News Center

August 14th, 2010

Chet’s Debt Deception

By Sen. Paul McKinley

Last week, Governor Culver issued a statement lauding Iowa’s lack of public debt as compared to the other 50 states in the union. Moody’s Investor Services issued a report showing Iowa had the second lowest amount of debt in the nation per capita – with only Nebraska slightly ahead of us.

Governor Culver promoted this report and mentioned that it was after the $1.7 billion dollar debt that was added to the state’s credit card to pay for his failed debt scheme known as I-JOBS. Said Culver in a press release, “Even after bonding for desperately needed infrastructure investments through I-JOBS, we maintain one of the lowest debts among states – a testament to our very careful and cautious budgeting and spending practices in this state.”

As it turns out, Governor Culver is completely wrong.

This report only factors in debt prior to I-JOBS and also does not factor in a whole host of other public debt at several levels of government for which taxpayers are on the hook.

State Auditor Dave Vaudt released his analysis of the report and noted, “Most of Iowa’s debt is secured by revenue outside the General Fund and is not considered General Fund debt—simply because of the way Iowa borrows funds. Just like with the General Fund, any non-General Fund resources used for debt payments take away resources that would have been available to provide ongoing services to the taxpayers.”

Vaudt continued, “Interestingly, the average ratio of ‘gross’ tax-supported debt to General Fund debt illustrates how Iowa’s borrowing practices compare to other states. The average ratio for all 50 states is only 2.24. This means for every $1.00 of General Fund debt, the average state has $1.24 of non-General Fund debt. Iowa’s ratio, however, is significantly higher at 14.54 (and substantially more than the next highest ratio of 6.41). This means for every $1.00 of Iowa’s General Fund debt, Iowa has $13.54 of non-General Fund debt. It is obvious that comparing Iowa to other states without accounting for this non-General Fund debt is very misleading.”

In closing, Vaudt laid out how much debt each Iowa taxpayer is actually responsible for by concluding, “For an apples-to-apples comparison with other states, Iowa’s “gross” tax-supported debt per capita is substantially more meaningful than the General Fund debt reported in the news. Comparing Iowa’s ‘gross’ debt with that of other states would put Iowa closer to the middle of the pack rather than second lowest in the nation. It means the share of Iowa’s debt load belonging to a family of four is over $4,000 rather than under $300. Iowa’s families should know Iowa’s debt load is 14 times more than was originally reported [by Culver]. Iowans deserve complete information to put Iowa’s debt load in context. Full disclosure is essential to Iowan’s effective participation in the policy debate concerning Iowa’s debt load.”

Culver’s release, which was debunked by Auditor Vaudt, is just the latest attempt by this governor to mislead Iowans about our level of debt. He continues to try to spin his failed four years as governor and shows how out-of-touch he is to the economic realities facing every day Iowans.

This political spin is exactly why Iowans also do not trust his inflated temporary work I-JOBS numbers, they do not trust his budget numbers as he continues to be in denial about the $1 billion dollar deficit that faces our state next year and they do not trust in his abilities to clean up the scandals that have consistently rocked his administration.

Senate Republicans believe Iowans deserve an honest government that will put the focus on private sector job creation, cutting spending, reducing taxes and cleaning up state government. We believe elected officials should be upfront with the taxpayers instead of providing misleading reports.

This debt and spend governor and the other Culver Democrats in the Legislature have amassed an unacceptable record that we cannot afford to repeat.

It’s past time that we put in place the kind of fiscal policies that will lead to less debt – not more. When government is fiscally responsible and does not continue heaping more debt and taxes onto citizens and employers, we will begin to see more certainty and stability and that means more private sector jobs.

Senate Republicans stand ready to lead Iowa forward with a focused agenda on more private sector jobs, real property tax relief, responsible budgeting and reduced spending. That’s the kind of positive agenda that all Iowans – present and future – can really rally around.

Photo by Dave Davidson

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The Iowa Republican





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