Governor: no special session to fix ’09 budget

Governor Chet Culver just held a conference call with Iowa reporters to discuss his travels.  Des Moines Register reporter Jason Clayworth & I asked about the state budget.

In response to Jason's question about a special session, here is what Culver said: "We don't believe that that will be necessary.  We had an ending balance of $100 million, just north of $100 million. I also have transfer authority of up to $50 million, if necessary, so we believe according to my budget director Dick Oshlo that we will be able to balance in '09 as we have always believed despite the additional down, I should say lowering, of estimates."

But the ending balance is less than half of what Culver said it is.  It's $44.6 million.  I followed up with a second question about the budget, asking how much he intended to use from the cash reserve to balance the books at the end of the fiscal year (thinking he'd say all he had authority to draw, which is $50 million).  Culver again misstated the ending balance.

Culver: "We don't know at this point and we still have a cushion right now.  As I said, even with the forecast, we left $100 million in the ending balance, so we are still able to balance as of today and if necessary we can transfer up to $50 million and I will let if and when that is an option that we need to move forward with."

The vast majority of states are facing problems in the next budgeting year, which starts July 1st.  Clayworth asked Culver how he planned to finance education and human service programs in the future, since a great share of the state's economic stimulus payment was used to bankroll those programs in fiscal year 2010

Culver: "Despite the rhetoric and misinformation you're hearing on the Republican side of the aisle, we actually cut $135 million from our state appropriation.  We had a reduction of two percent, over two percent of the budget. We actually are spending less state money in fiscal year '10 than we spent in fiscal year '08 and that meant we had to cut pretty severely in certain areas. It also meant we had to make cuts in some areas so that we could continue to protect our investments in things like education and health care. Alls I can tell you is that will remain my goal, is to do everything we can to make sure that we invest in our teachers and invest in our kids and invest in every level of education. I can't predict today what we're going to be able to do next March or April or May when it comes to making those investments. 

"The great news again, Jason, is we are better positioned than just about every state in the nation.  We have a cash reserve. We have a triple A bond rating. We're one of only 12 states that has a triple A bond rating right now, I think actually 11 states, so we're going to manage our way through this challenging economic environment."

UPDATE:  Troy Price, a spokesman for Governor Culver, says Culver misspoke.  The ending balance for fiscal year 2009 is indeed (roughly, nearly) $45 million. If you add $45 million and $50 million, you get (roughly) $95 million.  So the governor's authority to "fix" the books ends at approximately $95 million, unless there are unused funds from agencies (the experts call them "transfers") to account for several million more.

UPDATE II:  Troy Price, a spokesman for Governor Culver, issued a written statement via email.  Read it below.

"Governor Culver was referring to the projected ending balance for FY10.  He knows that the ending balance for FY09 is $45 million, which is down from a projected $84 million when the budget was finalized last year. The Governor continues to monitor the state budget, but at this time believes that no further action is needed for the current fiscal year," said Troy Price, a spokesman for Governor Culver. "However, the fiscal year is not over, and we won’t know for certain the final budget outcome until the books are closed in September.

UPDATE III:  Senate GOP Leader Paul McKinley issued a written statement via email.  Read it below.

DES MOINES, IA – Senate Republican Leader Paul McKinley issued the following statement today after Governor Chet Culver spoke with Statehouse reporters and again failed to recognize the serious consequences for taxpayers as a result of Governor Culver and legislative Democrats’ unsustainable record spending:

“Once again, Governor Culver failed to recognize the serious consequences for every taxpayer as a result of his and legislative Democrats’ unsustainable record spending that he just signed into law last week. Governor Culver, not even fully aware how many tax dollars are left in the state’s ending balance, has consistently ignored Republican warnings of overspending and legislative Democrats have obstructed common sense solutions to actually cut the bloated budget. As a result, next year’s budget deficit could be over $1 billion dollars and a special session may be needed to balance this year’s budget because the governor and legislative Democrats continually fail to demonstrate the fiscal leadership that all Iowans deserve. It is clear that the governor and his Democratic allies in the Legislature do not comprehend the severity of this spending problem and the taxpayers of Iowa will once again suffer because of their desire to grow Iowa’s government instead of growing Iowa’s economy and creating sustainable jobs.”