Governor Branstad's Iowa budget plan $144 million short, state auditor says

Without changes, state would need to dip into reserves to deal with 'spending gap'

Rod Boshart
Published: February 10 2014 | 10:37 am - Updated: 29 March 2014 | 3:25 am in
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Gov. Terry Branstad’s proposed fiscal 2015 budget plan would create a $144 million “spending gap” in the state’s general fund if adopted as is by the split-control Legislature, State Auditor Mary Mosiman said Monday.

Mosiman, a first-term Republican, told reporters her “apples-to-apples” comparison of the numbers indicate state budget-makers will have $7.239 billion in available ongoing revenue and the governor has proposed a budget with “true total appropriations” of $7.383 billion for fiscal 2015, which means Branstad has offered a plan that seeks to spend $144 million more than the state is projected to take in.

The state auditor said state lawmakers would have to dip into the state’s projected $746 million “surplus carry forward” to balance the fiscal 2015 ledger sheet.

“The proposed budget does not include significant spending on new programs, so nearly all of the spending increase in the proposal is focused on honoring commitments made to existing programs,” Mosiman told reporters. She said “multi-year accelerating” commitments made last session to commercial property tax relief and education reform will exceed $150 million in fiscal 2015 and increase in future years.

The state auditor said it will take long-term planning and fiscal discipline to maintain budget sustainability as lawmakers decide how best to fund multi-year commitments they put on the books last session.

Mosiman said general fund ongoing costs continue to be shifted other funds, although she noted the governor and Legislature reduced reliance on one-time monies to $36 million in the current budget year and that figure would be further reduced to $29 million under the governor’s spending proposal.

She also made a point that lawmakers and the governor continue to engage in “significant transparency-related shifts” that move general fund revenue – like gaming receipts and tobacco tax collections – and expenses to other funds which “distort” comparisons for citizens and taxpayers. She said those shifts that impact transparency would decline from $405 million in this fiscal year’s adopted budget to $339 million in the governor’s fiscal 2015 proposal.

Also of concern to the state auditor was the fact that Branstad’s fiscal 2015 spending plan potentially would underfund Medicaid by $19 million and, for the sixth straight year, state agencies would be asked to absorb salary and benefit costs because no increases were separately funded in the governor’s funding plan he presented to lawmakers last month.

The budget plan Branstad submitted to lawmakers on Jan. 14 proposed general-fund appropriations of slightly more than $7 billion, but Mosiman said the spending level is closer to $7.383 billion when revenue shifts, one-time funding and underfunded costs are taken into account. According to her analysis, the “true total expenditures” for the current fiscal year that ends June 30 are an estimated $7.012 billion.

The budget proposal Branstad submitted to lawmakers on Jan. 14 proposed general-fund appropriations of slightly more than $7 billion, but Mosiman said the spending level is closer to $7.383 billion when revenue shifts, one-time funding and underfunded costs are taken into account.

Sen. Bob Dvorsky, D-Coralville, chairman of the Senate Appropriations Committee, said negotiators for the GOP-controlled House, the Democrat-led Senate and the governor’s office are working through the process of establishing a spending target for fiscal 2015.

“We’re looking at the governor’s proposal as well as some other ideas, maybe a smaller budget,” said Dvorksy. One approach would be to set overall fiscal 2015 at the governor’s proposed level, he said, but added “there are others that are less.”

Gov. Branstad’s FY15 budget spends 91% of available capacity, 8% below the state’s spending limit.

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