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Governor
Signs Republican
Backed
Budget Cuts
On
Friday, March 1, Governor Vilsack signed Senate File 2304, the
$121.7 million deappropriation and budget adjustment bill for FY
2002. The Governor
withheld any item vetoes. SF 2304 has four major components:
$44.85 million from the Economic Emergency Fund to cover K-12
school foundation aid, $49.4 million of funds not yet spent
shifted into the general fund, $12.8 million from judicial branch
and executive branch furloughs and $14.7 million from the one
percent across the board cut and legislative cut.
In
the message announcing his action, the Governor said, “It
didn’t have to be this way.” The Governor does not have a
“15-month budget action plan” to balance the budget, as he
claimed, and if you look at his previous budgets, he’s never had
plans to balance any budget. Governor Vilsack’s standard answer
to budget problems is to shift more money and refuse to make tough
choices.
Although
the Governor said he was pleased that there was agreement to use
some of the state’s surplus to protect kindergarten through 12th
grade education, he also expressed disappointment in the
Republican legislature’s refusal to raid the Economic Emergency
Fund (EEF). Vilsack said he was concerned that Iowa’s children,
families, and senior citizens would not be protected from harmful
cuts. Several times, however, Republican leadership has asked the
Governor to submit budget cuts and make the tough choices. His
answer instead was an ultimatum to take $120 million from the EEF.
He refused to respond to requests from legislative leadership to
reach a compromise on the bill. Rather than meeting with
legislators, he went on a public relations tour to convince Iowans
that he was right and Republicans were wrong.
Finally,
the Governor said, “I had a better plan – which the Republican
Legislature rejected. It is my hope that in developing a common
sense budget for FY 03, legislators will join me in seeking to
protect the priorities of Iowa families – improving education,
expanding access to quality health care, and providing economic
opportunity.” Despite this statement, the Governor’s plan was
actually worse, not better as he claimed. The Governor’s
fiscally reckless policy was a recipe for disaster that would have
led to even bigger deficits in fiscal year 2003 and fiscal year
2004 and tax increases in future years.
While
it is good for the taxpayers of Iowa that the Governor signed the
bill, his comments were misleading.
Governor Submits
Second Budget for FY2003
The
Governor released his revised budget for 2003 Thursday. The
Department of Management says the Governor needed to cut or shift
$130 million from his original budget proposal. The Governor’s
revised budget will use a combination of budget cuts, revenue
transfers and reserve funds to support his spending increases. The
numbers work out to 80 percent in
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shifts
and 20 percent in cuts. Shifting this much only postpones the
problem until future years and sets the state up for a tax increase.
Since
the Governor exempts upwards of 75 percent of the budget from cuts,
the remaining 25 percent is forced to take a 3
percent
cut. If less of the budget were exempt, it would distribute the cuts
on a more equitable basis.
The Governor says he wants 49
percent to come from shifts. While some shifts are acceptable, there
are others we cannot accept. Even the Democrats won't vote to take
$60 million from the Road Use Tax Fund. Any additional dollars taken
from the Underground Storage Tank fund will cause cash flow problems
for the program next fiscal year.
The Governor’s
press release gives the idea that nobody will feel any pain with his
budget shifts and cuts. According to him, education, public safety
and human services will all be protected, but sooner or later
somebody needs to tell Iowans the hard truth about the budget
situation.
The
Governor claims his latest budget “draws the line at any further
cuts to human services.” Questionable budgeting practices and
salary increases implemented by embattled DHS director Jessie
Rasmussen, however, make it rather risky to assume that every dollar
DHS is spending is spent well or should be spent at all.
The
Governor claims his budget is a common sense budget and ensures
long-term fiscal stability. Long-term fiscal stability will not be
achieved by building a budget on one-time revenue sources. Common
sense tells us that when spending and revenue are out of balance,
that spending should be reduced—sooner or later the tough
decisions will have to made.
Saying
that spending will be aligned with revenue is also a false claim.
Next year the one-time revenue (which constitutes 80 percent of the
budget increase) will be gone and the spending will remain.
Ways
& Means Update
Bills Passed In The Ways & Means
Committee
This Week:
HF
2068
An
act relating to assessment of certain vineyards for purposes of
property taxation
Bills
Assigned in the Ways & Means
Committee
this week:
HSB
707 An act allowing a tax
credit for equity investments in Venture Capital funds.
HSB
708 An act relating to the method of computing the taxable
income of a member of a limited liability company.
HSB
709 An act providing modifications relating to the qualified
state tuition program to maintain consistency with federal law
changes.
HSB
710An
act relating to assessment of subdivided lots for purposes of
property taxation.
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