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Gov. Reynolds: No special session needed for budget shortfall; Dem’s hit back

Iowa capitol

DES MOINES – Gov. Kim Reynolds announced Wednesday that no special session is needed for Fiscal Year 2017.

The expected shortfall for Iowa’s FY 2017 budget is $14.6 million. Gov. Reynolds will combine $13 million from the state’s economic emergency fund with the $1.6 million ending balance. This is the final action on the FY 2017 budget, which ended June 30, 2017. The state has $605 million in reserve funds after closing the FY 2017 books.

“This has been a difficult budget year, but I am pleased we were able to manage lower-than-expected revenues without cuts to education or Medicaid,” Gov. Reynolds said. “We have been monitoring funds daily since the end of the fiscal year on June 30 and took a measured approach in dealing with the state’s finances. We continue to closely monitor the current fiscal year’s balance sheet and do not believe action is needed at this time.”

Department of Management Director Dave Roederer held a budget briefing for members of the media Wednesday morning. He shared more with reporters, including:

  • The Revenue Estimating Committee (REC) estimated 2.7% growth in the FY 2017 budget.

Actual growth was 2.5%.

  • Accruals (tax payments due June 30, 2017, that came in after June 30, 2017) totaled $73 million.
  • After stalling earlier this year, Iowa’s corporate income taxes came in stronger than expected at 5.6% vs. the REC estimate of 0%.
  • Corporate taxes make up 6.5% of Iowa’s general fund.
  • Projected FY 2017 revenue from the REC: $7.106 billion

Actual FY 2017 revenue: $7.095 billion

  • Projected FY 2017 net appropriations: $7.254 billion

Actual FY 2017 net appropriations: $7.258 billion

Following the Governor’s announcement, liberal Iowa Representative Marti Anderson released a statement:

The Governor is not going to call a special session. Somehow, the deficit still standing for the year that ended June 30, 2017 (FY17) has gone from an estimated $104 million to $14.6 million today. Governor Reynolds will borrow that from the Emergency Funds, guaranteeing a deficit in FY18 because first money in must go to repay the Emergency Fund. Below is Rep. Chris Hall’s statement. Rep. Hall is Ranking Member (top Dem.) on the House Appropriations Committee.

From Rep. Chris Hall, Ranking Member of House Appropriations Committee
“For the third time this year, Gov. Reynolds is making Iowans pay for borrowed money and corporate giveaways. The numbers don’t add up. The state was $104 million short on June 30 and only $14.6 million today. Taxpayers deserve to know whether Governor Reynolds and Republicans cooked the state’s books to close the fiscal year and avoid a special session.

The announcement today means the budget crisis created by Governor Reynolds and the GOP will continue through next year. We do know today that the GOP is no longer managing a checkbook budget like the average family, they’re borrowing money on a credit card and leaving Iowa families with the bill.

Students are now paying higher tuition. Fewer at-risk kids will attend preschool this year. Nursing home inspections and elder abuse claims are going without investigation. Homeowners are paying higher property taxes.
It’s bad news for Iowa families and it will be even worse next session.”

***********************

Here are the key questions Republicans need to answer about how they closed the state’s books without a special session:

1) When the 2017 Fiscal Year ended on June 30, the non-partisan Legislative Services Agency (LSA) said the budget was short $104.4 million.* How was that number reduced to borrowing just $13 million to close the state’s books?

2) Since thousands of Iowans had their refunds delayed this year because the state didn’t have money to pay them,** how many refunds for tax year 2016 still need to be paid?

3) The Legislature appropriated $1.587 billion for Medicaid in FY17 and the MCO’s are losing millions of dollars. What is the final dollar amount spent on Medicaid in FY17? Have all payments for FY 17 services been paid to the MCO’s? If not, how many payments have been delayed and must be paid out of the FY18 budget?

4) What other invoices from FY17 have not been paid to date? What is the total amount of the FY 17 invoices that will have to be paid in the FY18 budget?

5) The REC estimated the state’s net accruals in March would be $29.1 million this year. Over the last four years, accruals have ranged from $-16.2 million to a $19.6 million. To close the books this year, the state is now reporting net $73.5 million in accruals, which is the highest number in the last decade. Why is that number so high over the estimate?

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