Iowa revenue shortfall budget cuts may be painful, but not an emergency

DES MOINES - As Iowa lawmakers begin debate on making midyear spending adjustments to offset lower than projected revenue collections, they are looking to cut their way to a balanced budget rather than dip into flush reserve accounts.

'The fact is, we went through a tough year where our agriculture commodity prices - corn, soybeans, pork, beef, eggs - all were below the cost of production,” Gov. Terry Branstad said earlier this week.

As a result, he said, the Revenue Estimating Conference downgraded revenue projections three times in 2016 - $46 million in March, $70 million October and $86 million in December.

'When you have that kind of circumstance, you've got to adjust.” Branstad said.

A $117.8 million budget adjustment senators are expected to approve today includes cuts of $18 million to regent universities, $3 million to community colleges, $5.5 million to corrections, $3 million to the court system and $1 million to public safety.

The cuts and the accompanying pain could have been mitigated if Branstad and lawmakers tapped the state's cash reserves. If lawmakers took the full $117.8 million out of reserves it would leave nearly $603 million in those 'emergency” funds.

But there's no emergency, according to Branstad and lawmakers.

'That money is available if we have a real dire emergency, which we don't have,” Branstad said, explaining that $117.8 million in a $7 billion general fund budget 'is manageable.”

Sioux City Rep. Chris Hall, the ranking Democrat on the House Appropriations Committee, agrees that reserve accounts generally are tapped for financial emergencies and natural disasters. Rather than the farm economy, Hall blames 'poor judgment and bad decision-making” by Republicans who have controlled the House and governor's office since 2007.

'We're not in an economic emergency,” he said. 'At this point, we have a positive economy. The state's revenues are actually growing year-by-year, so I don't believe that it's the right time for us to look at those reserve accounts as an option.”

Branstad, who is slated to become President Donald Trump's ambassador to China, believes the president's action to put the XL Keystone and Dakota Access pipeline projects back on track and his proposed infrastructure initiatives are going to spur other investments and create a lot of jobs.

'The stock market just hit a record 20,000,” he said Wednesday. 'I'm optimistic looking to the future that the financial picture in this country and this state are going to get better.”

That won't be enough to offset revenue problems if Republicans continue to approve unsustainable tax giveaways, according to Hall and Iowa City Sen. Joe Bolkcom, the ranking Democrat on the Senate Appropriations Committee.

'There's been a steep increase in the number of tax credits that have been made available in the last year or two,” Hall said. 'If that some of that growth had been trimmed I think you wouldn't necessarily have to extend cuts to community colleges, public safety, law enforcement and elsewhere.”

Likewise, Bolkcom blames the GOP's 'big business tax cuts and tax giveaways” for undermining the state budget.

'Republicans have exponentially increased new tax breaks for corporations, which now top $500 million annually,” he said.

Hall pointed to the House GOP pushing for an additional $70 million tax relief by coupling state taxes with the federal tax code against the advice of the governor and Democrats.

'The $100 million total price tag on their coupling last year is roughly the same $100 million that we are now in a deficit,” Hall said.

After the Senate approves the budget de-appropriations bill, the House is expected to take it up Monday.

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