Fact Checker: Reynolds claims Iowa under Culver was 'bleak'

Introduction

'Iowa's story was pretty bleak. We were facing some tough challenges. The Culver administration, you heard a bit about it tonight, there was record spending, record unemployment. a record $900 million deficit. We were watching government just grow and grow and they were being involved more and more in our lives and businesses.

Source of claim

Lt. Gov. Kim Reynolds speaking to Marshall County Republicans during a July campaign stop in her run for re-election with Gov. Terry Branstad.

Analysis

This Fact Checker focuses on whether spending, unemployment and the deficit while Chet Culver was governor, from 2007 to 2011, hit all-time highs.

Spending

For spending, we will focus on the general fund.

Under Culver, appropriations from the general fund climbed from $5.385 million in fiscal 2007 to $5.934 million in fiscal 2009, and then dipped to $5.298 million in fiscal 2010 in the wake of the Great Recession, according to a 10-year overview of the state's general fund by the Legislative Service Agency (LSA). The agency provides non-partisan research for lawmakers,

At the time, spending was at an all-time high, but that is not necessarily unusual because most budget years exceed the previous years. For example, Branstad's most recent general fund spending plan of about $7 billion is higher than ever before.

Another way to look at this is the percent spending increased each year.

Under Culver, the largest one-year spending increase in the general fund was 9.3 percent in fiscal 2008. Under Branstad, the largest increase was 12.3 percent in fiscal 2012, according to the LSA data.

Deficit

Now for the claim about a 'record $900 million deficit.'

Iowa by law is not allowed to carry a deficit, so the budget ends up balanced at the end of the year. But in reality, deficits can exist, and they require action to comply with the law.

Heading into fiscal 2011 under Culver, Iowa faced a $1.071 billion 'spending gap,' according to a February 2010 budget analysis prepared by the Legislative Services Agency. A state auditor's review identified a $967 million gap.

In fiscal 2010, sales tax revenue estimates were coming in lower than expected, requiring the budget to be revised in multiple quarters.

The plan to overcome the deficit included budget cuts, reduced tax credit reimbursements and a transfer from cash reserves, among other actions, according to the LSA analysis.

The state auditor review stated that the budget was being balanced by one-time funds, which the report equated to 'kicking the can down the road' to deal with in future years.

The Branstad-Reynolds campaign put online a budget document that projected a 19.5 percent deficit by fiscal 2015, had spending continued at its fiscal 2011 rate. The document shows that the budget was balanced in fiscal 2011.

Also, Culver never carried forward a budget surplus to the following year during his term. Under Branstad, the carry-over surplus increased from $381.4 million in fiscal 2012 to a planned $745 million in fiscal 2015, according to LSA data.

Meanwhile, Iowa's rainy day fund, or reserves, dipped to $422 million under Culver in fiscal 2010, and since has climbed to a projected $696 million in fiscal 2015, according to LSA figures.

Unemployment

Unemployment under Culver peaked at 6.4 percent several times between January 2009 and February 2011 and maxed out at 106,500 people unemployed in August 2010, according to Iowa Workforce Development figures. National unemployment was above 9 percent in 2009 and 2010.

Under Branstad, unemployment has decreased to 4.4 percent as of June 2014, according to the Bureau of Labor Statistics.

While unemployment was at its highest since 1986 under Culver, it wasn't historic.

From June 1981 to July 1986 — three years of which when Branstad was governor — Iowa's unemployment never dipped below 6.8 percent, according to a Workforce Development report. It peaked at 8.6 percent from December 1982 to March 1983, and 122,100 people out of work in January 1983.

Conclusion

While Iowa's economy was reeling during recession and has grown on several fronts since Culver's term, Reynolds's claims about record spending, unemployment and deficit are misleading.

Unemployment under Culver never hit the historic highs seen under Branstad in the 1980s. And Culver's general fund spending increased less than under Branstad's watch.

It's true that Culver oversaw a spending plan estimated to hit a $1 billion deficit, and Culver critics say more wise spending would have mitigated such drastic measures of correction.

But the year ended with a balanced budget, as required by law.

We rate Reynolds's claims as mostly false.

Sources

Reynolds claims: https://www.youtube.com/watch?v=gDdCM6ZbqN0

Unemployment figures: http://www.iowaworkforce.org/lmi/laborforce/etables/Historical%20SSA%2076_13%20rounded.xls

Audit report: http://auditor.iowa.gov/press/Briefing_04-16-2010.pdf