Ed Tibbetts, a longtime reporter and editor in the Quad-Cities, is the publisher of the Along the Mississippi newsletter, where this article first appeared. Find more of his work at edtibbetts.substack.com.

Republicans at the Iowa capitol like to think they’re good at managing money.

They cut taxes. They’ve got a big surplus. They’re so proud of themselves, they want to teach the locals how to do it.

In her Condition of the State address in January, Governor Kim Reynolds said it was time to impose discipline on local governments, “because to pass meaningful property tax reform, we also need to be lean at the local level.”

But is the state really that much better at spending discipline than the locals?

Turns out, not so much.

Consider this: Between fiscal years 2019 and 2024, total spending by Iowa cities rose 35 percent, according to a compilation of budgeted expenses kept by the Iowa Department of Management.

During those same years, total state spending rose 31.4 percent, according to expenditure reports published by the National Association of State Budget Officers.

In other words, not much difference.

Yet, listening to the governor brag to Congress, you’d think the folks in Des Moines were Masters of the Universe.

It’s true there are differences between the state and the cities in general fund spending. The general fund is the main operating account for state and local governments, and it’s often cited by critics of local spending.

Between 2019 and 2024, general fund spending for cities was up 27 percent. For the state, general fund spending for those years increased 13 percent. (The 2024 state figures, self-reported by the state of Iowa, are estimates.)

So, what happened? Why the difference?

Easy. Public safety. Throw out the new money for cops, firefighters and ambulance services, and General Fund spending for Iowa’s cities rose over those five years by 14.8 percent. Compared to the state, that’s a difference of less than half a percentage point a year (2.96 percent vs. 2.6 percent).

Exclude the added city spending on garbage pickup, building inspections, and roads, and the cities actually come in under 13 percent.

It’s not like these are frills.

I don’t know anybody who wants to reduce current spending on cops, firefighters and city streets. And the state is only able to keep its general fund spending where it is because it skimps on K-12 public education. Iowa ranks 33rd in the nation in the share of its total spending devoted to elementary and secondary education. It isn’t even covering the cost of inflation. In fact, because of the way Iowa’s K-12 funding formula works, the state’s stinginess forces property taxes higher in some school districts across the state.

Critics of municipal spending also complain they have big cash reserves. And my perception is, in some cases, they’re right. But a one-size-fits-all property tax cap that’s being proposed in some quarters will just punish the cities doing a good job in an effort to constrain the cities that aren’t.

Besides, surpluses aren’t just a local phenomenon. The state of Iowa carries big reserves on its books, too.

Post-COVID, revenues swelled in states all across the country, vastly improving state balance sheets.

Much of the new money was due to a gusher of federal funds. Increased economic activity also helped.

Since then, the state has cut income taxes, including shifting to a flat tax. Unfortunately, the cuts favored millionaires, saving them an average $67,000, while the typical Iowa family only got $600. (The figures come from an Iowa Department of Revenue analysis.)

HIDDEN TAX HIKES

Lawmakers and the governor love to tell you about the taxes they cut.

They aren’t as eager to tell you about the taxes they raised. Which doesn’t mean Iowans don’t feel it.

Here’s an example: Two years ago, the state imposed a new 2.5 percent premium tax on the managed care companies that operate the Medicaid program. Medicaid is jointly financed by the federal government and the states.

The new tax will be reimbursed to the managed-care organizations through rate payments, but because of the way the program is financed, the state is now able to collect more federal money to help pay its Medicaid expenses.

That money doesn’t come out of thin air.

The Heritage Foundation calls these kind of provider taxes a “funding gimmick.” Advocates say they help pay program expenses.

Either way, they cost a lot of money. The Congressional Budget Office says that the federal government could save more than $600 billion over ten years just by tightening the rules on those taxes.

Congressional Budget Office table, December 2024

I wouldn’t expect states to be happy about this. Thirty-nine states, including Iowa, impose three or more Medicaid provider taxes, according to the Kaiser Family Foundation.

Lawmakers in Des Moines also like to raise costs on local governments. They do this by passing on new demands, or mandates. Meaning state lawmakers are pushing local spending higher.

Some of it is nickel and dime stuff, like a proposal introduced in the legislature to force schools to post “In God We Trust” signs at their entrances. Others cost real money.

I still hear complaints about the state ducking out on its contribution to police and fire pensions several years ago, then voting to expand benefits.

“They’re backing the blue on our backs,” one city official told me recently.

There are plenty of examples like this. The state houses some of its offices in county courthouses, which cost counties money. It also requires local governments to issue marriage licenses but keeps most of the fees for itself.

The list goes on.

Here’s the truth: Budgets are hard. People don’t like to pay a lot of taxes, but they want quality services.

Most elected officials I know work hard to strike a balance, because they know if they get too far out of line, they’ll get bounced out of office.

Maybe statehouse Republicans ought to remember that. In the meantime, legislators should leave well enough alone. They don’t have much room to brag, anyway.