For months, Republicans lied about Iowa supposedly running a billion-dollar budget deficit. Then they claimed that while Democrats might have balanced the current-year budget, they had pushed the state to the edge of a “cliff” for the following fiscal year. Another billion-dollar shortfall loomed, we were told, because Democrats relied too much on “one-time” federal funding and rejected the GOP’s proposed spending cuts. (By the way, those wouldn’t have saved the state as much money as Republicans claimed).
Yesterday Iowa’s Revenue Estimating Conference increased revenue projections for fiscal year 2011 by just under $298 million, citing improvements in the economy.
The REC additionally made its first projection for the fiscal year that will begin July 1, 2011. The estimate for that year is almost $5.946 billion. […]
The Legislative Services Agency has previously estimated that Iowa faced a budget gap of between $800 million and $1 billion for the fiscal year that begins July 1, 2011.
Gaps are not deficits. Instead they are projections. And projections of hundreds of millions of dollars are common prior to the beginning of any budget year due to how the state budget is put together. State lawmakers gather to whittle the state’s budget requests to fit the expected revenue.
Holly Lyons, director of the Legislative Services Agency’s Division of Fiscal Services and an REC member said today’s number would likely mean that the 2012 gap will be roughly $300 million smaller.
Contrary to Republican rhetoric, Democrats were wise not to deeply slash state services during the recession. The 2009 stimulus and other forms of federal fiscal aid did the job of helping Iowa get through a period of declining revenues without making huge cuts in education, Medicaid and other programs. Not using those federal dollars to support the state budget would have imposed unnecessary hardship on Iowans. In addition, deeper public-sector cuts would have further weakened the national economy. The latest U.S. jobs report demonstrated the impact of cutbacks in state and local budgets.
Iowa Republicans should apologize for their drumbeat on “overspending,” but don’t expect anything to change during the last three weeks of the campaign.
Final note: the swings in state revenue projections show that Terry Branstad’s plan to move Iowa to biennial budgeting would be foolish. It’s hard enough to predict revenues 12 months into the future, let alone 24 months out. That’s why many states have abandoned biennial budgeting in recent decades. Branstad hasn’t talked much about this issue since the Republican primary campaign, but he was on record then insisting that Iowa should move away from annual budgets.