Looking at the State Revenue Growth Debate

To confuse Iowans and help their argument in favor of higher spending, legislative Democrats are purposefully misleading Iowans by telling them there is 6% state revenue growth or $408.1 million.  They conjure up that growth by ignoring actual state spending.  Instead they take the latest estimate on final FY 15 revenue ($6.767 billion) and subtract it from the latest estimate on FY 16 revenue ($7.175 billion).  The difference is 6% or $408.1 million.

Actual state spending last year was $6.995 billion.  The new revenue estimate is $7.175 billion.  The difference is 2.6% or $180.9 million.  It is simple math; actual state revenue growth is 2.6%, not 6%.  In actual dollars, growth is $180.9 million, not $408.1 million.

The state’s Cash Reserve Fund has $522.2 million.  It must equal 7.5% of that year’s budget to help cash flow the state during the year.  When the Legislature decided to reform the budget process in the early 1990s, one of the key elements was ensuring that payments – especially school aid payments – were made in a timely manner.

The state does not have a $1 billion surplus.  Back in 2013 the state had an ending balance of roughly $900 million.  Since then that revenue has been used to pay off state debt and invest in key infrastructure projects in our Regents institutions and improving water quality.  The ending balance is estimated to be $420 million at the end of Fiscal Year 2015 on June 30.  If that money is spent, there is no automatic source for it to be replenished.