It was just back on Sept. 16 that I wrote this after Gov. Chet Culver’s visit to The Gazette:
Culver said, emphatically, he has no worries that ongoing economic tumult will impact Iowa. He didn’t explain how Iowa might untie itself from the nation’s sinking banking and investment sectors, but you have to admire his optimism. He said the next president needs to clean up the “crisis.”
But by yesterday, Monday, Culver’s tune has changed dramatically. Of course, to be fair, a hell of a lot has happened since last month. From Radio Iowa:
Governor Chet Culver says states across America are feeling the effects of the current economic “challenge” — and congress and the president should give states “direct” financial help. “According to the Center on Budget and Policy Priorities, 29 states will experience shortfalls in this fiscal year’s budget and 15 more have gaps which have occured since this summer,” Culver says.
Later in the story:
“Given what has happened, you know, nationally and the collapse that has happened on Wall Street there will be ramifications to all of the states that were not expected,” Culve rsays. “For example, we have added 11,000 people to our Medicaid rolls in the last two months. That arguably is a direct result of the recession that we’re in.”
If state tax revenues continue to slow down, Culver says that “might trigger” the need for a mid-year, across-the-board cut in the state budget. Culver spoke by phone with Iowa reporters on Monday after meeting with congressional leaders in Washington, D.C. to discuss a stimulus package for the states. “One of the things in particular we talked about was infrastructure,” Culver said, “by giving the states money so that we can put people to work, create jobs and address some infrastructure needs whether it’s in Iowa or other parts of the country.”
What I don’t buy is this notion that no one under the Golden Dome saw budget trouble coming. All sorts of folks, including our editorial page, sounded the alarm that large spending increases approved by Democrats weren’t sustainable. Dark economic clouds have been on the horizon for months. No one could foresee a historic panic, perhaps, but a drop in state revenues was all but inevitable.
Sure, we have reserves. But we’ve also got a whopping disaster recovery bill beyond what the feds will provide. The state is not going to be able to deal with this without rolling back some promised spending increases. I don’t expect to hear anything about that until after Election Day.