If you believe everything that Governor Chet Culver says about the state’s budget, then you probably let out a huge sigh of relief last Friday when he stated that not only did the FY 2009 budget balance, the state actually had a $450 million budget surplus.
Sounds farfetched, doesn’t it? If you need further proof, here is what Governor Culver actually said. “In spite of the economic challenges brought on by the world-wide recession, and a projected shortfall for the fiscal year 2011 budget, Iowa not only has a balanced budget for fiscal year 2009 but a budget surplus of well over $450 million for the current fiscal year,” said Governor Culver.
Was all the talk about Iowa’s budget problems just a lot of partisan rhetoric? Hardly. The $450 million surplus the governor is crowing about is actually the emergency funds that he is required by law to maintain. While Governor Culver continues to tell Iowans that he has the state’s fiscal house in order, Chris Rants, who hopes to be the Republican who challenges Culver next fall, is alleging that Culver withheld corporate tax refunds to balance last year’s budget.
Rants says that the Revenue and Estimating Conference estimated that the state would pay more than $70 million in corporate tax refunds in FY 2009. However, Governor Culver’s press release shows that only $43.9 million in corporate refunds were paid. Yet, on September 2nd, when the state stopped counting accruals from the previous fiscal year, the state sent out the remaining $30 million in corporate tax refunds.
Rants told TheIowaRepublican.com, “There is no such thing as coincidence – not in electoral politics or budget gimmickry. Governor Culver withheld the refunds so that he could make his budget balance without calling a special session. It is more important for small businesses struggling to survive to have their money to operate than for Culver to hold it to make his budget look good. It’s a dishonest way to make the budget appear balanced.”
Governor Culver’s creative budget fix spares him the embarrassment of having to call a special session, but in doing so, he made next year’s budget more difficult to balance. During the next legislative session, Governor Culver will already have to deal with a $1 billion budget gap, and he has pledged not to raise taxes to balance the budget. With the Iowa Department of Economic Development’s film office scandal adding additional to the financial strain, Governor Culver’s decision to wait and pay corporate tax refunds in the current fiscal year just adds to the state’s fiscal mess. That means it will be even more difficult for the governor to keep his no tax increase pledge.
While the state’s finances are guaranteed to play a critical role in next year’s general election, it looks like it will also play a major role in the Republican primary, especially if former Governor Terry Branstad gets into the race. When asked if Rants had ever seen the practice of withholding tax refunds to balance the budget, Rants indicated that it’s exactly what Terry Branstad did when he was faced with budget deficits during the farm crisis of the 1980’s.
Rants said, “Culver’s repeating the mistakes Branstad made in the 80’s. He moved money on paper and delayed payments from one fiscal year to another until it finally caught up to him and he raised the sales tax to square the books. He could only hide his deficits for so long. It’s these kinds of accounting gimmicks that caused the fallout between Auditor Johnson and Branstad.”
“We Republicans need to be better than that if we expect to earn the trust of Iowans,” added Rants.
With the continuing deterioration of the state budget, it is becoming apparent that the fiscal issues will play a major role in the Republican primary as well as the general election. Thus far, Chris Rants seems to be the only Republican candidate willing to distinguish himself from his opponents on those issues. Rants also seems comfortable questioning former Governor Terry Branstad’s record.
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