116 3rd St SE
Cedar Rapids, Iowa 52401
Iowa Gov. Kim Reynolds recently decided to reject $95 million in federal COVID funds for testing and contact tracing in K-12 schools and end Iowa’s participation in the $300 federal pandemic unemployment compensation. This is reflective of Iowa’s budgetary philosophy, set in our state constitution.
Iowa was one of a few states with a budget surplus in 2020, well before any federal COVID bailouts through the CARES Act were dolled out to rectify financial debt cities and states racked up during the pandemic and before. The reason Iowa continues to experience economic success and is one of the most affordable states to live is because of our healthy spending habits. Beyond greed and irresponsibility, taking unnecessary federal funding is antithetical to Iowa’s philosophy.
State Auditor Rob Sand, a Democrat, said Reynolds was simply pulling a “partisan stunt” at the expense of Iowa’s economy. Sand pointed out that the aid could have generated hundreds of jobs to administer and assist tests at schools, sporting events, graduations and conduct contact tracing. However, such testing is likely unnecessary. The Centers for Disease Control and Prevention have approved the Pfizer vaccine for children 12 and older, and children are far less likely to experience severe COVID-19 illness than adults. Vaccines are widely available for teachers and other adults who may come into contact with sick children — in fact, vaccine supply surpasses Iowa's demand.
Reynolds is correct to reject federal money that would create unneeded jobs for COVID-19 testing and a redundant unemployment benefit that discourages people from seeking work. Our state unemployment rate is one of the lowest in the nation at just 3.7 percent and current unemployment benefits with the $300 federal supplement cover 95 percent of average wages, which might discourage people from seeking a job that pays at or below the average weekly wage in Iowa.
These executive decisions reflect a positive fiscal outlook for Iowa, which is largely attributable to the balanced budget amendments in our state constitution. This type of statute or state constitutional amendment means that a state generally cannot spend more than they raise in tax revenues.
To see how careless state spending can destroy public accountability and the state economy, we only need to look east to our neighbor, Illinois. Illinois has nearly $140 billion in unfunded pension debt and its credit rating is just one notch above junk status. According to ALEC’s “Rich States Poor States” report, Iowa ranks No. 6 in the nation for debt as a share of tax revenue with just 3 percent going to debt repayment compared to Illinois, ranked 50th with 11.2 percent going towards debt repayment.
Iowa spends relatively little servicing our debt, which gives us the financial flexibility to support pandemic services, like our easily accessible TestIowa sites and streamlined vaccine rollout.
There are a variety of causes for this debt crisis in Illinois: an increase in pension funding, early retirement options, a tax hike that drove citizens out of state and consistent failure of state elected officials to pass fiscal accountability laws. Iowa’s budgetary process could be described as a regular gym-goer with a healthy lifestyle while Illinois is a crash dieter starting crunches two weeks before bikini season.
Our other neighbor, Nebraska, has a more modest state debt of $1.8 billion in comparison to Illinois. Comparing demographics and industry, Nebraska is much more similar to Iowa. So, how can Nebraska possibly have that much state debt? Simply put, incentives matter.
Having an amendment in our state constitution that requires us to balance our budget means that every drafted bill and invoice the state receives has to be accounted for with a funding source. Illinois will likely never dig itself out of this debt because no politician will ever be elected on a platform of cutting public programs, retirement accounts and public sector layoffs. The constitutional cap on spending creates incentives for Iowa politicians to draft rational plans, while the lack of a constitutional cap on spending in other states encourages public projects that are economically infeasible.
Economic conditions tend to snowball. Iowa has a very stable state economy because we set ourselves up for success by having a healthy budget and part-time Legislature. Our politicians only have a set amount of time to prioritize their goals and are paid a modest amount for their efforts. There is little financial or social incentive to become a political celebrity, and proposals have to pass the economic smell-test or they’ll get tossed out by the funnel.
Iowa’s fiscal responsibility benefits other Americans, too. During the COVID-19 pandemic, Congress has debated bailing out Illinois. If a federal bailout is passed, taxpayers across the country will foot the bill for Illinois’ public pensions and other outlays.
The U.S. can afford a few bad apples in our basket, but too many will bankrupt the farm. The federal debt is real, and looming over young Americans. Chaotically managed state budgets are relying on the rest of the country to be economically salable and provide perpetual charity for their bad decisions and nonexistent accountability.
Reynolds has set a good example for all of America that we need to care for one another by caring for the economic health of our country.
Patricia Patnode is a Gazette editorial fellow. Comments: email@example.com