Iowa adds nearly $306 million to budget surplus

GOP lawmaker: 'Conservative approach' paid off

Members of the state Revenue Estimating Conference - David Underwood (left), Dave Roederer (center) and Holly Lyons - me
Members of the state Revenue Estimating Conference — David Underwood (left), Dave Roederer (center) and Holly Lyons — meet March 12 in Des Moines to discuss Iowa’s economic outlook. (Ro Boshart/The Gazette)

DES MOINES — State government closed a rocky fiscal 2020 budget year — buffeted by economic uncertainty brought on by the coronavirus pandemic — with a $305.5 million surplus aided by billions of federal stimulus dollars, Gov. Kim Reynolds announced Wednesday.

The state’s fiscal year ended June 30, but officials said the accrual period officially ended Wednesday after payouts and outstanding obligations were accounted for.

Last fiscal year’s surplus was $289 million.

“Iowa is in a strong financial position due to responsible spending practices and our strong cash reserves of over $770 million,” said Dave Roederer, director of the Iowa Department of Management, who noted state officials continue to monitor the impact that COVID-19 is having.

Reynolds attributed Iowa’s “strong” financial position to fiscal responsibility “despite some significant challenges ranging from a global pandemic to trade disruption.” She said the state still grew support of education, agriculture, workforce, technology and health care.

Earlier this summer, officials with the Legislative Services Agency noted that state agencies had recorded federal awards totaling $2.896 billion to address a wide variety of expenses related to the outbreak — including $1.25 billion the state received from the CARES Act.

A major piece of the CARES money has gone toward paying unemployment benefits to tens of thousands of Iowa workers who have been idled due to the pandemic and business closings.

Before adjourning their coronavirus-interrupted 2020 session June 14, state legislators appropriated a total of $7.779 billion from the state’s general fund for the 2021 fiscal year that began July 1. That was a reduction of $45.9 million, or 0.6 percent, compared with the previous fiscal year’s revised spending. The fiscal 2021 appropriations — for the current state budget — are $244.4 million below the state’s spending cap.

Before passing a new state budget, legislative Democrats criticized majority Republicans for shirking their constitutional responsibility by proposing a “state quo” spending plan that cedes up to $10 billion in budget-making and oversight authority to the governor and her staff.

“The governor’s office has consistently painted a rosy picture of the state budget that doesn’t reflect the economic reality felt by working Iowans,” said Rep. Chris Hall, D-Sioux City, ranking member of the House Appropriations Committee.

“To portray a generous ending balance does not tell us how the governor used federal dollars to plug budget gaps or what programs may have been cut by her office to create savings.”

Republicans countered that the economic uncertainty caused by the COVID-19 pandemic made it prudent for legislators to pass a conservative general-fund budget with flexibility built in to for state leaders to move money around or use reserves and federal aid.

On Wednesday, House Speaker Pat Grassley, R-New Hartford, issued a statement touting a “cautious and conservative approach to the state budget,” noting the nonpartisan Council of State Governments ranked Iowa’s budget as the best in the country to respond to COVID-19.

“Over the years, we have been very intentional about our actions when it comes to the state budget: Plan for the future, account for uncertainty, and make strategic investments,” said Grassley, in defending a fiscal 2021 spending plan that raises funding to K-12 schools and regents’ special schools by 2.3 percent, raises Medicaid programs by $38 million and increases a few other areas of state government.

Members of the 88th Iowa General Assembly arrived at the Capitol in January with state government in a surplus position with prospects for strong revenue growth.

But their work was halted in mid-March as part of Reynolds’ mitigation strategy to slow the coronavirus spread.


GOP leaders, who had majorities of 32-18 in the Senate and 53-47 in the House, gaveled the session back into action June 3 and spent the next 10 days creating a spending plan based on revised revenue projections that were cut $500 million through June 2021.

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