State Budget Lays an Egg

As expected, the state Revenue Estimating Conference sliced tax collection estimates for the current year and next year.

The total slice is $400 million over the next 15 months. That’s more than two rounds of AIG bonuses, so it’s real money.

Covering Iowa Politics/Gazette has coverage.

So does The Register and Radio Iowa and Iowa Politics.com

Everybody agrees that lawmakers and the gov will have to look for more places to cut. And nobody is sure when the economy will bottom out and start recovering.

Still, the capital city remains calm at this hour.

But we are picking up sporadic bursts of partisan rhetoric near the Capitol. And lots of spin.

House Minority Leader Kraig Paulsen, R-Hiawatha, is pretty sure that this is the Democrats’ fault:

Paulsen Releases Statement on REC Estimate

(DES MOINES)- House Republican Leader Kraig Paulsen (R-Hiawatha) released the following statement after the Revenue Estimating Conference (REC) met today and released new revenue estimates:

“The REC numbers released today should be no real surprise to Iowans. Over the past two years, Democrats have increased state spending by nearly $1 billion and now we’re seeing the results of that spending spree compounded by a weak economy.

Republicans are adamant now is not the time for tax increases nor big debt and spending schemes such as the ones the governor has suggested. Since we cannot be sure we have hit the bottom yet, we must preserve the state’s cash reserves to protect against future economic turmoil. Republicans will also continue to suggest cost-saving measures such as the $48 million previously offered.

The Legislature needs to stop wasting time on department bills, government commissions, and renaming agencies. There are more than 80,000 Iowans out of work and the state needs the legislature to start focusing on economic growth, job opportunities, and encouraging employers to invest in our workforce to head off further economic problems.”

But Gov. Chet Culver says he’s confident, and still believes in a place called hope.  He also mentions (SURPRISE) the state’s AAA bond rating:

GOVERNOR CULVER RESPONDS TO REVENUE ESTIMATES

DES MOINES – Following today’s revised projections from the Revenue Estimating Conference, Governor Chet Culver issued the following statement on next steps to maintain a balanced budget for the current fiscal year and approve a balanced budget for fiscal year 2010. The REC estimated that net General Fund revenues would be $129.7 million less in FY2009 and $269.9 million less in FY2010 than the Governor’s budgets.

Governor Culver’s Statement

Given the dramatic impact of the national recession on our economy, it is no surprise that the Revenue Estimating Conference has lowered state revenue projections. Clearly the national economic downturn continues to be severe. But I am confident that Iowans will work our way out of this recession. That’s what we do when faced with challenges.

In fact, Iowa is better positioned than nearly every state in the nation to work our way out of this recession and come out stronger than before. Iowa is one of only eleven states with a AAA bond rating; after recently funding disaster relief, we still have cash reserves of $564 million; and our unemployment rate is more than three percentage points below the national average.

On top of that, we are offering Iowans hope with our efforts to create and retain jobs and strengthen the economy. First, Iowa is quickly putting President Obama’s economic recovery plan to work, already investing more than $100 million in transportation projects. Second, we are stimulating the economy with hundreds of millions of dollars being spent to rebuild communities hit hard by last summer’s natural disasters. And third, the legislature and I are working to create I-JOBS in order to make use of Iowa’s financial strengths by investing in infrastructure and supporting jobs throughout the state.

My Administration has stayed ahead of the changing economic conditions by taking effective steps to ensure a balanced budget and maintain strong fiscal management. For example, I ordered across-the-board cuts of $89.1 million, directed state agencies to reduce expenses, and last week signed legislation making $30.3 million in additional cuts which I recommended for this year. The legislature has been a key partner throughout this process.

With today’s new projections, Iowa law requires me to release my revised budget recommendations for FY 2009 and FY 2010 within two weeks. Starting next week, I will discuss recommendations with legislative leaders so we can move forward quickly to reach agreement on balanced budgets in light of these new revenue projections.

One important recommendation I will propose is making use of funds authorized by the American Reinvestment and Recovery Act. I believe funds from the federal economic recovery plan can maintain our priorities in key areas, such as education and health care, and should help us maintain services to Iowans by avoiding layoffs of public employees.

While important decisions have to be made, I am optimistic that we will come together and develop solutions to meet these economic challenges. From balancing the budget to investing in new jobs, we will do what’s necessary to provide a better, brighter future for all Iowans.

# # #

More updates as they develop. Back to the NCAA tournament, already in progress.

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