Fiscal Services: FY 2011 Spending Gap is $1.1 Billion

After the Revenue Estimating Conference meeting on December 11, Fiscal Services released the updated general fund balance sheet for FY 2011. The balance sheet shows that with the new revenue estimates, the spending gap for FY 2011 is $1.117 billion.

The spending gap is simply the difference between built-in spending (spending previously approved by the Legislature or mandated by the Iowa Code) and estimated revenue.

The Democrats are claiming that because of school aid and other standing appropriations, the Legislature faces a spending gap each and every year. This is a factually true statement. However, in the past decade, the spending gap has ranged from $150 million in FY 2008 (the last time House Republicans were in charge of the budget) to $450 million in FY 2004 with an average gap of $225 million.

It wasn’t until the Democrats took control that spending gaps began to sky rocket…

It wasn’t until the Democrats took control that spending gaps began to sky rocket, going from just over $400 million in FY 2009 to $800 million in FY 2010 and now $1.1 billion in FY 2011.

According to Fiscal Services, built-in spending for FY 2011 is $1.28 billion. The largest budget items on the list are as follows:

  • K-12 school aid (ATB cut and one-time money) – $542.7 million
  • Medicaid (in addition to stimulus dollars) – $189.2 million
  • Collective bargaining salary increases – $102.9 million
  • Regents (replace one-time money) – $80.3 million
  • Homestead Property Tax Credit – $78.7 million
  • Grow Iowa Values Fund – $50 million *
  • Community colleges (replace one-time funds) – $25.6 million

* The past two years, the Values Fund was funded in the Rebuild Iowa Infrastructure Fund

The estimated one-time stimulus funds remaining is $48 million and the REC estimates an increase in general fund revenue in FY 2011 of $103 million. When the $151 million in revenue is deducted from the built-in spending, it leaves a spending gap of $1.117 billion.

Democrats are also claiming that the gap is “closer to $500 million”. This is because they do not intend to backfill the $542 million for school aid. (The Governor recommended backfilling $142 million of school aid in his Condition of the State speech.) That means while the spending will still occur, it will not be funded with state tax dollars but rather property tax dollars.

That isn’t a cut in spending but rather a spending shift.

House Republicans believe in being transparent to taxpayers when it comes to budget numbers and budgeting decisions. By telling only part of the story, the Democrats do a disservice to taxpayers that only increases the cynicism about government and politicians.