Iowa's spending non-sustainable

By DUANE NOLLEN
The Oskaloosa Herald

OSKALOOSA May 21, 2008 10:49 am

— When you look at the state of Iowa’s budget, you need to look at the balance of the “checkbook” and the “credit cards” to get a true picture, State Auditor David Vaudt told the Oskaloosa Rotary Club Tuesday.
Vaudt said that politicians like to talk about the General Fund — the state’s checkbook — but not the amount in the various funds such as the Senior Living Trust Fund or tobacco-related funds — the state’s credit cards.
When taking both into account, Vaudt said that General Fund budget has grown 20.5 percent from 2000 to 2007.
“Wherever revenues go, spending goes,” Vaudt said.
Vaudt said that spending for the fiscal year 2008 budget is growing at a 10 percent rate.
“It’s not going to be sustainable,” he said.
While Vaudt praised Gov. Chet Culver for closing the spending gap, he said the methods used were not in the long-term best interests of the state.
The proposed FY 09 budget will have a $179 million gap between spending and revenues, compared to the $368.1 million gap in the current fiscal year. Spending growth has declined to 5.7 percent for FY 09, compared to 9.7 percent in FY 08, he said.
Vaudt said that the state’s “credit cards,” except for the “Rainy Day” fund are maxed out.
Looking into the future, Vaudt said that a total of $192.7 million of resources used in FY 09 will disappear in FY 10, but the expenditures will be ongoing.
Vaudt said with regards to the Senior Living Trust Fund, while lawmakers put money back into the fund, it goes right back out to help the state cover Medicaid expenses.
“It’s the best revolving line of credit I’ve seen,” he said.
Another thing Vaudt criticized the governor’s budget for was the use of $67 million in bonding to pay for FY 09 expenses.
Bonding is something “Iowa should never do,” he said. The state will be paying for those services for many years to come.
Vaudt also said shifting $90 million in gaming revenue from long-term infrastructure spending for use in the General Fund is questionable, especially with the state of Iowa’s roads and bridges.
Vaudt said that during a two-year snapshot of the General Fund, 80 percent of the $835.5 million in revenue growth in FY 08 and FY 09 comes from tax and fee increases. While revenue growth is at 12 percent, expenditures will increase by 16 percent in the period, he said.
Vaudt recommends that the state align revenues with expenditures; eliminate the reliance on one-time and limited resources, such as the Senior Living Trust Fund, for ongoing expenditures; incorporate a long-range focus on budgeting; and continue to enhance clarity in the budget process.
Herald Editor Duane Nollen can be reached by email at oskynews@oskyherald.com

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