State Auditor Dave Vaudt says Iowa lawmakers have put the state on a path that could be financially perilous if there’s a significant economic downturn.
"We’re not going to turn this ship around in one year and I’m not asking them to. I’m not expecting miracles, but I am looking for progress," Vaudt says. "…Should we hit economic times that either slow the (state tax) revenue growth, flatten the revenue growth or worse yet reduce revenues we’re going to have even more significant challenges to face because our ongoing programs are still going to be there demanding those dollars and we’re not going to have the revenues to support them because we don’t have them today, either."
Vaudt’s review of the state budget plan that goes into effect July 1st concludes the legislature and the governor dipped into special accounts for $366 million, rather than rely on general state tax revenue. And it’s not the first time the state has borrowed from some of these accounts. "I’d love to have a revolving line of credit with my bank like this. In other words, if you borrow it and you repay it once you’re done. You can withdraw it again and you don’t have to repay," Vaudt says. "I don’t think we’ll find a revolving line of credit with any bank, that I’m aware of, that will do that."
Vaudt, a Republican, is passing judgment on the latest budget developed by a Democratic-led legislature and approved by Governor Chet Culver, who’s also a Democrat. Vaudt says he raised the same kind of concerns when Republicans led the legislative branch. "There’s no such thing as Republican numbers or Democrat numbers. They’re the numbers and what we’re trying to do is say, ‘What’s best for Iowa? How do we get there and how do we start making some progress and some improvements?’ so that Iowa returns to better financial condition and we’re that better prepared for (the) future," Vaudt says.
Vaudt concedes Democrats ensured there is more than $600 million in the state’s "rainy day" fund — the most ever — but he warns that could evaporate in a year if there’s a recession and state tax revenues fall. "It’s a very, very scary situation when you say you have $600 million worth of rainy day funds, but yet when you take a look at what we’re paying for that’s not a general fund (state tax) revenue it’s really scary so the key is we’re very, very vulnerable to what the economy might do to us," Vaudt says. Vaudt says no one knows how long a recession might be, or how deep it might be, and he’s concerned there haven’t been ample preparations at the state level for such a downturn.
The spending plan lawmakers approved this spring provides a 4.7 percent increase compared to the current year. The state budget is over $6.5 billion for the 12-month period that begins July 1st. Vaudt began issuing an annual review of the budget devised by the legislative and executive branches of government in the spring of 1999, the year he took office.
You can listen to Vaudt’s review of this year’s budget by clicking on the audio link below.
House Speaker Pat Murhpy, a Democrat from Dubuque, issued the following written statement: "Over the last two (years), Democrats have made great progress in balancing the state budget and meeting the priorities of Iowans. We passed a fiscally responsible budget that complies with state law and fills the state’s savings accounts at the highest level in Iowa history, over $620 million.
"We knew we could not fix all of the Republican budget problems in just two years, but we have made significant progress. We repaid $263 of the $300 million Republicans borrowed from the Senior Living Trust Fund and we took another step toward reversing a Republican accounting gimmick used to pay for property tax credits out of the state’s ending balance.
"Auditor Vaudt should take off his partisan, Republican blinders and give credit to the Legislature for improving the state’s fiscal condition by balancing the state budget and helping middle class families."