No magical fiscal solution

Iowa Democratic majority leaders deserve credit for making some tough choices in an especially difficult state budgeting session. But Republicans' warnings that much of the fiscal pain has yet to be faced cannot be ignored.

Leaders from both parties recently met with The Gazette Editorial Board. We didn't hear a lot of partisan sniping. But their takes on our state government's financial status clearly differed.

Democrats pointed to their crafting a balanced budget for fiscal 2011, protecting critical public services and the fact that Iowa is still in better fiscal shape than most other states.

Republicans acknowledged modest efficiencies approved this session will produce some savings, but they focused on the perils of again using one-time funding sources to balance the budget.

Both are right.

Democrats faced a revenue gap of around $1 billion because of the economic recession, ongoing costs of 2008 natural disasters and overly optimistic spending of the previous two budget years. Following the lead of Gov. Chet Culver's across-the-board budget cut order, they produced savings through some streamlining and reorganization and found more money than expected for education. They approved an additional $17.4 million for Cedar Rapids and Linn County flood-recovery projects and created a $30 million disaster mitigation fund for which local leaders can apply.

But as Republicans noted, the 2011 budget will use nearly

$725 million from one-time sources - mostly the state's cash reserve and federal stimulus grants. That follows nearly $840 million of such money used to balance the current year's budget.

Using one-time sources has been pretty routine by both parties over the past decade, but it reached an extreme in the two most recent budgets.

And it can't continue. No more federal stimulus money is expected to be available when legislators meet again in January. And the state's cash reserves, about $600 million as of three years ago, are projected to be just more than $200 million.

Yes, state tax receipts are beginning to recover. But no economist we know expects them to rebound anywhere near enough to cover a still-huge revenue gap.

Republicans vow to keep pushing for even more extensive government reorganization next year. Democrats told us they want to review the impact of cuts made before considering any more streamlining.

Democrats also want local governments to save by partnering on more services.

We're hopeful that early signs of an economic rebound translate into a sustained recovery by year's end. Even in the best-case scenario, however, it's clear that legislators must do more to fix our long-term fiscal problems while protecting high-priority services. Next year's challenges aren't going to magically melt away.

-- The Gazette Editorial Board