Democrats’ Legacy: Four Biggest Budgets in History, $1.7 Billion in Bond Debt, Gaping Hole in FY 2012
Despite all of the rhetoric about being fiscally responsible and cutting budgets, Democrats approved (and the Governor will soon sign) the four largest budgets in the state’s history.
According to the Legislative Services Agency (LSA), here is the general fund spending (including one-time federal stimulus funds, cash reserve funds and other one-time funds) over the past five years:
- FY 2007 — $5.392 billion ($50 million in supplementals shifted into FY 08)
- FY 2008 — $5.938 billion (Includes $50 million in shifted supplementals)
- FY 2009 — $6.169 billion (Includes $210 million one-time funds)
- FY 2010 — $5.974 billion (Includes $672 million in one-time funds)
- FY 2011 — $6.014 billion (Includes $735 million in one-time funds)
As you can see, the FY 2009 budget spent the most on general fund obligations, followed closely by the budget just approved by the Legislature. The FY 2010 budget only comes in below $6 billion because of the Governor’s 10 percent across the board cut, which reduced FY 2010 expenditures by $565 million.
In addition, Democrats approved the Governor’s I-Jobs Program, which spends $875 million on a plethora of infrastructure, roads and technology projects. This number includes $810 million in bonds, which will cost $1.7 billion when fully repaid in FY 2034. Democrats added $45 million in principle in 2010 but that is not expected to increase the total repayment cost.
Note: This does not include $131 million in prison infrastructure fund bonds for the maximum security prison in Fort Madison that were approved during the 2008 session.
Finally, according to LSA, the FY 2012 budget has a gaping hole due to the use of one-time money in FY 2010. It appears that at this point the built-in spending for FY 2012 is roughly $1.1 billion. In order to cover this amount of spending, revenue would have to increase by 20 percent. It would also take an increase in the state sales tax from 6 percent to 9 percent, or a 50 percent increase in the tax.
It appears that the Democrats’ budget legacy will be increased spending while putting the state into debt for the next 20 years and setting the state up for a huge tax increase in FY 2011.