Sioux City lawmaker sues Reynolds over ‘scheme’ to balance budget

DES MOINES - A Democratic lawmaker is challenging Gov. Kim Reynolds' transfer of $13 million from an emergency reserve fund to balance the state's budget at the end of fiscal 2017.

Rep. Chris Hall, D-Sioux City, claims in a petition filed electronically New Year's Day in Polk County District Court that Reynolds and David Roederer, director of the Department of Management, conspired to unlawfully appropriate and misuse state funds.

Rather than an economic emergency, the shortfall was the 'predictable and preventable” result of Republican mismanagement, Hall claimed in the lawsuit.

The governor's spokeswoman, Brenna Smith, dismissed Hall's action as a 'political lawsuit with political motivations.”

Reynolds ordered the transfer from the Economic Emergency Fund to the state general fund on Sept. 28, 2017, to 'manage lower-than-expected revenues without cuts to education or Medicaid,” she said.

The state also tapped its $1.6 million ending balance to cover the $14.6 million shortfall.

'Everyone agrees the state budget needs to be balanced - which it now is - and Gov. Reynolds is focused on the upcoming legislative session,” Smith said.

Hall contends the shortfall did not meet the legal requirements for Reynolds to tap the Economic Emergency Fund. By state code, the governor can order a transfer if actual receipts and accruals are at least 0.5 percent less than projections by the Revenue Estimating Conference. The difference between the actual net general fund revenue of $7.096 billion and the Revenue Estimating Conference's estimate of $7.107 billion was just $11 million, or 0.15 percent, Hall said.

Rather than 'scheme” to transfer the money, Reynolds could have called the GOP-controlled Legislature into special session to fix the situation, said Hall, who identified himself in his filing as a 'taxpayer, resident and citizen of the state of Iowa.”

However, he said, a special session would have created a political problem for Reynolds by drawing attention to her inability to adequately manage the state's fiscal matters.

Hall claims that under Reynolds' supervision, the state has gone from a $927 million budget surplus in fiscal 2013 to a $259 million budget gap that required reductions, transfers and adjustments in the fiscal year ending June 30, 2017. Reynolds has been governor since late May. From 2013 to 2017, Democrats and Republicans shared control of the Legislature.

'The change is not the result of a shrinking economy,” Hall claims. 'To the contrary, over that same time, Iowa has had a growing gross domestic product and low unemployment. Instead, the budget gap is the result of several years of appropriating more revenue than taking in and excessive corporate tax giveaways.”

Hall's lawsuit has prompted predictable reactions from the state Democratic and Republican parties.

Reynolds is 'dodging questions and desperately trying to avoid being held accountable for her fiscal mismanagement,” Democratic spokeswoman Tess Seger said.

Labeling him 'Hypocrite Chris Hall,” the Republican Party of Iowa said the Sioux City Democrat was being critical of spending down the budget surplus, 'apparently unaware he's voted to use the surplus on various spending schemes during his time in the Legislature.”

Hall's lawsuit also prompted criticism of the transfer from former Iowa Speaker of the House Ron Corbett, who called for a special legislative session five months ago.

'By not calling a special session, Governor Reynolds has put the Legislature in a box and ... (it) will be forced to either make more midyear cuts or borrow additional millions from the rainy day fund,” said Corbett, mayor of Cedar Rapids for eight years before stepping down to seek the Republican nomination for governor.

In his petition, Hall asked the court to void the transfer, order Reynolds and Roederer to comply with the Iowa Constitution and state code regarding transfers and award him court costs and attorney fees.

l Comments: (319) 398-8375; james.lynch@thegazette.com