Pella Chronicle


November 3, 2009

Inside the Iowa Legislature

Reducing spending to balance the budget

Even though we adjourned the Legislature in April with a $97 million projected state general fund ending balance for the current fiscal year (FY 10), the recession whittled the balance away and earlier this month the state’s Revenue Estimating Conference (REC) reduced the revenue estimate by $415 million, triggering an immediate ten percent across-the-board cut by Governor Culver. The Governor’s cut, which I support, was deep enough to cover the shortfall and leaves us with a $189 million projected ending balance, as a cushion to help fill budget gaps and keep us in the black if revenues continue to decline. As an added cushion, we still have $419 million in the state’s reserve accounts, plus $133 million in unspent federal stimulus funds.

Since the Governor’s cut only applies to general fund spending in the executive branch, I met with Senate leaders last week and we agreed to immediately implement a ten percent reduction in the legislative branch budget. By shortening the 2010 legislative session from 100 days to 80 days, cutting reimbursement to legislators, eliminating travel, and implementing a staff hiring freeze and salary reduction through furloughs, we will save the state about $6 million.

While there may be signs that the national economic downturn is coming to an end, we’re not out of it yet, and I share Governor Culver’s aversion to raising taxes in a recession. Before the across the board cut, we had already made $365 million in reductions over the past year, with no tax increases. While the across-the-board spending reduction will have an impact on local schools, I agree with the Governor that school districts need to first address the cuts by drawing down their reserve funds.

State agencies have submitted preliminary ideas for how they expect to meet the ten percent reduction, including plans to leave most vacant positions unfilled with some additional layoffs in several departments including Human Services, Public Safety and Corrections. The Governor indicated he will review these ideas and he has the authority to revise those plans before implementing the cuts, which he hopes to complete before the end of the month. He has indicated that he will be looking to make sure that public safety, job training, and certain other basic services are not compromised by cuts.

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