Governor Culver announces budget cuts

News release, posted below — followed by prepared statements from legislative leaders:


Announces 1.5% across-the-board reduction, seeks $10 million in fund transfers

DES MOINES – Governor Chet Culver has announced new steps he is taking to meet the budget challenges facing the state of Iowa caused by a global economic downturn, including an across-the-board cut in State spending.

“We are in the midst of an economic challenge that is historic in its scope,” said Governor Culver.  “While its cause comes from actions on Wall Street, supported by misguided federal policies from Washington over the past eight years, the result has been an economic recession that is hitting Main Streets and factories and farms and families across the nation.  This world-wide economic recession is affecting every state in the nation, no matter if they are big or small, rural or urban, Democratic or Republican. We are all facing this challenge together. And together, we must accept the reality and share in the sacrifice.”

The Governor is taking action after last week’s meeting of the Revenue Estimating Conference (REC) determined that state government would see a decline in revenues during the current fiscal year.  After meetings with state budget officials and members of his Council of Economic Advisors, the Governor determined the end of the economic downturn has not yet reached Iowa and that the REC could make further reductions to revenue estimates.

The Iowa Constitution requires a balanced budget; the state cannot deficit spend. Today’s actions by the Governor meet the demands of the current and projected declines in revenue, and balance the state budget. He has taken the following steps:

1. He has directed the Department of Management (DOM) to revise its projected balance sheet for the General Fund at the end of December in order to adjust for the recent REC action and make other adjustments based upon DOM’s best projections of income and expenditures.  This action has already been done, which projects a negative balance at the end of the current fiscal year. A copy of the revised sheet is attached.

2. Pursuant to Iowa Code, the Governor will sign an Executive Order making an across-the-board reduction in General Fund expenditures, currently expected to be 1.5%.  This is estimated to save the state $91.4 million.  However, the Governor will protect funding for Corrections Officers and State Troopers, and will ask the legislature to backfill these cuts when they convene next month.

3. He will work with legislative leaders and members of the legislature to transfer $10 million to the General Fund from accounts and funds in state government that have balances that exceed the amount needed for the current fiscal year.

Governor Culver assured Iowans that he would hold the line on taxes, saying, “Maintaining a balanced budget and staying in front of this national economic crisis requires sacrifice throughout state government, as well as business, workers, urban, rural, and all of Iowa.  And I intend to do this while holding the line on taxes.”

Today’s announcement represents a $101 million reduction in general fund expenditures for the current fiscal year.  When combined with last weeks announced $77 million in cuts, this represents nearly $180 million in budget savings for the current fiscal year.

During his remarks today, the Governor reassured Iowans that Iowa is in a strong position to meet the challenges presented by the national economic downturn.

“I don’t want to be alarmist or suggest to Iowans that their state government is in financial trouble,” the Governor said.  “The fact is we have more than $620 million in reserves that will help us through this situation. We have a AAA bond rating that would allow us to do some things that other states may find impossible.”
The Governor added: “We have a history, under both Democratic and Republican leadership, of balancing our budget and acting appropriately to economic tough times. And we have a strong, unmatched, talented citizenry who demands that their political leaders pull together to keep Iowa strong.  The difficult, current economic circumstances may not be the fault of Iowans, but it is something we must all face together. Like most Iowans, I am both optimistic and confident about what the future holds for our state. We have always met challenges with solutions, problems with answers. And we always will. “

Below is a listing of budget savings announced by the Governor in recent weeks.


Freeze on Out-of-State Travel, Filling of Vacancies, and
Equipment Purchases and savings from Judicial Branch,
Legislature, and the Regents:                                                          $28.0 million

Transfers from Alcoholic Beverages Division and Executive
Council:                                                                                              $12.0 million

De-appropriation of New State Office Building:                            $37.0 million

Total                                                                                                   $77.0 million


1.5 % Across-the-Board Reduction:                                               $91.4 million

Transfer of Funds                                                                              $10.0 million
Total                                                                                                   $101.4 million

Total Budget Savings:                                                                  $178.4 million

"Governor Culver took appropriate action today.  Given the national recession is deepening and having an impact on the state budget, there is no choice but to make mid-year budget corrections.  These are challenging times.  Iowa families are tightening their belts and the state must do the same.  We will continue to work with Governor Culver and all House members in January to keep the state's fiscal house in order."

UPDATE II: Senate Republicans Respond to Governor Culver’s Latest Budget Announcement

DES MOINES – Today Governor Culver announced new reductions in spending, reacting to Iowa’s budget crisis.  Senate Minority Leader Paul McKinley (R-Chariton) provided the following response:

“While it is admirable that the Governor is offering ideas to trim Iowa’s budget before the legislative session begins, it has not come soon enough.  Over the past two years Republicans and the non-partisan Legislative Services Agency have been warning the majority party about their massive spending run-up.

“Governor Culver’s admittance to entertain any and all ideas presented leaves the door open for increased taxes and risky schemes.  As January 1st is quickly approaching, families are sitting down and developing a household budget.  The Governor’s reluctance to take a tax increase off the table leaves Iowa families unable to plan accordingly.

“At a time when Iowans' pocketbooks are being stressed, Senate Republicans will continue to fight for limited government and advocate for policies that will grow the economy.”

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About O.Kay Henderson

O. Kay Henderson is the news director of Radio Iowa.