A letter to the editor that appeared in local newspapers this past week made several false assertions that have become common political talking points. I want to use this column to address these misconceptions.
The writer stated that in January 2011, when Terry Branstad became governor, we had close to a billion dollars in our rainy day fund and then followed that up by asking, “ How much money is left in the rainy day fund?” The answers to those two questions are: In January 2011, we had $421.9 million and this year we have $605.3 million in the rainy day funds. Furthermore, we have voted to repay all the money that was borrowed from the funds this past year, meaning the rainy day funds should be full to their statutory limit at the end of FY 2019 ($749 million).
As you can see, the budget is actually in much better condition today than it was at the beginning of 2011. There are some structural differences that make the contrast even greater. Within a little over a year before January 2011, the state had received over a half a billion in bailouts from the federal government and Gov. Culver had cut 10 percent across-the-board from the budget. The impact of these two events equaled 20 percent of the budget and over a billion dollars, and yet the rainy day funds were still not full.
We have had four years in a row now that revenues have not met expectations, but largely because of the tax plan that President Trump signed, Iowa tax revenues are on the rise. Some of the increase is a windfall that is occurring because of Iowans ability to deduct federal taxes. In other words, federal taxes decline, so Iowans get a smaller deduction on their Iowa returns.
Because we have put money towards fully repaying the rainy day funds (essentially paying off a debt we owed to ourselves), and revenues are increasing, we can afford to fund our priorities and pass tax reform.
As we get close to the end of this Legislative session, the details of next year’s budget are nearly agreed to. The plan is responsible and takes into account the impact of the tax reform plan, while leaving a healthy ending balance at the end of the fiscal year.
The budget plan includes:
- $46 million in additional funding for K-12 schools
- Funding to implement Future Ready Iowa and build a skilled workforce
- Funding for mental health reforms passed this session
- Additional funding for community colleges and Regent universities
- Full repayment of the Cash Reserve Fund
- Funding for the property-tax backfill to local governments
If you have any questions or concerns, please contact me.
Home phone: 515-382-2352