Governor Chet Culver says states across America are feeling the effects of the current economic "challenge" — and congress and the president should give states "direct" financial help. "According to the Center on Budget and Policy Priorities, 29 states will experience shortfalls in this fiscal year’s budget and 15 more have gaps which have occured since this summer," Culver says.

However, Culver disputes the Center on Budget and Policy Priorities conclusion that Iowa’s budget will have a $350 million "gap" or shortfall if changes aren’t made by June 30th.

"The good news is we have a AAA bond rating and we have $640 million in our cash reserve, so because of that — especially the fact that we have more more money in our cash reserve than at any time in the history of our state — we will be able to get through the end of the fiscal year," Culver says, "and the Revenue Estimating Conference in fact said that we will have more than $40 million in a surplus at the end of the year."

But the governor says it’s time to "tighten our belt" and to "be prudent" when it comes to state spending as there’s no way to anticipate what will happen in the economy for the next several months. "Given what has happened, you know, nationally and the collapse that has happened on Wall Street there will be ramifications to all of the states that were not expected," Culve rsays. "For example, we have added 11,000 people to our Medicaid rolls in the last two months. That arguably is a direct result of the recession that we’re in."

If state tax revenues continue to slow down, Culver says that "might trigger" the need for a mid-year, across-the-board cut in the state budget. Culver spoke by phone with Iowa reporters on Monday after meeting with congressional leaders in Washington, D.C. to discuss a stimulus package for the states. "One of the things in particular we talked about was infrastructure," Culver said, "by giving the states money so that we can put people to work, create jobs and address some infrastructure needs whether it’s in Iowa or other parts of the country."

Earlier this afternoon, the state’s executive council tabled Culver’s call to switch to a single company — Wellmark — to provide health care benefits for state employees. "At this time especially when we’re faced with real challenges in terms of our national economy and the budget, I think it was a mistake for the executive council to approve the much better option, in my opinion, that could save taxpayers up to $20 million over the next two years," Culver said. Critics say it makes no sense for the state to reduce competition in the health care arena by picking just one carrier to provide insurance benefits to state workers.

 

AUDIO: Culver conference call (mp3 runs 15 min)