Review Shows Overspending Caused the Budget Mess

spendingincreaseGovernor Culver and the Democrats continue to argue a lack of revenue, not overspending, is the cause of the state’s budget situation. However, reviewing the dramatic spending growth over the past three fiscal years, there is no doubt Culver and Democrats have themselves to blame.

In his statement announcing the 10 percent across the board cut, Governor Culver said:

“The meltdown of our national economy has created many challenges for our state – both immediate and long-term. We inherited this mess after nearly a decade of bad practices on Wall Street and poor decisions in Washington. As is true with all great challenges, there is a painful reality to our situation: Given this budget reality, there are no easy gimmicks or quick fixes. The solution will be long-term in duration, complex in nature and dependent on many, many stakeholders – all of whom I am pleased to say have rolled up their sleeves and helped craft a cure.” (Governor’s press release, October 28, 2009)

This ignores the dramatic rise in spending since Culver was elected and Democrats gained control of the Legislature in 2006. The three budgets approved under their watch were and still are the three largest budgets approved in the state’s history.

The first budget approved by Culver and the Democrats increased spending by $556 million, or over 10 percent compared to the final budget approved by House Republicans. At the time House Republicans began sounding the alarm that the dramatic increase in spending was not sustainable.

In addition, Democrats created several new and expensive programs including the early childhood instruction program and the Iowa Power Fund.

The second budget approved by the Democrats was FY 2009 and it set a new government spending record. After the stimulus funding for ongoing general fund operations is included, the FY 09 budget was the first to surpass the $6 billion mark. This was “only” a 3.3 percent increase. However, it came at a time when revenue was decreasing by 5.3 percent. That is an 8.6 percent differential – almost as much as the 10 percent growth in FY 08. It is not difficult to see that this spending explosion was not sustainable.

House Republicans continued to warn that Democrats were spending too much.

Finally, in FY 2010, the Governor and Democrats ignored negative revenue estimates and used $529 million in one-time federal stimulus dollars to increase general fund spending and balance the budget. After the across the board cut, FY 2010 is still the third largest amount spent in the state’s history. Also, because $250 million of the cut is not a spending reduction but rather a property tax increase, one can make the case that it is the second most spending, exceeding both the $6 billion mark and FY 2008.

Now Democrats are sounding the alarm about the “$1 billion spending gap” for FY 2011. However, this is ALL due to overspending because the revenue estimate is -0.4 percent, or roughly the same amount of revenue as FY 2010. If the Democrats had not used over $500 million of one-time money and built-in another $500 million of automatic spending increases, there would be no budget problem next year.

House Republicans remain committed to a line-by-line review of the budget and program elimination as opposed to lazy across the board cuts and property tax increases.

general fund spending chart

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Dansette