Maybe you recall that dramatic scene in “It’s a Wonderful Life” when a bank panic grips Bedford Falls and Bailey Building and Loan customers crowd into its lobby demanding their money.
George Bailey urges calm. He asks how much they need to tide them over until the crisis passes. He hands out all of the cash on hand, except for $2, and saves the Building and Loan from falling into the hands of old man Potter.
Now imagine those townspeople in crisis turning to Iowa Gov. Kim Reynolds for help.
“Unfortunately, there’s just not enough state funding to make everybody whole, and that’s just a reality of what we’re dealing with,” Reynolds said at a recent news conference when asked if the state could use its ample budget reserves to provide some relief to Iowans.
Instead, aid must come from Congress, she contends. Please wait.
So Potter takes over the struggling Building and Loan and then helps bankroll Reynolds’ run for governor. She, in turn, champions tax cuts that save Potter a bundle. Newly named Pottersville is an economic success story cited by Reynolds in her Condition of the State speech.
It truly is a wonderful life.
In reality, Iowa ended its last fiscal year with a $305 million surplus. Revenue forecasters are expecting modest growth in the current and next budget year amid ongoing economic difficulties spawned by the pandemic. Meanwhile, Iowa’s two reserve funds hold $770 million.
Federal COVID-19 CARES Act funding has all but run out. A new federal aid package is possible, but it’s unlikely to meet the needs of Iowa small businesses and individuals facing closures, evictions, food insecurity or any among a number of pandemic-fueled problems.
State revenues have taken a hit. But Statehouse leaders could tap into our reserves to provide some additional help. Sure, no one gets made “whole,” but they might get enough bucks to survive a very hard time.
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But Reynolds says the state can’t afford to help. We have to wait for the feds. And, hopefully, this time around, the governor won’t misuse tens of millions of dollars on dubious state expenses.
At the same time, Republicans are touting the state’s great financial situation under their watch. They take our big “surplus” out of the garage every once in a while, polish it up, brag a bit to the neighbors and then roll it back inside. They’d hate to get any rain on the state’s rainy day fund. Hands off.
So we’re in great shape, but also, apparently, in no shape to help. What gives?
“Strong economic growth coupled with spending discipline provides an excellent foundation for the Legislature to move forward with additional tax relief,” said former Republican lawmaker Chris Hagenow, now vice president of Iowans for Tax Relief, in a statement last week.
Of course. Tax cuts.
GOP lawmakers are publicly urging budgetary caution. But if the GOP can find a way to fit in more tax cuts, they’ll do it. Even with sluggish revenues and pressing priorities, such as funding Iowa’s mental health system, public education and COVID relief, there’s always room for a tax cut. Economic stimulus, they’ll call it.
Somewhere in Pottersville, an old man is smiling.
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