Truth in Accounting provides an annual report about the financial health of Iowa and all 49 other states. The last time we reported on this issue, Iowa was ranked 8th in the nation and our financial burden per taxpayer was a surplus of $100 per taxpayer. As we look at the report for the 2014 year, Iowa is now ranked 9th, but our tax burden has now increased to a credit of $400 per taxpayer.
As state governments continue to recover from the recession, states are working to decrease their debt and increase the money they have available to pay their bills. In 2013, there were eight states that had a surplus per taxpayer. This year that number has increased to nine.
The report has the following positive points about our state. “Iowa beat the 180-day goal time between the close of its fiscal year and release of its 2013 Comprehensive Annual Financial Report (CAFR), publishing the report 166 days after the fiscal year-end.” The timeliest states — Michigan (82 days), Utah (115 days), Washington (131), North Carolina (148 days), New York (156), and Wisconsin (164) — published their CAFRs well before the 180-day deadline. The worst state, New Mexico, had not issued theirs as of July 27, 2014, and California took 295 days to publish its CAFR. Also “outbound moves from Iowa in 2013 were 49.8 percent of total moves, down from 50.14 percent in 2012, meaning that moves into the state approximately equaled moves out of it.” Additionally, “this Iowa Taxpayer Surplus is 1 percent of an average citizen’s personal income of $45,114.”
The negative point of the report is about the lack of transparency concerning retirement benefits in the state. This means that almost 90 percent of retirement liabilities are not clearly disclosed on the balance sheet for the state. Truth in Accounting discovered, “a total of $2.4 billion of retirement benefits have been promised but not funded. Because of the confusing way the state does its accounting, only $253.4 million of these liabilities are reported on Iowa’s balance sheet.”
The state of Iowa’s financial situation continues to improve, but we still need to work on the issue of properly reporting liabilities concerning retirement obligations in the state. While Iowa’s surplus per taxpayer isn’t as high as other states, it is important to note that in 2010 our taxpayer burden was $500. So Iowa has worked hard in the last four years to take a state that was in a financial spiral and get the budget back in line and keep expenditures in check. Now it is important for the state to focus on the pension system in Iowa. First off the state needs to do a better job of reporting the liabilities of the pension system.
From last year to this year unreported retirement liabilities have increased from $1.9 billion to $2.2 billion. This represents an increase of 15.8 percent. We have to do something about this before it starts to have a negative impact on our state financial health.
Take the time to ask your Representative or Senator about what his or her plans are concerning the pension system in Iowa. If we don’t demand more transparency concerning this issue, how will the state know to change the way they report the information? For while we do have the money to pay our bills now, that doesn’t mean we will in ten years. The only way to ensure that we can meet the obligations of the pension system is if they are openly reported and fully funded.