Now that State Senator Kim Reynolds is officially the Republican candidate for lieutenant governor, it’s time for her political views to receive more scrutiny. On the day Terry Branstad announced he had picked Reynolds, she said this:

We have a projected state budget gap of nearly $1 billion dollars.  And we have seen a dramatic slide in student test scores and teacher layoffs in school districts across the state. We can do better.  We must do better.  And, as Terry Branstad’s running mate, I will dedicate my every waking minute to sharing with Iowans his ambitious goals for our future.

She repeated those talking points in her speech to the GOP state convention on June 26. Republicans never tire of the “projected state budget gap” ruse. Reynolds is talking about projections for the budget year that begins in July 2011. Maybe she forgot that the Democratic-controlled legislature passed a balanced budget for the fiscal year beginning on July 1 despite a projected $1 billion shortfall last November. Reynolds also asserted that Governor Chet Culver has “spent too much, taxed too much, borrowed too much” and dismissed Iowa’s AAA bond rating as irrelevant: “That’s like my husband telling me, our checkbook and savings are empty, but we’ve got $15,000 we can still spend on the credit card.” Not really, Senator Reynolds: Iowa has money left in our state reserve funds (equivalent to a family’s savings account), and independent analysts affirm that our fiscal health is strong coming out of the worst recession since World War II. Many states fully depleted their rainy day accounts in response to an unprecedented drop in state revenues, but Iowa did not.

Like Branstad, Reynolds laments teacher layoffs across the state, and like Branstad, she fails to acknowledge that those education cuts would have been much deeper without the federal stimulus money Iowa has received.

Branstad’s not a numbers guy and hated tough budget meetings when he was governor. Having served four terms as Clarke County treasurer, Reynolds should feel more comfortable talking specifics on state spending. Friends have said she was able to save money as a county treasurer without cutting services. She’s campaigning with a guy who promises to veto any bill that calls for spending more than 99 percent of state revenues collected. Let’s see Reynolds produce an alternative budget for the current year that protects K-12 education without “spending too much.”

Details on the budget for fiscal year 2011 can be found here. All Reynolds needs to do is figure out how to spend no more than 99 percent of state revenues projected for the year. In other words, balance the budget without using the $328 million in federal stimulus money (American Recovery and Reinvestment Act funds) and the $267 million in reserve funds that Democrats included in the budget Culver signed into law.

If Reynolds is prepared to criss-cross the state bashing Democrats over teacher layoffs, she should be prepared to show us the education budget Iowans could expect under a Branstad administration.

Republican candidate Terry Branstad claims he learned from his mistakes in handling the state budget and says he will “put the focus back on restoring fiscal responsibility and jobs and education” if elected to a fifth term as governor. Not only will he abide by generally accepted accounting principles, he promises, he will veto any bill that calls for spending more than 99 percent of state revenues collected.

Independent analysts have vouched for Iowa’s strong fiscal condition, but Branstad and other Republicans cry “overspending” because the balanced 2010 and 2011 budgets relied on some money from the federal government and from Iowa’s reserve funds. Never mind that supporting state budgets, thereby reducing the need for big service cuts, was one of the primary goals of the American Recovery and Reinvestment Act (2009 stimulus bill). Never mind that unprecedented flood damage in Iowa coincided with the sharpest drop in state revenues in 60 years because of the longest recession since World War II. Branstad claims Iowa should not spend more than 99 percent of state revenues collected in any fiscal year.

Last Friday Branstad used a story on teacher layoffs in Des Moines to score political points, ignoring the fact that education cuts would have claimed far more teachers’ jobs if not for the federal stimulus bill. Click here for more information on ARRA funds allocated to Iowa education programs for the 2010 and 2011 fiscal years.

It’s time for Branstad to put up or shut up. He has a well-staffed campaign and a policy director who served in the Iowa House for ten years. Taking the 2011 budget Governor Chet Culver signed as a starting point, Branstad’s team should figure out how to do without the $328 million in federal fiscal aid (ARRA funds) and the $267 million in reserve funds that budget incorporates.

Then Branstad should produce the budget he would have demanded for fiscal year 2011, which would spend no more than 99 percent of state revenues projected for the year. Let’s see how K-12 education, Medicaid, public safety and other services would fare under Branstad’s “responsible” Iowa budget.

