Paulsen: Democrats’ Budget = Deficit Spending & Raised Property Taxes

From Iowa House Republican Leader Kraig Paulsen:

Last week in the Iowa House, Democrats released partial state budget targets to the budget subcommittees.   This is the first step in putting together the budget for fiscal year 2011, which is the budget year that begins on July 1 of this year.   This partial glance at the budget gives us an incomplete picture of the Democrats’ spending plan but there are also some very clear signals it sends.

The targets cover roughly $2.5 billion of the general fund budget which.  Ultimately this will be less than one-half of the general fund expenditures.   Hopefully the remainder of the plan will be forthcoming soon. 

While it’s only a small glimpse of the budget, it appears that legislative Democrats plan to carry forward Gov. Culver’s property tax increases.

Many questions remain regarding the budget but there are three things we know for sure.  The plan the Democrats released will:

• Spend more money than the state takes in;
• Significantly underfund Medicaid;
• Dramatically raises property taxes

Democrat leaders have said they will use one time dollars to balance the budget.   The governor recommended borrowing $200 million from the Cash Reserve Fund, it is my expectation that Democrats will take at least that much.  There is also one-time federal stimulus dollars remaining which will be spent by Democrats in this budget ($200 million).   This allows them to spend more than we have in ongoing revenue.   I understand the need to meet Iowans’ needs, but this is a set-up for increased fiscal troubles down the road and more tax increases than the governor has already done.

Additionally, the House Appropriations chair stated last week that the Democrats intend to under-fund Medicaid (health care for the poor and elderly).  Since Medicaid is an entitlement, this just pushes the problem off until next January when the Legislature will be forced to appropriate funds to eliminate the shortfall caused by the under-funding.   This is not optional spending, all underfunding now does is make it easier to temporarily balance the budget.

Lastly, you may recall from previous newsletters that when Governor Culver did his across the board cut he raised Iowans’ property taxes by an amount that could be as much as $250 million, approximately a 6 to 7% increase.   This occurs because K-12 education expenses were transferred from state funding to the back of the property taxpayer.  Democrat legislative leaders have indicated they intend continue these tax increases. 

At this point the budget lacks clarity in many regards but this is basically what we know at this time.

House Republicans believe in open and transparent budgeting.   Furthermore, it’s vital that the budget not spend more than the state takes in and not raise taxes, especially property taxes.

As we continue to move through the budget process, House Republicans will offer more budget savings ideas.   We have already offered multiple ideas this year that when added together come close to $300 million in savings.   We’re committed to commonsense budgeting and being frugal with taxpayers’ dollars.