Governor Chet Culver received some bad news yesterday. The fiscal year 2009 budget failed to balance when the fiscal year came to a close at midnight on June 30th. Governor Culver’s FY 2009 budget came up $161 million short. The Governor only has $118 million at his disposal to cover the shortfall. That money comes from the FY 2009 ending balance, money from the state’s economic emergency fund, and the Medicaid account. All told, Culver needs an additional $43 million to make the budget balance, but he will likely need the legislature to reconvene to solve this problem since he is out of options.
Governor Culver’s whereabouts are unknown, and he did not issue a statement or speak to the media regarding the non-partisan Legislative Service Agency’s memo regarding the state’s general fund receipts for fiscal year 2009.
Culver’s budget director Dick Oshlo said, “With yesterday marking the end of the fiscal year, we now know the state’s gross receipts for FY 2009. While the state’s tax receipts deteriorated more than expected during the last two months of the fiscal year due to the ongoing effects of the national economic recession, this is a manageable number. Fortunately, receipts improved during the final days of June. At this point we see no legitimate reason for a special session to balance the state’s budget.”
Culver’s budget team admitted that the total gross receipts for FY 2009 are $57.7 million lower than the Revenue Estimating Conference predicted, but they remain confident that the $44.7 million ending balance and $50 million from the economic emergency fund will be more than enough to cover the shortfall.
Once again, Governor Culver and his staff fail to be honest and upfront with Iowans concerning the state’s financial condition. While Oshlo is correct when he states that revenues are only off by $57.7 million, he fails to address that tax refunds came in $72.3 million higher than the REC estimated, and school infrastructure refund transfers also exceeded REC estimation by $31 million. That means the state budget isn’t off $57.7 million Culver’s office claims. The budget is off by $161 million.
Instead of tackling Iowa’s financial crisis head on, Culver and his advisors have decided to wait until September when the FY 2009 books close to make any adjustments. By that time, the state will be a quarter of the way through the FY 2010 budget that already has almost a $1 billion budget gap. When Culver is forced to use the $44.7 million dollar ending balance for FY 2009 to help balance that budget in September, he will also be creating a larger budget gap in FY 2010.
Making matters worse for the FY 2010 budget is the sudden drop of corn prices. The collapse was triggered by a USDA report that shows that American farmers have planted 4 million more acres of corn this year than in the previous year. Iowa’s solid agriculture industry has helped the state weather the national economic crisis better than most states, but if corn prices remain low, and Iowa farmers see their revenues fall, the state’s economy is about to suffer another devastating blow.
Republicans were quick to respond to the LSA’s report. GOP gubernatorial candidate Chris Rants called on Governor Culver to convene a special session of the legislature. Rants said, “Governor Culver has allowed the budget mess to become far too problematic for him to handle on his own – we have gone from having a projected deficit to an actual deficit. He needs to call the Legislature back for a special session to balance the budget. He then needs to ask the Legislature to reduce the budget for the coming year by an equal amount.”
Bob Vander Plaats, another GOP gubernatorial candidate also responded, saying, “Chet Culver’s irresponsible, out-of-control spending have left state government with a deficit or just pushed it to the very edge. He needs to make a resolution to change his way. I realize that traditional New Year’s resolutions come on January 1, but the fiscal year starts today. Besides, because of Chet Culver’s irresponsible handling of the budget, we can’t afford to wait another minute for him to start a healthier fiscal regimen.”
Senate Republican Leader Paul McKinley compared Culver to Gilligan for the TV show Gilligan’s Island. “While taking Iowa taxpayers on a three hour tour, the governor has let go of the rudder of the ship, cannot read the compass and his crew members, legislative Democrats, have ignored the life preservers thrown their way by House and Senate Republicans in the form of hundreds of millions of dollars in responsible budget cuts,” McKinley said.
He added, “The Iowa Constitution requires our state to operate with a balanced budget yet the fiscal year that ended yesterday leaves Iowa with an unbalanced budget. Republicans and independent expert economists for the past few years have consistently and continually warned Governor Culver and legislative Democrats, who remain in a state of denial about Iowa’s budget, that Iowa’s taxpayers cannot afford the record spending, record borrowing and record deficits.”
House Republican Leader Kraig Paulsen also chimed in, saying, “Democrats passed the largest amount of spending in the state’s history, so we shouldn’t be surprised that we’re in this budget mess. House Republican efforts to save over $300 million in cost savings and spark job growth were thwarted by legislative Democrats. The bottom line remains the same: Gov. Culver spent too much and cut too little. House Republicans will continue to look for ways to rebuild Iowa’s economy through hard-working Iowans not big government.”
Despite the state of Iowa being on the verge of running out of money in less than a year, Governor Culver is nowhere to be found. As noted in the Iowans for Tax Relief press release on this subject, Governor Culver said the following while on Iowa Press just a few weeks ago, “I’m very confident that we’ll be able to close the books on fiscal year ’09 and move forward, and at this point, it’s too early to know exactly what we’re going to have to do.” Ed Failor, Jr. responded by saying, “The facts did not change in two weeks. Making tough decisions in life are never easy, but when the choice is to cut spending or raise taxes….the answer is simple, cut spending.”
No matter what Governor Culver plans to do, he has a responsibility to tell the people of Iowa the truth about Iowa’s financial situation. Thus far, he has decided to kick the can down the road and tell Iowans he feels optimistic about the state’s budget. An optimistic Governor would have the decency to communicate with Iowans about the latest financial numbers. Culver has chosen not to do that, instead he incommunicado, leaving Iowans in the dark. That is not the action an optimistic governor would take. That is the action of a coward.
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