Iowa Auditor: State government making strides, but spending still exceeds revenues
Updated at 4:15 p.m. with comment from House Speaker Kraig Paulsen.
Iowa state government has made great strides in reducing its dependence on one-time funds for ongoing expenses, but is still spending more than it takes in, state Auditor David Vaudt reported this morning.
In a review of the fiscal year 2013 budget enacted into law this year, Vaudt, a Republican, reported that lawmakers authorized $6.67 billion in state spending for the year that began July 1. That’s $161 million more than the $6.51 billion in available “ongoing” revenues – that is, income from taxes and other sources that can be counted on year after year.
That difference is made up for with what the auditor and others refer to as “one-time” money – dollars held over from the previous year or secured from other sources that may not be available again once they’re spent.
A top stated goal for Republicans – who control the governor’s office and the Iowa House – is to not spend more than the government takes in on an annual basis.
House Speaker Kraig Paulsen, R-Hiawatha, said Monday afternoon that figures compiled by the nonpartisan Legislative Services Agency contradict the auditor’s findings. Although he said he wasn’t “challenging” Vaudt, he added that his staff is working with the auditor’s office to determine just what caused the discrepancy.
“The auditor gets to look at everything after the fact and move some stuff around the way he thinks it should be calculated, but not necessarily the way that the law says you must calculate it,” Paulsen said.
The LSA figures for the enacted 2013 budget show available funds totaling $6.55 billion. Factoring in the state law limiting expenditures to 99 percent of revenues, the money actually available to spend was $6.46 billion. But the budget finally enacted spends just $6.22 billion — $328 million less than actual revenues and $234. 4 million below the spending limit.
The difference between the auditor and LSA spending figures, then, totals roughly $450 million, and it’s not immediately clear what accounts for it.
“There’s a lot of different ways you can calculate it,” Paulsen said.
In any case, Paulsen said, lawmakers have been responsible with taxpayer money. Since 2010, legislators have filled up reserve and emergency funds, socked away an extra $60 million in a “taxpayer trust fund” and ensured a surplus at the end of the year in both 2012 and 2013.
“He does his auditor stuff the way he does his auditor stuff, but I do know that it’s awful hard to build up one-time funds (in the manner that the state has in recent years) if you’re spending more than what you’ve got coming in,” Paulsen said.
Contested or not by legislators, that $161 million figure actually contrasts favorably with figures from previous years, Vaudt said.
“Are we where we want to be yet?” Vaudt asked. “No, we’re not quite there. But we’re definitely on the right track, and we’ve made significant progress to get to where we want to be.”
In the fiscal year 2012, which ended June 30, the gap was $220 million. In fiscal 2011, it was $764 million, according to figures provided by Vaudt.
In addition to the $161 million in spending over revenues, Vaudt’s review also found $71 million in expenditure “shifts,” in which ongoing programs were funded with one-time revenue streams. This, again, is not ideal, Vaudt said, but represents an improvement over previous years.
Looking forward, Vaudt warned of two fiscal challenges facing the state.
One is its pension liabilities. The Iowa Public Employees Retirement System is presently funded at just 80 percent of liabilities, a decline from 98 percent in the year 2000. Fully funding the system should be a major emphasis for policymakers in the years to come – and could be a prudent place to spend the state’s one-time funds, he said.
The other challenge concerns federal aid to the state. Roughly half of Iowa’s total budget – around $6 billion – comes from federal sources, much of it funding the Medicaid health-care program for the poor. As it works to reduce its own debt and deficit problems, the federal government may soon start scaling back that aid, Vaudt said, with serious consequences for the programs now receiving it.
“While Iowa has made very substantial progress in addressing its fiscal house, we have to remember that the federal government is our partner and it must get its fiscal house in order also,” he said. “It’s critical to Iowa’s future.”
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