The state auditor warns the budget plan devised by the Iowa Legislature and signed into law by Governor Vilsack will “strain” future policymakers.
State Auditor David Vaudt says to keep future spending promises as well as the tax cuts outlined in the document, legislators and the next governor will either have to cut state services or raise taxes. “We’re getting to the point where the resources that we’ve ben tapped in the past are essentially depleted,” Vaudt says. “We’re either going to have to find ways to reduce the expenditure side or increase the revenue side.”
Vaudt points to the $300 million in new spending on education initiatives that legislators and the governor promised over the next three years and the $70 million in pension tax cuts. “That is definitely contrary to good, sound budgeting principles,” Vaudt says. “Part of my concern gets to be is if you take a look at what we’ve been doing over the last few years, we can’t balance our current costs let alone when we build in these increases.”
Vaudt today (Wednesday) released an analysis of the budget Governor Vilsack signed into law in May and early June. Vaudt warns the spending’s too steep when compared to incoming state tax revenues, and could put the state in jeopardy if there’s a recession or some sort of natural or man-made disaster. “We have no contingency plans should the economy change,” Vaudt says. “If the economy changes because of some impact — the weather, attacks, whatever it might be — we have no contingency plans because of the way that we’re building our budget.”
Vaudt, a certified public accountant who was elected state auditor in 2002, points to rising interest rates and higher energy costs which are “changing the markets” according to Vaudt. As a result, Vaudt believes Iowans will spend less and that means the state will collect less in sales taxes.
The legislature and governor approved $5.7 billion worth of state spending in the next 12 months. Vaudt says that’s a more-than-five-percent increase compared to the previous budgeting year. The state fiscal year started July 1st.