A three-member panel of financial experts has dramatically reduced their estimate of state tax revenues, a decision that will force legislators to cut the state budget. Reducing the current year’s state budget by $130 million and cutting next year’s spending plan by about $270 million will cause "pain," according to one legislative leader.

House Democratic Leader Kevin McCarthy of Des Moines says lawmakers hope to avoid state worker layoffs. "But it is a possibility given the numbers that we’re facing," McCarthy says. "It’s not a pleasant situation to be in but our job as legislators is to balance the budget. That’s our legal requirement and we’re going to do it in a prudent fashion and try and protect those services that the most vulnerable Iowans need — but there’s going to have to be some serious cuts and there’s going to have to be some serious pain involved."

Legislators had been waiting for today’s report before drafting any specific spending plans for next year. McCarthy says now lawmakers can shift into "shut down mode" and make final decisions on next year’s budget. "We have the numbers now — much worse than we expected — but that’s why we get paid the big bucks here is to make the tough decisions," McCarthy says. "We do have the numbers, so that will allow us to be focused, determined and to make the tough decisions over this next week on what our (spending) targets are going to be and then move forward and start shutting down the legislature which will take the next two or three weeks."

There’s still one big unknown for legislators: the "strings" which may be attached to the one-point-nine billion dollars being sent to Iowa courtesy of the federal economic stimulus package. Representative Jo Oldsen, a Democrat from Des Moines, is chair of the House Appropriations Committee. She’s directing the leaders of her seven budget subcommittees to make more cuts.

"We are still trying to get as much detail as we can on what those strings will be from the feds," Oldsen says. "But our instruction at this point to our budget (subcommittees) is to take a look at the dollars that we have in the state budget as it stands and try to be as lean and efficient as possible without counting on what those federal dollars may be."

Danny Homan, president of AFSCME Council 61 — the union representing the largest number of state workers, says state government’s basic operations have been cut to the bone. "I would challenge anyone to walk into any one of the state institutions anywhere in this state and find excess people," Homan says.

Homan contends union workers aren’t the problem. He suggests there are too many mid-level managers in state government.  "I believe that in some parts of state government they have added additional management, middle management or assistants to assistants to assistants that may not be necessary."

Homan suggests some areas of state government — like the state’s prisons — actually need to hire more staff. "I can tell you that in the cell house at any one of our prisons, we don’t have enough staff. That’s why folks are being assaulted. In the (state facilities which care for the mentally ill and mentally disabled), we don’t have enough staff. We are mandating overtime like there’s no tomorrow and we need some staff," Homan says. "But at this point in time, I don’t know how we get there."

Governor Culver issued a prepared statement, saying that "while important decisions have to be made," he’s "optimistic" there are "solutions to meet these economic challenges."