Hint: the spending cuts Branstad endorsed during the primary campaign (ending the preschool program, family planning funding, and reducing administrative costs at Area Education Agencies) would not come close to bringing the budget into balance for 2011.

Also keep in mind that the spending cuts Iowa Republican legislators proposed during the 2010 session were padded with wildly inaccurate estimates of how much could be saved on services to undocumented immigrants.

Voters deserve more than platitudes about fiscal responsibility. Let us compare the 2011 budget Iowa Democrats adopted with the one Branstad would have demanded.

Speaking to the annual meeting of the Iowa Farm Bureau Federation today, Governor Chet Culver said the way Iowa drafts its budgets should be changed:

Currently, the governor said he is required to submit a state budget by the end of January based on projections set by the state Revenue Estimating Conference in December, but then lawmakers craft their spending plan after the REC’s next quarterly estimates in March.

“That makes no sense at all. For three months, we sit around and wait for the March number in many cases before serious budget discussions take place,” he said. “We have a moving target. It is terribly frustrating and we need to make some changes.”

Several accounting experts have told me that it is impossible to estimate state revenues accurately. The current system leads to budget surpluses when the economy is doing well and shortfalls requiring rapid cuts when the economy heads downhill.

As usual, Iowa State University economist Dave Swenson has a better idea. Speaking to the Des Moines Register in October,

Swenson said he believes the budget-setting system is backward. Government should look at annual needs and adjust taxes and fees to accomplish goals. Instead, officials adjust needs by what’s available.

“It is a stupid system and makes no sense,” Swenson said.

The most recent Iowa poll for the Des Moines Register showed that broad majorities support increased state spending on various programs that Democrats have expanded in recent years. Even a majority of self-identified conservatives supported maintaining higher spending levels for teacher pay, state aid to schools, renewable energy research and development, health care coverage for children and repairing roads and bridges.

If politicians evaluate our state’s needs and then search for a way to fund them, we are likely to get some changes on the revenue side of the equation. Eliminating certain tax credits could increase revenue, and Culver has created a panel that will evaluate all of the state’s current tax credits before making recommendations for state legislators.

Our state income tax structure should also be on the table. A new poll by Selzer and Associates for the Iowa Fiscal Partnership found that a majority of Iowans would support eliminating federal deductibility, which mainly benefits high-income taxpayers. During the 2009 legislative session, Culver and legislative leaders agreed on a tax reform package that would have ended federal deductibility, but Iowa House leaders were unable to find 51 votes to pass that bill.

UPDATE: More details from the Des Moines Register are after the jump.

Iowa Senate Majority Leader Mike Gronstal discussed the film tax credit fiasco on this weekend’s Iowa Press program, and it sounds like defenders of the tax credit will be fighting an uphill battle during next year’s legislative session:

“I think we’re going to get this investigation from the Attorney General and from the State Auditor. I think we’re going to do a good evaluation of the program and if we can’t show a real benefit to the state of Iowa – and not just a few part-time jobs, but a real long-term benefit to the state of Iowa – I think it’s 50-50 as to whether this program continues.”

According to Gronstal, he and other legislators right now “see very little in terms of potential benefits” to the state from the film tax credits which have been awarded already.  […]

Gronstal says he may regret having voted to create the program and he expects some political fall-out from this episode.

“People will be disappointed in that, but I think it’s the responsibility of the legislature – we try things in economic development. Everything we try doesn’t work and it’s perfectly o.k. to occasionally decide, ‘You know, we’ve (gone) down a road and that road doesn’t make as much as sense as we thought it made,’” Gronstal says. “And so we’re going to go back and change that.”

Gronstal also defended Governor Chet Culver, saying “once he found out about [problems with the film tax credit] he acted quickly and put the program on hold and got people to investigate.”

Gronstal expressed surprise that a flood of applications for film tax credits this spring allowed producers to get around the $50 million annual cap the legislature approved for the program. (Note to legislators: next time you cap a tax credit, make the law go into effect immediately on being signed by the governor.)

