State budget war of words continues

DES MOINES – Lower-than-expected fiscal 2009 revenue totals Wednesday set up the likelihood Gov. Chet Culver will have to make more adjustments to balance the state budget before the books are officially closed this fall.

Culver aides insisted any potential imbalance that emerges is manageable without a special legislative session, but minority Republicans questioned the assessment and called for more action to reduce excessive state spending.

The Legislative Services Agency's year-end report indicated cash gross receipts grew by $203.2 million during the fiscal year that ended Tuesday -- a total that was $57.7 million below the state Revenue Estimating Conference's revised growth projection. Net state revenues, excluding transfers, were down $320.5 million, or 5.3 percent, compared to the previous year in totaling nearly $5.739 billion.

“While the state's tax receipts deteriorated more than expected during the last two months of the fiscal year due to the ongoing effects of the national economic recession, this is a manageable number,” said Culver budget director Dick Oshlo. “At this point, we see no legitimate reason for a special session to balance the state's budget.”

Culver aides issued a statement projecting the potential revenue shortfall at $57.7 million, which exceeds the year-ending balance that lawmakers had budgeted by $13 million.

That number could change by September when accruals and reversions are finalized, but should be within the governor's authority to transfer up to $50 million from the state's cash reserve to cover an imbalance, said Culver spokesman Phil Roeder.

However, House Republicans pointed to figures included in the Legislative Services Agency's year-end revenue report indicating the state tax refunds topped projections by $72.3 million and school infrastructure refund transfers were $31 million above estimates in suggesting the fiscal budget will still be out of balance by $43 million even if Culver uses his full transfer authority.

“The Iowa Constitution requires our state to operate with a balanced budget yet the fiscal year that ended yesterday leaves Iowa with an unbalanced budget,” said Senate GOP Leader Paul McKinley of Chariton.

“Gov. Culver seems to be auditioning for the role of Gilligan,” McKinley said in a statement. “While taking Iowa taxpayers on a three-hour tour, the governor has let go of the rudder of the ship, cannot read the compass and his crew members, legislative Democrats, have ignored the life preservers thrown their way by House and Senate Republicans in the form of hundreds of millions of dollars in responsible budget cuts.”

Roeder said McKinley's remarks show why Republicans are in the minority by engaging in “name calling” at an economically turbulent time for the nation that requires serious leadership.

Rep. Christopher Rants, a Sioux City Republican eyeing a 2010 gubernatorial bid, said the state's budget situation has exceeded Culver's ability to handle the problem on his own in calling for a special legislative session to balance the fiscal 2009 ledger.

 “Everyone in the state has seen this day coming, except for Governor Culver.  Taxpayers and local governments cannot afford a ‘wait and see' approach any longer.  Action is needed now,” Rants said in a statement. “It is time to quit worrying about the political ramifications of admitting that we have a deficit and get about the business of fixing it.”

Another potential GOP gubernatorial challenger, Sioux City businessman Bob Vander Plaats, said Culver should mark Wednesday's start of a new fiscal year by making a resolution “to control his excessive spending habits that have already pushed the state to the brink of an illegal deficit.”

Meanwhile, the nonpartisan, nonprofit Tax Foundation posted a wrap-up of last-minute budget-balancing scrambles by state officials around the nation to deal with revenues sagging due to recession.

Joseph Henchman, the Tax Foundation's counsel and director of state projects, reported that elected officials in Ohio and North Carolina passed temporary budgets to buy time, while an executive order kept essential services funded in Connecticut, several states entered the new fiscal year without budgets and at least four states have raised taxes to balance their ledgers.