The bottom line

Governor Culver's budget chief, Dick Oshlo, offered his assessment on the state budget situation this morning during an interview with Radio Iowa.  Below you will find the written statements which have been released this morning and early this afternoon on this subject.  Likely Republican gubernatorial candidates Christopher Rants and Bob Vander Plaats both have issued a statement; potential GOP gubernatorial candidate Paul McKinley – the current leader of Republicans in the Iowa Senate — issued a statement which compared Culver to Gilligan of "Gilligan's Island" fame. 

Here is the detailed Legislative Service Bureau analysis with graphs and spread sheets.

According to Republican legislators, there's red ink. Here are the GOP calculations:

$161 million short – breaking down as follows:

• $57.7 million gross revenue
• $72.3 million increase in refunds
• $31.0 million increase school infrastructure refunds

Republicans say it looks like Governor Culver has $118 million to transfer:

• $44.5 million ending balance
• $50.0 million from Economic Emergency Fund
• $23.5 million from Medicaid

The GOP's conclusion? Culver is $43 million short.

The governor's budget chief, Dick Oshlo, countered that this morning, suggesting it's too early to have the details:

"The first number that is going to be actually decided is the gross receipts number and that is what we're calculating literally right now," Oshlo said during an interview with Radio Iowa.  "We're going to have to look at expenditures and reversions and accruals, and those numbers are not going to be available for another three months — until September." 

Again, below you will find all the statements that have made it into the newsroom on this subject.

IOWA BUDGET DIRECTOR: REVENUE SHORTFALL MANAGEABLE, BUDGET WILL BALANCE

DES MOINES – The Iowa Department of Management announced today that, while the national economic recession has continued to impact state tax receipts, the revenue shortfall is manageable and it is anticipated the state budget will be balanced when the State closes its books at the end of September.

Total gross receipts for FY 2009 are $6.921 billion, which is only $57.7 million lower than the Revenue Estimating Conference’s official estimate of $6.979 billion.

Dick Oshlo, state budget director, said: “With yesterday marking the end of the fiscal year, we now know the state’s gross receipts for FY 2009. While the state’s tax receipts deteriorated more than expected during the last two months of the fiscal year due to the ongoing effects of the national economic recession, this is a manageable number. Fortunately, receipts improved during the final days of June.  At this point we see no legitimate reason for a special session to balance the state’s budget.”

The gross receipts announced today are the first set of numbers used by the Department of Management to close the General Fund budget for the fiscal year. Between now and September the final numbers for expenditures and accrued revenues will be determined. The actual budget will not be closed until the end of September.

The State of Iowa has a projected ending balance of $44.7 million, and the Governor has the authority to transfer up to $50 million from Economic Emergency Fund in order to balance the State’s budget during an economic downturn.

Culver, Legislative Democrats’ State of Denial and Failed Fiscal Leadership Leaves Iowa With Unconstitutional State Budget; Republicans and independent expert economists have continually warned Governor Culver and legislative Democrats about the perils of their massive overspending and now Iowa taxpayers will pay a big price

DES MOINES, IA – Senate Republican Leader Paul McKinley (R-Chariton) issued the following statement today regarding the beginning of Iowa’s new fiscal year and the news that Iowa’s FY2009 budget, which ended yesterday, is likely unbalanced, a violation of the Iowa Constitution:

“The Iowa Constitution requires our state to operate with a balanced budget yet the fiscal year that ended yesterday leaves Iowa with an unbalanced budget. Republicans and independent expert economists for the past few years have consistently and continually warned Governor Culver and legislative Democrats, who remain in a state of denial about Iowa’s budget, that Iowa’s taxpayers cannot afford the record spending, record borrowing and record deficits.

Governor Culver seems to be auditioning for the role of Gilligan. While taking Iowa taxpayers on a three hour tour, the governor has let go of the rudder of the ship, cannot read the compass and his crew members, legislative Democrats, have ignored the life preservers thrown their way by House and Senate Republicans in the form of hundreds of millions of dollars in responsible budget cuts. Had the governor and legislative Democrats followed the leadership of Republicans and ended the purchasing of new state vehicles, slashed millions out of the pens and paperclips fund, banned the state from paying for blackberries for bureaucrats among many other smart budget savings ideas, Iowa taxpayers would not be facing these serious fiscal problems.

Unfortunately, today starts a new fiscal year and the prognosis for Iowa’s new budget, the largest in the 163 year history of Iowa, does not look better as independent and non-partisan analysts with the Legislative Services Agency (LSA) have already pegged the new budget to have over a $900 million dollar deficit. Senate Republicans will continue to offer real fiscal leadership for Iowa because the taxpayers of this state cannot afford more of the same out-of-control spending practices that have been implemented by Governor Culver and his allies in the Legislature that are responsible for this mess.”

