Iowa’s state budget is better prepared than most to handle a recession, according to a recent analysis by the Pew Charitable Trusts.
The nonprofit, nonpartisan organization charted all 50 states’ reserve balances as a percentage of state spending and the volatility in each state’s revenues to help determine which states have put themselves in a good position to weather an economic downturn.
“In general, states with greater revenue volatility need to save relatively more than do those with less fluctuation. High revenue volatility means that tax collections tend to drop more dramatically during economic downturns,” the report says.
Iowa’s reserve account balance as a percentage of state spending is roughly on par with the national average, according to the Pew analysis.
And Iowa’s annual budget volatility is lower than average, according to the Pew analysis, which calculated each state’s yearly percentage change in total tax revenue over the past 20 years, accounting for changes in tax policy.
That combination of an average reserve balance-to-spending ratio and below-average budget volatility placed Iowa in a class of no more than 10 states with favorable ratings in both categories.
“States in this category might be relatively better off than others,” the Pew report says. “Their level of reserves are higher than average, and their revenue does not fluctuate as much as the typical state’s. Although their saving levels still may not be high enough to mitigate a severe recession, these states are in a stronger position than those with either lower reserves or higher volatility.”
Iowa’s total state budget balances were 8.7 percent of spending in the 2018 budget year; the 50-state median was 8.6 percent, according to Pew.
That is down significantly from the 2013 budget year, when Iowa’s total balance of $1.5 billion was 24 percent of spending, according to Pew’s analysis.
Pew’s analysis uses semiannual surveys of state budget officers conducted by the National Association of State Budget Officers.
States take redistricting from lawmakers
Voters in four states this year approved changes that limited the authority of state lawmakers to draw legislative boundaries, shifting that power instead to bipartisan or nonpartisan commissions in decennial (once every 10 years) redistricting.
The movement shows a trend of voters favoring redistricting programs designed to limit gerrymandering, the process of lawmakers drawing boundaries that benefit their political interests.
Missouri, Colorado, Michigan and Ohio this year approved plans that, while varied, generally put redistricting in the hands of bipartisan or nonpartisan commissions. Ohio’s measure passed earlier this year; the others passed in the November midterm elections.
Still, more than 30 states have state lawmakers draw political boundaries, according to research by New York University Law School’s nonpartisan Brennan Center for Justice.
Iowa’s redistricting process is viewed as a model of fairness: Legislative boundaries are drawn by the state’s nonpartisan Legislative Services Agency using simple factors that do not necessarily benefit incumbents or either major political party. The maps are then approved by state legislators and the governor.
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Erin Murphy covers Iowa politics and government. His email address is firstname.lastname@example.org. Follow him on Twitter at @ErinDMurphy.