The Institute for Truth in Accounting’s second edition of The Financial State of the States spotlights the lack of truthful accounting and transparency in state government. Iowa is no different than most of the other states in the country. In reviewing the report, you can see that only six states have a surplus of money to pay their bills: Alaska, Wyoming, North Dakota, Utah, Nebraska, and South Dakota. The five states with the worst Taxpayer Burden are Connecticut, New Jersey, Hawaii, Illinois, and Kentucky. As you review the study, you will see that all the states together have over $1 trillion in debt.
As we take a specific look at Iowa in this year’s report, Iowa was short over a half-million dollars in meeting its bills for the year, which translates into a Taxpayer’s Burden of $500 per taxpayer in Iowa. This data is for the fiscal year ending June 30, 2010. The previous year’s report spotlighted why Iowa is having difficulty with debt. The report spotlights the following problems for Iowa:
“The state of Iowa reported liabilities, not related to capital assets, of $5.6 billion. Institute for Truth in Accounting’s detailed analysis discovered $1.9 billion of additional retirement benefits have been promised. When these retirement systems’ obligations are included, the state’s bills total $7.5 billion.”
“Since retirement benefits are not immediately payable in cash, Iowa politicians have ignored most of these true compensation costs when calculating ‘balanced’ budgets. Furthermore, the state has set aside only 71 cents to pay for each dollar of these promised benefits.”
The Institute for Truth in Accounting also has a flyer about Iowa on their website that looks at the state of Iowa’s budget as of the end of June 30, 2011. The flyer shows at the end of FY 2011, the Taxpayer Burden had dropped to $300, but it also reported that:
“The State of Iowa has promised $7.0 billion of pension and retirees’ health care benefits, but only $4.9 billion has been set aside to fund these benefits. Therefore, Iowa has less than 70 cents to pay for each dollar of promised benefits.”
In FY 2009 it was 71 cents and at the end of FY 2011 it dropped slightly down to 70 cents. This is a massive liability for our state, and we have to hope that things will change in the state to correct this problem.
So as a taxpayer it is important to ask questions about our elected officials and find out what the plan is to deal with the lack of assets to pay for pension and retirees’ health-care benefits. Remember that taking the time to inform yourself is the best defense to fight the battle for future generations’ debt loads.
Jennifer Crull is a IT specialist with the Public Interest Institute in Mt. Pleasant, IA. This was originally published in PII’s In The Public Interest and is republished with permission.