Staff Columnist

Iowa's pandemic-plagued budget plan remains in quarantine

The Iowa Capitol is seen in Des Moines on Thursday, Dec. 19, 2019. (Andy Abeyta/The Gazette)
The Iowa Capitol is seen in Des Moines on Thursday, Dec. 19, 2019. (Andy Abeyta/The Gazette)

In a couple of weeks, Iowa lawmakers will be back at the Statehouse after more than two months on a pandemic pause. Non-essential workers, apparently.

They’re already practicing impressive social distancing, but mainly between Iowans and any solid details on what the Republican-controlled Legislature actually plans to do upon return. The agenda remains in a modified quarantine.

In April, Gov. Kim Reynolds said she would be releasing a revised state budget plan dealing with revenue losses amid the pandemic and the sharp economic downturn it’s spawned. She was asked on Monday why no plan has yet materialized.

“So we’re working with the Legislature,” Reynolds said. “They’ll be back in June. We’re having those conversations. We’re going to continue to wait. We’ll have a better idea by the end of May.”

Reynolds said the potential for state revenue losses is one reason she’s moved to reopen businesses across the state and remove some pandemic safety restrictions. So we know the fiscal situation is bad enough to roll the dice on reopening, sidestepping the advice of Iowa health experts.

But the true scope of revenue losses remains publicly fuzzy. Last week, the nonpartisan Legislative Services Agency reported that between March 19 and May 13, state revenues declined by $531 million compared to a year ago. Much of that loss, however, was attributed to moving tax filing deadlines from April to July, giving individuals and businesses more time to pay. But sales taxes and an array of other tax collections have declined.

Iowa’s Revenue Estimating Conference is expected to meet May 29 to set new numbers lawmakers will use to rebuild their budget plans.

So far, all we’ve heard from Republican leaders is that Iowa has nearly $800 million in reserves and a projected surplus cushion thanks to their budget stewardship. Nothing to see here.

But that hasn’t worked out so well elsewhere. Ohio also was projecting a surplus earlier this year but now is looking at a $777 million budget hole. Republican Gov. Mike DeWine warns the state will need all of its $2.7 billion in reserves to get through the next two years. Michigan and Colorado also expect their healthy reserves to dry up as revenue losses mount.

An estimate by Moody’s puts Iowa’s potential revenue loss at 11.4 percent to 14 percent, possibly topping $1 billion. That would eclipse the 9 percent hit tax collections took during the Great Recession.

Back then, the federal government stepped in to provide Iowa with considerable fiscal help, which softened the blow. That sort of help may or may not be coming this time, and I haven’t heard Iowa Republicans ask their good friend in the White House for assistance.

And Republicans might not even tap Iowa’s healthy reserves. House Speaker Pat Grassley, according to Radio Iowa, said he wants the budget to stick with projected revenues, not dip into cash reserves to fund ongoing programs. That could lead to deeper cuts.

So what’s being talked about in all of these “conversations” Reynolds referred to? Who knows? Will Iowans have more than days or hours to assess the GOP budget after it springs from a backroom?

What else is on the agenda? A constitutional amendment restricting abortion rights? New barriers to receiving public assistance in the midst of “Great Recession II This Time its Infectious?” We’re all in this together, after all.

No worries. The wise stewards have got this. But, please, keep your distance.

(319) 398-8262; todd.dorman@thegazette.com

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