VIDEO: Money in state's cash reserve will likely be used to address budget shortfall

The Revenue Estimating Conference met Tuesday at the State Capitol to discuss the budget. (Photo: Steffi Lee)

Governor Terry Branstad and top Republican lawmakers may tap into the state's savings account to address an estimated $131 million budget shortfall for the current fiscal year.

The three-panel Revenue Estimating Conference met Tuesday to break down the latest numbers for the state's revenue projections, explaining that the state is expected to get $7.1 billion for this year's budget.

"The Iowa economy is showing signs of weaknesses in some areas," Holly Lyons, fiscal services division director with the non-partisan Legislative Services Agency, said. "There is no indication that we are headed into a recession in the near term, but we are facing a difficult time. State revenues are still experiencing growth, just slow growth."

Lyons said the state is experiencing "lower than anticipated" sales tax revenue and income tax revenue.

David Roederer, Governor Terry Branstad's top budget director, also cited a lagging farm economy in the regards to the budget shortfall.

"The agriculture sector has some concerns," he said. "We have a net farm drop again this year, not nearly as much as the year before."

Roederer said major agriculture products, such as corn and soybeans are being produced at a loss or close to just breaking even.

But with the current fiscal year ending on June 30, Branstad and key GOP leaders like State Sen. Bill Dix, R - Shell Rock, say they don't believe additional budget cuts are reasonable. Lawmakers have already slashed the current spending budget to cover a shortfall of more than $110 million.

"We must not cripple our schools, public safety and many other essential services with further cuts this year," Dix said in a statement. "Our savings account exists for moments such as this."

Ben Hammes, Governor Branstad's spokesperson, said the state has "hundreds of millions in the cash reserve account."

"The State has already made cuts to the current fiscal year budgets but with just over three months remaining in the current fiscal year, additional cuts are not feasible," Hammes said in a statement. "The Governor and Lt. Governor are committed to reimbursing the cash reserve account in the budgets to be passed this legislative session."

But House Appropriations Chair Rep. Pat Grassley, R - New Hartford, says nothing's finalized yet.

"I've continued to say that everything is on the table," Grassley said. "When you look at tax credits, looking at the budget, I think we've seen based on the information we've gotten today that everything needs to be on the table."

Democrats remain critical of the latest numbers, that also includes a projection of a $191 million cut from the budget for the 2018 fiscal year that begins on July 1.

"Republicans are pursuing an agenda that is driving down incomes and destroying jobs," Sen. Joe Bolkcom, D - Iowa City, said.

Rep. Kirsten Running-Marquardt, D - Cedar Rapids, says it's time that lawmakers analyze every dollar that's being spent.

"This is another example of poorly managing our state's funds," she said.

close video ad
Unmutetoggle ad audio on off