DES MOINES – Governor Chet Culver has announced new steps he is taking to meet the budget challenges facing the state of Iowa caused by a global economic downturn, including an across-the-board cut in State spending.
“We
are in the midst of an economic challenge that is historic in its
scope,” said Governor Culver. “While its cause comes from actions on
Wall Street, supported by misguided federal policies from Washington over
the past eight years, the result has been an economic recession that is
hitting Main Streets and factories and farms and families across the
nation. This world-wide economic recession is affecting every state in
the nation, no matter if they are big or small, rural or urban,
Democratic or Republican. We are all facing this challenge together.
And together, we must accept the reality and share in the sacrifice.”
The
Governor is taking action after last week’s meeting of the Revenue
Estimating Conference (REC) determined that state government would see
a decline in revenues during the current fiscal year. After meetings
with state budget officials and members of his Council of Economic
Advisors, the Governor determined the end of the economic downturn has
not yet reached Iowa and that the REC could make further reductions to revenue estimates.
The
Iowa Constitution requires a balanced budget; the state cannot deficit
spend. Today’s actions by the Governor meet the demands of the current
and projected declines in revenue, and balance the state budget. He has
taken the following steps:
1. He
has directed the Department of Management (DOM) to revise its projected
balance sheet for the General Fund at the end of December in order to
adjust for the recent REC action and make other adjustments based upon
DOM’s best projections of income and expenditures. This action has
already been done, which projects a negative balance at the end of the
current fiscal year. A copy of the revised sheet is attached.
2. Pursuant
to Iowa Code, the Governor will sign an Executive Order making an
across-the-board reduction in General Fund expenditures, currently
expected to be 1.5%. This is estimated to save the state $91.4
million. However, the Governor will protect funding for Corrections
Officers and State Troopers, and will ask the legislature to backfill
these cuts when they convene next month.
3. He
will work with legislative leaders and members of the legislature to
transfer $10 million to the General Fund from accounts and funds in
state government that have balances that exceed the amount needed for
the current fiscal year.
Governor
Culver assured Iowans that he would hold the line on taxes, saying,
“Maintaining a balanced budget and staying in front of this national
economic crisis requires sacrifice throughout state government, as well
as business, workers, urban, rural, and all of Iowa. And I intend to
do this while holding the line on taxes.”
Today’s
announcement represents a $101 million reduction in general fund
expenditures for the current fiscal year. When combined with last
weeks announced $77 million in cuts, this represents nearly $180
million in budget savings for the current fiscal year.
During his remarks today, the Governor reassured Iowans that Iowa is in a strong position to meet the challenges presented by the national economic downturn.
“I
don’t want to be alarmist or suggest to Iowans that their state
government is in financial trouble,” the Governor said. “The fact is
we have more than $620 million in reserves that will help us through
this situation. We have a AAA bond rating that would allow us to do
some things that other states may find impossible.”
The
Governor added: “We have a history, under both Democratic and
Republican leadership, of balancing our budget and acting appropriately
to economic tough times. And we have a strong, unmatched, talented
citizenry who demands that their political leaders pull together to
keep Iowa strong.
The difficult, current economic circumstances may not be the fault of
Iowans, but it is something we must all face together. Like most
Iowans, I am both optimistic and confident about what the future holds
for our state. We have always met challenges with solutions, problems
with answers. And we always will. “
Below is a listing of budget savings announced by the Governor in recent weeks.
SAVINGS ANNOUNCED ON DECEMBER 9TH
Freeze on Out-of-State Travel, Filling of Vacancies, and
Equipment Purchases and savings from Judicial Branch,
Legislature, and the Regents: $28.0 million
Transfers from Alcoholic Beverages Division and Executive
Council: $12.0 million
De-appropriation of New State Office Building: $37.0 million
Total $77.0 million
ADDITIONAL SAVINGS ANNOUNCED TODAY
1.5 % Across-the-Board Reduction: $91.4 million
Transfer of Funds $10.0 million
Total $101.4 million
Total Budget Savings: $178.4 million