Culver has ordered a comprehensive review of all Iowa tax credits, and Gronstal made clear that legislators will subject these programs to additional scrutiny in the coming year:

“If you can show that a tax credit creates a climate, for instance, the research activities tax credit – if you can show that that keeps an industry here in the state of Iowa and builds long-term jobs and high-wage, high-skills jobs in this state where there’s a net benefit to the state by having that set of jobs come along with it, yeah, that makes sense,” Gronstal says.  But Gronstal says if you can’t show that, then the tax credit should be repealed.

A critical analysis of Iowa’s tax credits is overdue, but better late than never. State revenues continue to lag behind projections because of the recession. Repealing wasteful tax credits could reduce the size of state spending cuts during the 2010 fiscal year. Iowa Republicans would like to plug the budget gap entirely through spending cuts, but they forget that deep spending reductions by state and local governments can also be a drag on the economy.  

The Des Moines Register ran a piece on New Year’s Day called Culver resolves to leave as premier Iowa governor:

Gov. Chet Culver, who plans to run for re-election in 2010, gave himself overall high marks for his first two years in office during an exclusive, year-end interview with The Des Moines Register this week.

Some of the accomplishments he touted include improvements to health care coverage for children, expanded preschool, alternative energy incentives and efforts to help Iowa in flood recovery.

Culver has a picture of former Iowa Gov. Horace Boies on the wall of his office at the Capitol, which he uses as inspiration.

“Some people say he’s the best governor we ever had and that’s my goal: To try to be the best governor we ever had, and I’ve got a lot of work to do to achieve that goal,” Culver said.

I don’t know a thing about Horace Boies, but the piece got me thinking about what Culver would have to do to go down in history as the best governor Iowa ever had.

What makes a governor, or any elected official, memorable in a good way for decades after leaving office?

Some politicians make history instantly by being the first something-or-other to reach a particular position. Whether Barack Obama turns out to be a great president or achieves as little as Millard Fillmore, he’ll be remembered for centuries as the first black man elected president.

Culver’s not going to be remembered for being the first of anything.

Some politicians are good at winning elections but don’t leave much of a legacy. Terry Branstad never lost an election and served four terms as governor of Iowa, but he’s not going to make anybody’s “best governors ever” list.

Bob Ray was a good man and had a lot of crossover appeal. He was re-elected by big margins. (He was the only Republican who ever got my mother’s vote, as far as I know.) He was tolerant and even encouraged foreign immigrants to move here, which may be hard to believe if you’ve only ever known Republicans since 1990. I don’t know whether Ray had any big accomplishments historians will be talking about far into the future, though.

If Culver does an adequate job governing Iowa through a difficult economic stretch, he should be able to win re-election. But if he wants to be remembered 50 or 100 years from now, he’s going to have to do something big to change business as usual in this state.

On January 1 former Senator Claiborne Pell of Rhode Island passed away at age 90. He’s been out of the Senate for more than a decade, he represented a small state, and according to his obituary he was a weak chairman of the Senate Foreign Relations Committee.

Nevertheless, people remember him because Pell Grants have helped thousands and thousands of Americans go to college. Millions of Americans have a friend or relative who received a Pell Grant. The grants may not be large enough to meet the need and have not increased at the same rate as college tuition, but they have improved people’s lives in a tangible way.

Lots of people serve in Congress for decades without ever achieving anything as significant as establishing the Pell Grant program. They may be more politically skilled than Claiborne Pell, but they won’t be remembered in the same way. He was passionate about expanding opportunities for children of modest means, and he made lasting change toward that end.

I don’t know what issues are particularly important to Culver. From my perspective, he needs to be ambitious about achieving some goal that benefits large numbers of Iowans. He’s more fortunate than Tom Vilsack, because the Republicans are not in a position to block his agenda in the legislature. He may need to spend political capital to get the Democratic leaders in the statehouse to back him, but he’s got a better chance than Vilsack to make big changes.

I haven’t seen Culver take a lot of political risks during his first two years. He’s done good things, like raising the minimum wage, making health care accessible for more children and allocating more money to the Main Street program. He’s tried to do other good things, like expand the bottle bill to include juice, water and sports drinks (the legislature did not approve that measure).

But Culver is not out there on any controversial issue. He said he was for local control over siting of large hog lots (CAFOs) when he was running for governor, but he hasn’t done anything to get the legislature to pass agricultural zoning. I don’t expect that to change, even though the Iowa Democratic and Republican party platforms ostensibly support “local control.”

