Democrats in the Iowa Senate have sent out a fundraising pitch today, criticizing Republican Governor Kim Reynolds for “mismanaging” the state budget to the point that state income tax refunds “are taking much longer to get back to you.”
Earlier this month, Iowa State Treasurer Michael Fitzgerald told Radio Iowa the state nearly drained its cash reserves in April because it didn’t have enough cash on hand to pay those refunds and all its bills. Today, Governor Reynolds dismissed the assertion that state finances are “on the brink.”
“Every day we manage our cash flow,” Reynolds said. “…We are still a state that’s seeing growth in revenue, although it’s not as as we had projected. We have over $600 million in our economic cash reserves.”
The state has two “savings” accounts. One is the Economic Emergency Fund and the other is a cash reserve. Reynolds announced last week that she intends to use up to 50 million from the Economic Emergency Fund to cover any shortfall in the current year’s state spending plan. The budgeting year ends June 30.
Reynolds is also disputing the idea the state’s precarious finances caused the delay in income tax refunds. Reynolds said the Iowa Department of Revenue’s effort to prevent identity thieves from stealing income tax refunds is the reason refunds have been delayed.
“The bottom line is everyone will get their refunds and we’re on par to be able to manage that,” Reynolds said.
And Reynolds has rejected the state treasurer’s idea of having the state engage in short-term borrowing to improve cash flow. Reynolds said the state will have enough cash on hand to pay its bills and any income tax refunds.
According to the National Conference of State Legislatures, Iowa is among 22 states that have struggled with slow tax revenue growth and have been forced to deal with budget shortfalls this year.