Dems warn 2011 budget could be tougher

CEDAR RAPIDS - Days after the governor signed off on the $6.3 billion 2010 state budget, Democratic leaders are warning that unless the state economy rebounds quickly, balancing the 3011 budget will be difficult.

Not to say putting together the 2010 budget was easy, Senate Majority Leader Mike Gronstal, D-Council Bluffs, said Thursday in Cedar Rapids, "but the federal stimulus helped us, it made all the difference in the world."

"If the economy doesn't turn, next year will be an incredible challenge," he said.

Despite Republican warnings that overspending by the Democratic majorities in the House and Senate set up the state for a $1 billion gap between revenue and spending next year, Gronstal and House Speaker Pat Murphy, D-Dubuque, defended their efforts. They've performed better than Republicans who had the majority the last time the state's economy was in the doldrums, they said. Seven years ago, Gronstal said, Republicans spent the reserves down to about $130 million. Democrats project there will be more than $400 million in reserve accounts. The Republican-controlled Legislature also cut $60 million in local government assistance, forcing cities and counties to raise property taxes, the Democratic leaders said.

"We're in better shape. We've handled this better than the last time the state got in the tank," Gronstal said.

However, they don't know what the economy will be like when lawmakers meet again in January.

"I think we will have some significant economic stimulus from the bonding, create some short-term jobs that will be good for our economy in the short-term," Gronstal said. "We're all hopeful (the economy) will be better and it would be better if the feds would be able to provide additional stimulus funds. If not, we'll have to struggle through."

The struggle will be for Iowa taxpayers footing the bill for the federal stimulus dollars, according to House Minority Leader Kraig Paulsen, R-Hiawatha. Taxpayers also will pay for the $337 million in spending cuts Republicans proposed, but Democrats, for the most part, rejected. And taxpayers will struggle to pay for Democratic Gov. Chet Culver's $830 million bonding program, he added.

"I think it was very regrettable that rather than use tough times to make tough decisions this General Assembly used it as an opportunity to grow government," Paulsen said.

The tough times may encourage lawmakers to take a look at reorganizing state government to gain efficiencies, Murphy and Gronstal said.

Democrats have established a task force headed by Rep. Mary Mascher, D-Iowa City, and Sen. Staci Appel, D-Ackworth, to look for ways to reduce the cost of state government. Gronstal expects it will look at things like whether there is a need for four mental health institutes and 22 state data centers that, in many cases, can't communicate with each other.

"The time is ripe for this," Murphy said. "Tough budget times force you to look at things you otherwise wouldn't."

It won't be easy, Gronstal said. "It's amazing how much resistance there is to making changes ... among the institutions of state government."