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No special session needed to resolve Iowa budget shortfall

The Iowa Capitol Building. (CBS2/FOX28)

State lawmakers will not be heading back to Des Moines for a special session on the budget.

State officials announced Wednesday that the expected shortfall for the fiscal year of 2017 is $14.6 million.

Governor Reynolds will transfer $13 million from the state's emergency fund and pair that with the $1.6 million ending balance to cover the shortfall and balance the budget. If the shortfall exceeded $50 million, Reynolds would've needed to call back the legislature to get approval to transfer any amount more than that. The state still has $605 million in reserve funds after closing the books for FY 2017.

“This has been a difficult budget year, but I am pleased we were able to manage lower-than-expected revenues without cuts to education or Medicaid,” Gov. Reynolds said in a statement. “We have been monitoring funds daily since the end of the fiscal year on June 30 and took a measured approach in dealing with the state’s finances. We continue to closely monitor the current fiscal year’s balance sheet and do not believe action is needed at this time.”

No special session came as a surprise to some, after the nonpartisan Legislative Services Agency released a report that projected the shortfall might hit $104 million. Department of Management Director David Roederer, who briefed reporters Wednesday for over an hour about the budget and final revenue numbers, said he thought he would be giving a very different presentation.

“Was I in doubt? Yeah. When we get to June 30 we were short $76 million," Roederer said.

Iowa GOP chair Jeff Kauffmann praised Governor Reynolds in a statement for her "steady, stable management" and State House Speaker Linda Upmeyer, also a Republican, wrote in a statement that Reynolds "diligent and thoughtful" approach was the "right decision." Some Democrats, however, criticized Reynolds and the GOP-controlled legislature for the ongoing budget problems.

Democratic gubernatorial candidate and state Senator Nate Boulton said he is worried for what future mid-year cuts to agencies may look like when the legislature begins again in January.

"We’re giving agency directors very little opportunity to deal with these problems in a responsible way," Boulton said.

Even though the amount Governor Reynolds will transfer from emergency accounts is less than the $50 million which would require legislative approval, Boulton said a special session might have been a good idea regardless.

“I think we should’ve had a special session to deal with the very real crisis in front of us, which is actually dealing with the budget problem that’s going to hit really hard now in January, as well as the root cause so we don’t keep having this conversation every six months.”

Lawmakers approved a series of cuts and transfers in January in another effort to balance the budget. This announcement brings the total shortfall close to $263 million for the 2017 fiscal year.



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