When the legislature debated the TIME-21 proposal to increase transportation funding, Culver did not get behind efforts to increase the share of funds devoted to freight and passenger rail, public transit or maintaining existing roads. As a result, it’s possible that new road construction will consume all of the extra money allocated to transportation.

Culver supports renewable energy, but he hasn’t taken a position on the new coal-fired power plants proposed for Waterloo and Marshalltown. Nor has he leaned on the legislature to pass an ambitious renewable electricity standard (for instance, requiring that 20 percent of electricity come from renewable sources by 2020). That kind of mandate would require utilities to ramp up clean energy production more quickly.

Faced with a major revenue shortfall, Culver took the relatively safe path of imposing a hiring freeze, reducing out-of-state travel, and then cutting spending across the board by 1.5 percent.

Perhaps the Popular Progressive blog was right, and Culver should have spared some state agencies from cuts while imposing deeper cuts on the agencies that are not performing as well.

Depending on what Culver cares about most, and what he views as achievable, he could secure his legacy in any number of ways.

He could become the governor who made sure Iowa’s water was cleaner when he left office than when he arrived. But that would require addressing some conventional agricultural practices that cause runoff problems. Obviously, the groups backing the status quo in agriculture are quite powerful.

Culver could become the governor who took the climate change problem seriously and put us on track to reduce our carbon-dioxide emissions. That means getting behind the recommendations of the Iowa Climate Change Advisory Council and making sure budget constraints don’t become an excuse for doing little to promote clean, renewable energy.

Culver could become the leader who helped solve our budget problems by restructuring government to save taxpayers money without reducing essential services. That might require treading on politically dangerous territory. Maybe Iowa needs to take radical steps to save money, like reducing the number of counties.

My list is not exhaustive, so feel free to add your ideas in the comments.

I’ll wager that anything big enough to put Culver on the all-time great governors list would be risky for him to pursue. He might fail to secure the legislature’s backing and come out looking ineffective. Also, some policies with long-term benefits may be unpopular in the short term, either with the public or with well-funded interest groups.

Playing it safe may give Culver a better chance of being re-elected, but at a cost to his potential legacy.

What do you think?

Iowa voters handed Democrats the keys to run the state in 2006 and expanded the Democratic majority in the legislature this year. Now we have to prove that we are capable of governing well. Like almost every other state, Iowa is facing a deteriorating revenue base while demands for government services rise in a tough economy. Governor Chet Culver has already imposed two rounds of budget cuts, and more difficult choices will need to be made during the upcoming legislative session.

There is no perfect solution to the budget problem, but some proposals are so bad that they should be ruled out immediately.

Selling the Iowa Lottery is a terrible idea on every level.

I don’t often agree with Des Moines Register columnist David Yepsen, but he is right about this:

Why would anyone want to sell their seed corn? And why would Iowa want to do something that may lead to expanded gambling? […]

We should privatize those governmental functions that cost the taxpayers, not the ones that make them a profit. […]

Since 1985, the Iowa lottery has netted state government $1 billion. Why would we turn some of those profits over to the gambling industry? It’s short-term thinking to give up $50 million in annual lottery profits for a lump sum now.

Also, this idea breaks faith with the promise made to Iowans when we started down the path of expanded gambling: If Iowa was going to get into legalized gambling, it was going to be heavily regulated.

Now we’re going to invite casino owners and others in the gambling industry to run our lottery? I’m sorry; the history of the gaming industry is just too checkered to put people from it in charge.

I have never bought a lottery ticket, and I hate to see the state encouraging people to throw their money away on the lottery. But now that Iowa has a lottery, we should keep the profits in state hands. Selling the lottery would bring in cash this year, but we’d need to replace the lost revenue in future budgets. It wouldn’t solve the problem, and it would make Democrats look incompetent.

By the way, State Auditor David Vaudt described the idea as “a very short-term Band-Aid approach.” The plan he described would involve

a lease of the lottery for up to 50 years in exchange for a lump sum payment of $200 million and some annual lease fee.

The lottery generates more than $50 million a year in profits for the state’s budget, and Vaudt predicted the lump sum would quickly evaporate.

Of course it would.

