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Governor Culver's statement on balancing the state budget |
| Updated: October 13, 2009 |
DES MOINES –Governor Chet Culver announced today that he is implementing a 10% across-the-board cut to state government spending. The cut is in response to yesterday’s unanimous Revenue Estimating Conference projection of declines in state revenue of 8.4%, or $414.9 million. The Governor’s statement, delivered this afternoon at the Iowa State Capitol, is below.
“Good afternoon. I am here today to announce the action I will take to balance our state’s fiscal year 2010 budget.
“In July 2008, while our state was still recovering from the worst natural disaster in Iowa’s history, our revenue was strong. Not long after that, however, the results of failed policies from Washington and bad practices on Wall Street were beginning to be felt in Iowa along with every state across the nation.
“In December of last year, the REC met and unanimously approved lower revenue estimates for Iowa. At that time, I did what I am obligated to do: I balanced the state’s budget by implementing a 1.5% across-the-board cut.
“This past March, the REC met and unanimously approved the official revenue estimate for the current fiscal year. That was the basis for the balanced budget approved by the legislature and signed by me earlier this summer.
“In recent months, the decline in revenue became dramatic. For example, last month alone, revenue dropped by more than 5%. And yesterday, the REC approved another unanimous estimate that projects a decline of 8.4% in revenue for the current fiscal year, a loss of nearly $415 million.
“The fact is clear: Iowa has not spent too much, rather our revenue has fallen off by significant amounts as the result of this national economic recession.
“Our state is faced with simple but painful choices: to increase taxes, cut spending, or both. I have been clear on this: I believe now is not the time to raise taxes on hard-working Iowans.
“As Governor, I have two options to cut state government spending. I can implement an across-the-board cut in state government spending or call the legislature into a special session.
“I have ruled out a special session for two reasons. First, the outcome of a special session would be uncertain. Second, the effects of a special session, and any action taken, could take weeks to be actually implemented.
“Therefore, I have decided to implement an immediate across-the-board cut in state spending. I have arrived at this decision after long and thoughtful deliberation. So, this afternoon, I will be signing Executive Order Number 19, to implement an across-the-board cut of 10%, which will become effective today.
“After the Revenue Estimating Conference meets in December, I will consider asking the legislature, to the extent possible, to backfill funding to three key areas. One is basic health care services, especially for our children. Another key area is public safety, in particular correctional officers, troopers and others on the front lines to keep our communities safe.
“Finally, workforce development. Iowa has lost nearly 50,000 jobs over the past year, and we need to ensure that those Iowans who have or will lose their jobs – including state employees impacted by these cuts today – have the support they need during these challenging times, for them and their families.
“Let me conclude with the following points:
“First, some programs will continue without costing the state any revenue, such as our effort to prevent the new flu in Iowa.
“Second, I am appointing my Deputy, Joni Klaassen, as my special liaison to the unions representing state employees to help address the reduction in our state government workforce.
“Third, I am calling upon the legislature to make the first bill they pass in January to require public school districts to spend money from their cash reserves rather than raising property taxes, to make up for the loss of revenue as a result of this across-the-board cut.
“I believe these steps will get us to January, at which time we begin work on the FY2011 budget. In the meantime, my administration will do a line-by-line review of the more than 250 budget items in the state budget to identify and recommend further reductions in state government spending.
“This is a tough decision, but I believe it reflects our Iowa values of common sense and fiscal responsibility. This is not a challenge we’ve asked for, but it is one that we will meet together as Iowans.”
Below is the text of Executive Order 19, which implements the across-the-board budget cut.
EXECUTIVE ORDER NUMBER 19
WHEREAS, reckless conduct by Wall Street financial interests, combined with years of misguided economic and fiscal policies of the federal government, have joined to create a Great Recession, the worst economic downturn since the Great Depression; and
WHEREAS, as a result, across the nation, states are facing record high budget shortfalls in Fiscal Year 2010; and
WHEREAS, in addition to budgetary challenges caused by this economic down turn, the State of Iowa has, in recent years, experienced a series of unprecedented natural disasters requiring increased expenditures to relieve hardships endured by individuals and businesses harmed by those weather-related events; and
WHEREAS, the State of Iowa, using sound fiscal management practices, is in better shape than most other states, had the highest reserve funds in the state’s history in Fiscal Year 2009, and thereby positioned itself to manage successfully notwithstanding the economic downturn and the adverse impacts of weather-related events; and
WHEREAS, in March, 2009, the State’s Revenue Estimating Conference projected state revenues for Fiscal Year 2010, and the Iowa General Assembly passed, in April 2009, a balanced budget for Fiscal Year 2010, based on those projections; and
WHEREAS, on October 7, 2009, the State’s Revenue Estimating Conference (REC), upon its review of more recent economic data, substantially revised and reduced its official projection of state General Fund revenues for Fiscal Year 2010 by approximately $415 million; and
WHEREAS, based on these most recent projections, unless budgetary adjustments are made, I find that the estimated budget resources during Fiscal Year 2010 will be insufficient to pay all appropriations in full by the end of that period; and
WHEREAS, I have therefore requested the Department of Management to recast the Fiscal Year 2010 General Fund budget with the REC’s new revenue projections in order to abide with generally accepted accounting practices and to avoid an overdraft or deficit in the several funds of the State’s General Fund for Fiscal Year 2010; and
WHEREAS, modifying budget allotments to state departments and agencies this early in the fiscal year will help state agencies adjust to lower revenues, despite already managing within the tight budget; and
WHEREAS, an across-the-board reduction of General Fund expenditures avoids the unfair and unrealistic “picking and choosing“ of important programs; and
WHEREAS, a 10 percent reduction in appropriations, pursuant to Iowa Code 8.31, would reduce state expenditures in Fiscal Year 2010 by approximately $565 million and help the State avoid an overdraft or deficit in the Fiscal Year 2010 General Fund; and
NOW, THEREFORE, I, Chester J. Culver, Governor of the State of Iowa, by the power vested in me by the Constitution and laws of the State of Iowa, do hereby order and direct a uniform modification of allotment requests, pursuant to Iowa Code 8.31, to achieve an annual ten percent budget reduction for Fiscal Year 2010. The Department of Management shall take all necessary steps under Iowa law to effectuate the annual ten percent reduction for Fiscal Year 2010, directed to all state departments and establishments, as provided in Iowa Code 8.2(5). Actions taken by the Department of Management and all state departments and establishments described above to implement this order shall commence on October 8, 2009.
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