Culver looks at spending cuts next year; hopes to streamline gov't reorganization

Gov. Chet Culver won't have to make deeper spending cuts this fiscal year based on newly revised revenue estimates, but it likely will be a different story for next year's state budget.

“We're going to have to make additional cuts (in fiscal 2011). No one's suggesting that we won't,” Culver said Friday. “The question is can we minimize those cuts” by saving money via proposed efficiency measures, streamlining and government reorganization.

The governor's comments came on a day when the state Revenue Estimating Conference lowered its current year state revenue projection by $36.8 million and shaved $13.1 million from its fiscal 2011 tax collection expectation.

Dick Oshlo, an member of the conference who is Culver's budget director, said the downward revision will not force additional spending adjustments beyond the 10 percent across-the-board cut the governor already ordered because Culver was realistic and set aside a projected $188 million ending balance that would absorb the latest decline.

Culver said he was “encouraged” by indications that Iowa may have seen the worse of the national recession.

The revised estimate of $5.401 billion in available state tax receipts for the current year means the state treasury is expected to take in $532.8 million less than it did in fiscal 2009. Revenue Estimating Conferece members expect fiscal 2011 tax receipts will be virtually unchanged, increasing by $2 million overall for the year.

House Majority Leader Kevin McCarthy, D-Des Moines, said the state's fiscal 2011 budget will be “very challenging,” but he noted “the cuts we'll have to make won't be as drastic as they initially looked like they were going to have to be.”

Minority GOP legislators were less optimistic, saying the state's ongoing budget woes speak to a spending addiction by Culver and legislative Democrats rather than the nation's recession as the majority party contended.

“The newest estimate by the REC is not surprising,” said House GOP Leader Kraig Paulsen of Hiawatha. “The real budget mess is how much money was spent during the last two years.

Culver said the consensus view is that he and legislators will face a fiscal 2011 budget gap of about $500 million. He has proposed about $341 million in savings through streamlined government efficiencies and he pointed to additional federal stimulus money and state cash reserves topping $400 million as a possible one-time source to smooth out budgetary bumps.