Vaudt may be the Republican nominee for governor in 2010, and he was warning about budget problems long before Culver and the Democratic leadership in the legislature started talking about budget cuts. Do we want to hand him another talking point on Democrats’ alleged fiscal irresponsibility?

If selling the lottery is bad policy and bad politics, why would anyone consider it? Here is Yepsen’s theory:

[T]he fact that Culver is entertaining sale of the lottery is an example of how big gambling money and influence slosh around Iowa politics.

The delegation that called on him to promote the idea included former Iowa Attorney General Bonnie Campbell, who is a longtime friend, adviser and donor of Culver’s, and Jeff Link, a leading Democratic campaign strategist who also runs referenda campaigns for gambling interests.

Culver will need to show how selling the lottery is a good deal for taxpayers and not just his cronies and campaign contributors on the gambling industry’s payroll. Watch to see how much gambling money starts showing up in Culver’s re-election warchest – and in those of Democratic legislative leaders.

Democrats helped gambling interests last session by putting an unjustified exemption for casino floors into the smoking ban bill. If we care about workers’ health, why should casino employees be less protected than those who work in restaurants and bars?

Handing over the lottery would play right into Republican talking points about “special interests” controlling the Democratic Party.

Culver, House Speaker Pat Murphy and Senate Majority Leader Mike Gronstal should nip this speculation in the bud by ruling out any plan to sell the lottery for short-term gain.

What else, if anything, should be “off the table” in the context of balancing the budget? I agree with Culver that going into debt should be considered.

I also believe that shared sacrifice requires some kind of action on the revenue side, such as closing tax loopholes that primarily benefit the well-off. When middle-income and lower-income Iowans bear the brunt of cuts in services, wealthier Iowans should also be asked to help bring the budget into balance. Some economists have shown that during an economic downturn, raising taxes on the wealthy does less harm to the economy than cutting government spending.

I understand the political arguments against raising taxes in any form now. There will be plenty of time to debate that later. For now, Democrat leaders should make the easy call: keep the Iowa Lottery in state hands.

Three days after he announced plans to cut $40 million from the current-year budget and delay a planned expenditure of $37 billion, Governor Chet Culver said on Friday that he will announce a further $60 million in spending cuts next week. The total state budget for the current fiscal year is $6.1 billion.

Iowa’s Revenue Estimating Conference met the same day and “lowered this fiscal year’s revenue estimate by $99.5 million and next year’s estimate by $132.6 million.”

Iowa House Republican leader Kraig Paulsen slammed Democrats in a statement:

Democrats have put this state in a precarious position […] At a time when the national economy was on it’s way down, Democrats increased state spending by over $2,000 per family, over the span of two years they’ve hired more than 2600 new state employees, and loaded up budgets with pork projects for their preferred constituents. The only thing they have left to show for it is a gaping hole in the budget.

Give me a break. The Republican Party long ago stopped being the party of fiscal responsibility. John McCain himself admitted this:

We lost the election in 2006 because we lost our way. […] Spending lurched completely out of control.

Anyway, the New York Times reported last month,

At least 37 states and the District of Columbia have faced or are facing budget gaps totaling $66 billion in the 2009 fiscal year. Most states, which rely on sales, income and property taxes, are seeing a significant drop in such revenues or increases that are below the inflation rate, compared to the same period last year.

Click here to view a graphic showing which states have budget problems. If you look at that map, you can see that many states’ projected budget shortfalls are larger per capita than Iowa’s. This is a tough economy, and not only for states run by Democrats.

Meanwhile, House Speaker Pat Murphy promised,

We will take action in January to keep the 2009 budget balanced. There will be difficult decisions to make, but we will not balance the state budget on the backs of middle class families in these difficult times.

House Majority Leader Kevin McCarthy commented,

We have over $620 million in the state’s rainy day funds and we have a Governor and state legislature that are committed to fiscal discipline.

Yet, we need to be prepared for real cuts in budgets for both 2009 and 2010.  There will be real cuts and there will be real pain, but I do believe that Iowa is in a better position to weather this budget storm than almost any other state.  

Jason Hancock’s piece about the various budget projections for Iowa is worth a read. The most pessimistic scenario is quite grim.

Very tough choices will have to be made during the legislative session. I wouldn’t expect the return of much, if any, of the state money that was “swept” from other programs last summer to pay for flood relief.