The state treasurer has delivered a letter to Governor Kim Reynolds, formally asking her to reconsider a short-term borrowing plan to ensure the state can pay all its bills on time.
State Treasurer Michael Fitzgerald says there’s great uncertainty about state finances since Governor Reynolds hasn’t decided how much of the state cash reserve will be used to balance the previous year’s state budget. The official close of accounts for the previous fiscal year is September 30.
Fitzgerald says it would be “prudent” to get a cash-flow borrowing plan in place now for the next 10 months. He says it will avert problems next spring when the state treasury is stretched as state income tax refunds go out — and the state still must meet payroll and make monthly state school aid payments.
Fitzgerald has been making this suggestion informally since June, but he made an official request Wednesday. Governor Reynolds has repeatedly rejected the idea the state needs to issue short-term bonds to build up a cash-flow cushion for state government operations. Earlier this month, Reynolds said the state had “almost half a billion dollars” in its cash reserves and short-term borrowing is not necessary. According to Fitzgerald, the state barely “squeaked by” and came “dangerously close” to not being able to pay its bills on time last April.
Governor Reynolds’ communications director Brenna Smith issued a written statement, indicating the state’s cash reserves are now at $610 million.
“Michael Fitzgerald is again engaging in his tiresome, headline-grabbing scare tactics. Iowans should not be fooled by this dangerous, reckless rhetoric,” Smith said.