Culver: Iowa bucking budget, economic trends

Gov. Chet Culver is bullish on the Iowa economy, predicting state revenues will begin growing later 

this year and the state could emerge from recession by mid-2010.

Culver, who has been on the road this week for meetings in Washington and a trade conference in Quebec, cited reports Iowa has the eighth fastest growing economy in the country and may be among the first dozen states to move from recession to recovery.

"We're bucking the trend," he said and said he's confident that despite less-than-projected revenue collections the state will finish the fiscal year in the black.

However, Senate Minority Leader Paul McKinley, R-Chariton, said Culver is in denial about the budget situation.

"Once again, Governor Culver failed to recognize the serious consequences for every taxpayer as a result of his and legislative Democrats' unsustainable record spending," McKinley said. He chided the governor for not knowing how much was left in the state's ending balance.

Culver said the $100 million ending balance and his authority to transfer as much as $50 million from reserve accounts will be more than adequate should they be needed to balance the budget.

The Legislative Fiscal Bureau projected an ending balance of nearly $45 million because of declining state revenues.

A Culver spokesman later explained Culver was adding the $45 million ending balance with his $50 million transfer authority and rounding up to $100 million.

Iowa's general fund receipts are up 3.7 percent over the previous year. But April and May general fund receipts fell $161 million. Revenue grew less than 2 percent in January and has been falling since then.

Culver maintained his optimism about the state's fiscal situation in light of a report by the National Governors Association Wednesday that state budget numbers are "some of the worst" it has collected in 30 years. For only the second time, state spending has declined two years in a row, the NGA reported.

The states' fiscal troubles are likely to be longer and deeper than in 1983, according to Ray Scheppach, NGA executive director. The downturn would be even worse if not for the $787 billion federal stimulus package that sent $246 billion to states, he added.

Culver is hopeful Iowa's $529 million share of stimulus dollars along with the $830 million I-JOBS program will give the state's economy a shot in the arm before the year is over. He predicted state tax revenues would increase in the first and second quarters of 2010.

Culver sees no need for more across-the-board cuts or a special session to deal with the budget.

Despite Republican "rhetoric and misinformation," he said, lawmakers cut actual state spending for the fiscal year beginning July 1. That meant making cuts in some areas so the state could to protect teachers and the state's investment in education and health care.

McKinley warned next year's budget deficit could be over $1 billion dollars.