By: Ed Failor, Jr., President of Iowans for Tax Relief
Date: Wednesday, December 2, 2009
Iowa taxpayers were dealt another crushing blow last week when the non-partisan Legislative Fiscal Services Division announced the state is facing a budget gap totaling more than one billion dollars. This number estimates the amount by which state spending will exceed expected tax revenues. There is no doubt, the Iowa budget is in bad shape – but there is a way out of budget chaos.
I have been suggesting ideas for Governor Culver and Iowa Lawmakers to consider next year because I know Iowa can once again grow and prosper. We live in a great state, which will come out of this economic downturn but in order for our state to be on the right track, our state leaders need to employ serious fiscal discipline.
Unfortunately, based on recent history, fiscal discipline may be hard to come by.
Currently, there is a provision in Iowa law which limits lawmakers to spend only 99% of tax receipts, this is commonly referred to as the Iowa 99% Expenditure Limitation. Unfortunately, because the Expenditure Limitation is not in the State Constitution, there are ways around this limit. Over the past several years, the spending limit has been temporarily suspended, as a result the state budget grew more than the law allows. The desire for bigger government has led our state down this rocky course which is culminating in the current budget disaster.
In State Budget Years 2006 and 2007, the spending limit was suspended to spend an additional $84.2 million in 2006 and $45.7 million in 2007. During the 2008 Legislative Session, the 99% Expenditure Limitation was suspended again, this time lawmakers overspent an additional $49.1 million.
Bypassing the spending limit accelerated the rate of state spending and grew government at a pace faster than Iowa taxpayers could actually afford. Years of going around the law contributed to the budget mess our state now faces. Had there been a stronger spending limitation in place, the additional $179 million would have been spent in the proper budget year, not building up large state budgets to a level which could not be maintained.
I recommend to our state leaders it is time for a constitutional spending limitation; one which does not allow for a temporary suspension when lawmakers want to spend more. I suggest an amendment to the Iowa Constitution specifically limiting state government spending to 99% of the tax revenues from the previous year. A spending limit such as this in the Iowa Constitution would prohibit a backdoor way around the law.
Hard-working Iowans do not have the luxury to temporarily suspend reality when budgeting family expenditures. Lawmakers need to play by the same rules.
Spending limits offer protections both for state budgets and for taxpayers. With a constitutional spending limit, lawmakers would be prevented from massive state spending increases, and would help to stabilize the state budget. Most importantly, Iowa taxpayers would benefit from a constitutional spending limit; instead of rapid state government growth, Iowans’ tax dollars would be spent in proportion with revenues.
While we are unable to go back in time and have the Governor not spend the $179 million from the past budgets, we must seize the fiscal crisis to demand future fiscal restraint and responsibility. Our leaders need to craft a state spending limitation which will set us on the right course for economic growth and prosperity.
With every dollar spent on Iowa government coming from Iowa taxpayers; Governor Culver needs to spend our tax dollars wisely, but we could certainly use a constitutional spending limit to make certain it happens.
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