State Auditor Mary Mosiman says the governor and legislators are doing some good things with the state budget, but says there are some challenges ahead.
Mosiman released her review of the budget today.
“Our budget is balanced, we are doing very well in adhering to sound budgeting principles — which is essential for government entities –the deviations that we have are minimal,”according to Mosiman. “We have practically eliminated using one-time revenue sources for ongoing expenditures. The multi-year accelerated financial commitments have expired. And we are doing a better job of using the best estimates available in the budget.”
Mosiman, who is a Republican, had praise for the handling of the drop in revenue when the state tax collections came in below the forecast revenue.
“We did react timely when it became clear that our revenues were not coming in as expected. Again, the legislature and the governor’s office showed fiscal discipline did not exceed its resources,” Mosiman says. The state had to use 131 million dollars in cash reserves to cover the shortfall in tax revenues. Mosiman says things won’t get any easier in trying to forecast state revenue.
“Gaining a better understanding of Iowa’s changing revenue environment will be one of our greatest challenges and opportunities in this coming year,” Mosiman says. “But we also need to have accountability and transparency in matters that impact our revenues — such as tax credits and abatements.” Mosiman expanded on her view of the tax credits and abatements.
“What I am specifically saying with any type of credit or abatement is, the expected return needs to be known, it needs to be evaluated, it needs to be available for the decision makers. At least since I’ve been the state auditor, the three tax credit reports that we issued, that was clear in our reports that return on investment was not clearly and accurately reported,” Mosiman says. She says it is important for the decision makers to keep up on all the factors that can impact state tax revenues, including the impact of online sales.
“Just like our past performance, just like the farm economy and things like that, they have to take into account the current demographics. How are people making their purchases? Are they purchasing goods and services which are taxed — or are they purchasing services which are not necessarily taxed,” Mosiman explains.