Rants: Call a Special Session to Balance the Budget

SIOUX CITY, IA – Rep. Chris Rants made the following statement today in response to the numbers released by the Department of Revenue and Finance on tax receipts collected for the fiscal year.
 
“Governor Culver has allowed the budget mess to become far too problematic for him to handle on his own – we have gone from having a projected deficit to an actual deficit.  He needs to call the Legislature back for a special session to balance the budget.  He then needs to ask the Legislature to reduce the budget for the coming year by an equal amount.
 
“Everyone in the state has seen this day coming, except for Governor Culver.  Taxpayers and local governments cannot afford a ‘wait and see’ approach any longer.  Action is needed now.
 
“It is time to quit worrying about the political ramifications of admitting that we have a deficit and get about the business of fixing it.  Governor Vilsack put aside partisan politics and called a special session in 2001 and 2002 to balance the budget after revenues declined; Culver needs to do the same."

Paulsen Issues Statement on New Revenue Numbers

(DES MOINES)—House Republican Leader Kraig Paulsen (R-Hiawatha) released a statement today regarding the nonpartisan Fiscal Services Agency’s monthly review of the state’s revenue:

“Democrats passed the largest amount of spending in the state’s history, so we shouldn’t be surprised that we’re in this budget mess.  House Republican efforts to save over $300 million in cost savings and spark job growth were thwarted by legislative Democrats.  The bottom line remains the same:  Gov. Culver spent too much and cut too little.  House Republicans will continue to look for ways to rebuild Iowa’s economy through hard-working Iowans not big government.”

VANDER PLAATS: CULVER NEEDS FISCAL NEW YEAR’S RESOLUTION TO CONTROL HIS OUT-OF-CONTROL SPENDING

SIOUX CITY – With the start of the new fiscal year today, Gov. Chet Culver should make a resolution to control his excessive spending habits that have already pushed the state to the brink of an illegal deficit.

“The Legislative Services Agency reported today that state revenues are $123 million less than the estimate the budget was based on. That may mean the state is deficit spending or Chet Culver’s budget director may be correct in saying he can transfer enough funds to ‘manage’ the estimated $58 million shortfall. Either way, Chet Culver’s irresponsible, out-of-control spending have left state government with a deficit or just pushed it to the very edge. He needs to make a resolution to change his ways,” Vander Plaats said today. “I realize that traditional New Year’s resolutions come on January 1, but the fiscal year starts today. Besides, because of Chet Culver’s irresponsible handling of the budget, we can’t afford to wait another minute for him to start a healthier fiscal regimen.”

The Sioux City Republican added, “It takes 21 days to develop a new habit so if the governor starts today and works very hard, he’ll be able to resist his big-spending ways by the time his staff starts to work next month on the next fiscal year budget.  He might even work up the ability to say no to legislative Democrats who only want to increase spending, taxes and the size of state government.”

Culver said last week that the state budget “should be all right,” despite concerns by the nonpartisan Legislative Services Agency that slumping state revenues can’t keep pace with sharp spending increases approved by Culver and the Democrat-controlled legislature since the Democrat took office in January 2007.

While, the state’s largest union agreed to a zero-percent pay raise this year, merit raises and “step increases” that move employees closer to the top pay in their grade mean state workers still will receive an average 4.5 percent raise in the coming fiscal year.

“That adds $121 million to the overspending that’s already going on,” Vander Plaats said today. “I respect state workers but we shouldn’t be giving raises when the private sector is cutting back and state government is faced with a $903 million shortfall this year because of the governor’s fiscal mismanagement.”

Culver has also said he hopes Iowa’s economy will rebound faster than other states so the state can work its way out of the financial hole he’s dug. However, a published report on Monday indicates economists expect Iowa’s employment and revenue to remain down for the next two years.

“New Year’s is a time when people often face the cold, hard facts, reflect on their shortcomings and resolve to take action and make constructive changes,” Vander Plaats said. “I’d encourage Chet Culver to do exactly that today on the fiscal new year and set the state budget back on the right course.”

Iowa Policy Progress Project statement:  Governor fails to balance budget

Iowa is ending the FY 2009 budget year with a budget deficit.  State tax revenues are about $161 million less than expected according to the Department of Revenue and Finance.  Ending the fiscal year with a budget deficit is a violation of the Iowa Constitution.  

Officials from the nonpartisan Legislative Services Agency (LSA) have previously warned that a deficit would be the likely outcome.  Unfortunately, Governor Culver ignored the cautionings and insisted that Iowa would end FY2009 with a positive balance.

In the face of all the facts and warnings, Governor Culver maintained that the budget would balance and that the numbers would work out.

The Governor's next option is to call the Legislature back for a special session and work on balancing the budget. 

The Iowa Progress Project calls on Governor Chet Culver to do the responsible thing and call a special session of legislature.  This will allow for bipartisan solutions towards balancing the budget and open up discussion for more sensible future spending.