116 3rd St SE
Cedar Rapids, Iowa 52401
Iowa concluded Fiscal Year 2021 with a $1.24 billion budget surplus. The largest ever.
Black ink is certainly better than red ink. But why are we sitting on a mountain of cash while we squeeze funding for our public priorities, and during an ongoing pandemic that’s spawned so much adversity for Iowans and small businesses?
We’ve got chronically underfunded universities and K-12 schools struggling with paltry budget increases, which are really decreases due to declining enrollment. We could’ve provided more bucks to our inadequately funded mental health system, or put some money into fixing up our state parks, which are seeing record usage.
With the state in such a strong budget position, maybe we could start to address those priorities now.
“This is why we cut taxes this year and eliminated the inheritance tax,” Gov. Kim Reynolds said last weekend, touting the surplus. “This is your money, not the government’s. And I will never forget that. Republicans in the Legislature will never forget that, which is why we will continue to cut taxes in Iowa.”
Or, I guess, we could do that again.
We are, of course, only one more big tax cut away from becoming an economic utopia. OK, maybe two. You might recall a study a few years ago that found as of 2010, all of the tax cuts, credits and exemptions approved by lawmakers over 20 years or so added up to $12 billion annually. Iowa’s entire general fund budget is in the neighborhood of $8 billion annually.
That got some media attention. So the Department of Revenue stopped doing the report. At one point they blamed a lack of funding. You can’t make this stuff up.
Reynolds credited herself and Republicans who run the Legislature for building this grand mountain of excess money. But she neglected to thank the federal government, which has sent state agencies $6.8 billion through various COVID-19 relief bills passed under the Trump and Biden administrations.
Maybe music played her off the stage before she got a chance. These things happen.
According to the non-partisan Legislative Services Agency, it’s difficult to tell how demands for state services would have been covered without federal help. But the state was in a strong financial position before the pandemic, so federal money was not needed to balance the budget, analysts say.
But it did play a hand in feeding the big surplus.
Iowans received $8.1 billion in individual federal assistance. To explain just how big a number that is, it amounts to 5.1 percent of total personal income Iowans earned in 2019.
And that big figure doesn’t include other pandemic assistance, such as unemployment insurance, paycheck protection and student loan forbearance.
State tax revenues rose sharply starting this spring, with sales and use tax collections jumping $350 million compared to last year. Spending stirred by federal stimulus efforts clearly was a factor in that revenue increase.
A COVID-related increase in the federal percentage rate of matching funds for Medicaid directed an extra $512 million into state health insurance, helping the program end FY 2021 with a projected surplus. In exchange for those bucks, the state was barred from dropping clients from the rolls.
More than $3.2 billion in federal dollars covered COVID unemployment benefits beyond the usual payments covered by the state. The Department of Education received $1.2 billion for an array of pandemic-related programs.
Reynolds was not a fan of some of these federal interventions, particularly the ones championed by Democrats and President Joe Bidden. “Blue state bailouts,” they were dubbed by Republicans.
She cut off extra federal unemployment benefits to push lazy Iowans back to work. She refused $95 million to pay for COVID testing in schools. But she’ll take credit for the economic stability federal efforts helped create in Iowa as the virus spread.
She did use $3.7 million in federal COVID bucks to produce the “This is Iowa” marketing campaign. Yep, sadly, this is now Iowa.
Republicans do deserve full credit for controlling spending. And even with the prospect of a large, projected budget surplus at the end of FY 2021, they didn’t get all spendy in Fiscal Year 2022.
State law limits general fund spending to 99 percent of estimated revenue. But Republicans passed a 2022 budget that spent $178 million less than that.
To put it in context, lawmakers approved a 2.4 percent increase in state aid to public schools, or about $179 million. They could have covered the 4 percent increase sought by school districts without breaking a sweat or the expenditure limit.
But that’s not what the current commanders of the Golden Dome of Wisdom are all about. They squeeze funding, build surpluses and cut taxes. Also, they complain about failing schools.
Meanwhile, you leave funding to state universities flat after years of cuts, leading to tuition increases. The state’s parks now receive less funding than they did in 2010. Lawmakers took over funding of county and regional mental health systems but offered no new money. That move was more about cutting property taxes than providing better services.
Maybe you like this hoard-squeeze-cut-repeat regime. But I’d rather have my tax money fund a government that serves Iowans beyond the hog barons and tycoons who loan the governor jets. If only we had a surplus of smart leadership.
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