Democrats’ Legacy: Three Biggest Budgets in History, $1.7 Billion in Total Debt, Gaping Hole in FY 2011
Despite all of the rhetoric about being fiscally responsible and cutting budgets, the Democrats approved (and the Governor will soon sign) the two largest budgets in the state’s history.
According to the Legislative Services Agency (LSA), the FY 2009 budget (general fund plus federal stimulus funds for general fund operations) is $6.110 billion. The FY 2010 budget (general fund plus federal stimulus funds for general fund operations) is $6.297 billion. These are the only two budgets to top FY 2008, which spent $5.898 billion in the general fund.
In addition, the Democrats approved the Governor’s I-Jobs Program, which spends $830 million on a plethora of infrastructure, roads and technology projects. This number includes $765 million in bonds, which will cost $1.664 billion when fully repaid in FY 2034. Here is the breakdown, by bill number:
- SF 474 (Regents, $100 million for University of Iowa, $15 million for Iowa State University) – Principle of $115 million — Interest & Costs are $137.5 million — Total is $252.5 million
- SF 376 (I-Jobs plus disaster relief, storm sewer and wastewater treatment, broadband technology) – Principle of $545 million — Interest & Costs are $653 million — Total is $1.198 billion
- SF 477 (Vertical Infrastructure and Alternative Energy Revolving Loans) – Principle of $105 million — Interest & Costs are $108 million — Total is $213 million
- Total – Principle: $765 million — Interest & Costs: $899 million – Total: $1.664 billion
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.
In addition, the Governor counts $65 million of cash from several other sources to reach the $830 million figure. This includes $5.55 million federal stimulus for local roads (HF 820), $39.45 million from the RIIF (FY 10 and FY 11) for local roads (HF 822), $10 million multi-modal transportation (in FY 2010 from RIIF in HF 822), and $10 million unused RISE DOT money.
Also, the Democrats used $56 million from the EEF for flood recovery and $145 million from the Cash Reserve Fund to balance the budget. That leaves $441 million in the cash reserves ($342 million in the CRF, $99 million in the EEF), which is $145 million short of the 10 percent goal.
Finally, according to LSA, the FY 2011 budget has a gaping hole due to the use of one-time money in FY 2010. It appears that at this point the spending gap is over $700 million if the remaining federal stimulus funds are used in FY 2011. And that is only if the revenue meets the REC estimates.
It appears that the Democrats’ budget legacy will be wildly increasing spending, putting the state into debt for the next 25 years and setting the state up for a huge tax increase in FY 2011.