A projected $1 billion “hole” in the state budget for the next year was the major topic of conversation at the first Mills County legislative briefing of the year.
Western Iowa state representatives Greg Forristall and Richard Anderson joined veteran state senator Hubert Houser in addressing state finances and other legislative issues with approximately 25 people in attendance at the Jan. 16 forum in Glenwood.
The three Republican legislators told their Mills County audience that initial projections show revenues falling approximately $1 billion short of meeting the state’s $6 billion budget.
Houser said the shortfall is a direct result of budgets being established on projected revenues instead of actual dollars generated. He singled out the state’s cigarette tax as an example of a revenue source that isn’t producing the dollars it’s been projected to.
“There are things like that (the cigarette tax),” Houser said. “When we overproject on revenue, it’s one of the reasons we get into trouble.”
Houser said this is the third time in his 18-year tenure in the Iowa Legislature that lawmakers have been forced to deal with a revenue shortfall. In similar situations, Houser said, the state has dipped into cash reserves, made cuts or shifted dollars from one fund to another, but this time he senses a different result.
“What I see differently about this situation compared to the past is that we generally followed with a V-shaped economic recovery, so that in a year or two, the economy was generally coming back with the adjustments that were made along with new growth and revenues” Houser said. “Of course, we didn’t ever have this huge billion-dollar hole we have now. We were able to get through it. Everybody has their opinion on this, but I certainly don’t see a V-shaped recovery out there. We’ll probably be at this thing for several sessions.”
Houser said there’s been some talk of utilizing road-use dollars to fund the Iowa State Patrol, a proposition that’s not popular with Joe Blankenship, a member of the Mills County Board of Supervisors.
“The problem in taking this $50 million out of the road-use tax fund and giving it to the highway patrol, the roads in this state are in terrible condition,” Blankenship said. “For two years, they talked about raising the gas tax – which would help somewhat because non-residents of the state would pay into the tax money.
“The more money they take out of the road-use tax fund, the less money we’re going to have as a county to make the repairs that we have to make. So, the cost of that drops to the residents of the county.”
Forristall said raising the state gas tax has support in the legislature, but not from Gov. Chet Culver.
“If left to the legislature two years ago, we would have raised the gas tax two years ago, but the governor said absolutely not,” Forristall said. “Over his dead body, he would veto it – whatever. That’s why we didn’t do it.”
Houser said Iowa is utilizing approximately $300 million in federal economic stimulus money to fund road use projects, noting that the Iowa Department of Transporta-tion’s budget is approximately $1.4 billion, but little if any of the stimulus money has trickled down to Iowa’s 99 counties. More stimulus money could be headed Iowa’s way, Houser said.
“As I understand it, there’s a second stimulus package being put together at the federal level. That’s going to be focused on jobs and infrastructure. Whether this is right or wrong, what I’m hearing from some of my Democrat friends is that this new stimulus money will be targeted to states that have Democratic governors who are in trouble - and we’re in that situation.
“This is just sheer politics. If the Republicans were in control, maybe they’d be doing the same thing.”
Anderson said Iowa shouldn’t rely on federal funding for state programs.
“When this federal stimulus money goes away, we’ve got a hole,” Anderson said. “That’s what’s been happening in the state of Iowa in the last year or so, we’ve replaced state money with federal money, but we didn’t cap the growth of government. Expenses continue to go up, now the federal stimulus money is going to start disappearing unless we get more of it.
“That’s why you keep hearing about this billion-dollar hole in state government, because we grew the spending in the state at the same time we were relying on federal money. We got bailed out, so we didn’t even keep on spending flat, we increased it. Now, we have a bigger problem.”
Future legislative briefings in Glenwood this winter are scheduled for Feb. 20 and March 20, at 9 a.m., at the Mills County Engineeer’s Office.
The meetings, sponsored by the Glenwood Area Chamber of Commerce, are open to the general public.