Political Football

This is a newsletter I got from Senator Rants – an Iowa State Senator that must be running for Governor or something…

Well I thought the current Governor’s memo to state employees was creepy myself… saying “this is not our fault” when gee – in the NOVEMBER elections all the Republicans in the state were talking about how much money the Dems were spending and there really is a deficit – they cooked the books…. and the Dems were saying the budget is balanced, life is good yada yada…

you can download the Governor’s letter at the bottom of this page. -pf

Culver’s Cuts: What, Why and When

Culver Takes Action

This morning many of Iowa’s news outlets, reporters and columnists alike, are giving kudos to Governor Chet Culver for announcing a 1.5% (one and a half percent) across the board reduction to the state budget.They aren’t wrong – Culver did the right thing. But before we heap to much praise on the Governor for his courageous actions lets first consider why he did it, and look a little more precisely what it is that he actually did, and more importantly didn’t do.

It’s Bush’s Fault?
First, let’s peer into the inner workings of Culver’s motivations. How can we know what he’s thinking? Why, his own words of course. The following comes from an email that Culver sent to all state employees yesterday (full text is on my blog):“As you know, we are in the midst of an economic challenge that is historic in its scope. 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 – and state governments – across the nation.”

Translation – “its Bush’s fault.”
No where in the letter does Culver acknowledge that before the Revenue Estimating Conference met, that the Auditor, the press, everyone was telling him that there was a $550 Million “spending gap” (the difference between expected revenues and already committed expenditures).

I understand Culver wanting to blame someone. I get the Democrat talking points at play here – that they can blame Bush for anything, after all, it worked pretty good in the elections. But I guess I missed how Bush forced Culver to sign into law an additional billion dollars in new spending in just two years with out the money to pay for it.

Remember….

$550 M – Budget gap before Revenue Estimating Conference.

$779 M – Budget gap after Revenue Estimating Conference.

Also from his letter:

“And I am confident that, in January, President-elect Obama and Congress will immediately go to work on an economic stimulus package that will make a difference to critical financial issues facing all States, such as funding for Medicaid, improving our infrastructure, creating new jobs, and rebuilding our economy.”

Why is that important? Because it’s a clear signal that rather than take immediate action to balance our budget, Culver and the Democrats are going to wait.

Oh, they’ll jump on a plane and head to DC (that part of the travel budget isn’t getting cut) to plead for alms from the Federal Treasury. But aside from that action, they are going to play the waiting game. Wait for the Feds to take care of Iowa’s problems.

From the letter: “We did not cause this economic crisis. But the responsibility falls to us to respond to it.”

He’s right, but so far Culver has only responded with $180 M of cuts to solve the problem.

The problem is $779 M. He can blame Bush for $229 M of it, but what about the first $550 M? Don’t Iowans deserve to know where the rest of the reductions will come? Absolutely.

I know many are worried that rather than make reductions, Culver and the Democrats will raise taxes. Take heart. Culver also wrote “I will protect our State’s fiscal position, and I will do so without raising taxes on Iowans.”The problem is, that action Culver took yesterday will raise taxes on some Iowans.Here is why.

The Governor’s across the board cut impacts the amount of money the state gives to local school districts. It does not change the allowable growth formula, which sets the amount of money that schools can spend, that allows local school boards to back fill those cuts with local property tax dollars. Not all of them will, but some will. Others will use their cash reserves and refill that fund with a levy.

That’s why earlier this week, when I presented a list of options, I suggested cutting more, and using those other state dollars freed up to prevent this kind of property tax increase shenanigans.

For now, however, let’s ignore these pesky little details and take Culver at his word. No tax increases from the state. So how does he plan to close the gap? $779 M spending gap, $180 M in cuts. That leaves $599 M to go.

That’s roughly the size of what he started out with – back in April….

Read Culver’s letter here