.

Hall posed a number of questions he would like the state auditor to examine to provide an 'independent, accurate, and timely audits of the financial operations.” He requested Mosiman expedite the special audit so it is completed before the 2018 Legislature convenes in January.

In an interview, Hall conceded the special audit is 'a hefty undertaking” but appropriate.

'I think it's very important to know that if there were any payments delayed or tax refunds that were delayed in order to help balance the books because they end up having a chain impact on what next year's budget is going to incur,” he said. 'Anything that was done to benefit fiscal year 2017 likely is going to have an impact on the fiscal year 2018 ledger, and so punting on these issues and delaying them with the hopes that revenue comes in strong or the economy starts moving along, that's wishful thinking and not prudent management.”

Reynolds' spokeswoman Brenna Smith issued a statement in response to Hall's requesting, saying: 'It's a sad day when a Democratic state representative is actively rooting for a bad budget.

'The representative should know the budget is automatically audited each year. Department of Management Director Dave Roederer explained last week that the budget process in place has been used for the last 30 years. Rep. Hall should stop playing politics and focus on building a better Iowa,” she added.

Rep. Pat Grassley, R-New Hartford, chairman of the House Appropriations Committee, called Hall's letter politically motivated because it was seeking what he called a special routine audit.

'Rep. Hall clearly hasn't done his homework. Auditing the budget every year is already standard practice,” Grassley said in a statement. 'Normally positive budget news is viewed as helpful to the taxpayer. It is disappointing Democrats are cheering for negative outcomes in the misguided hope they can capitalize politically.”

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