The Final Budget – On a Family Scale

From Republican Leader Kraig Paulsen:
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Now that the 2010 legislative session has adjourned, we’re able to go back and fully address the final budgets that were passed by the Legislature. Remember that coming into the session the Legislature faced a 1.1 billion dollar problem. As the session wore on it was evident that while Democrats worked with us to find some modest government efficiencies, they were going to be relying a great deal on one-time money and raiding the cash reserve fund to cure their appetite for spending.

What does that really mean? To the average Iowa family, this might be what the state budget looks like – on a family budget scale (courtesy of House Appropriations Ranking Member Rep. Scott Raecker).

For 2010, a family planned their budget for the year and identified that they have $64,000 in expenses. They then looked at the amount of money they would take in and saw they only had $53,000 to spend. The shortfall was $11,000. Rather than look at ways to cut expenses to meet the revenue, the family took a financial gift from an uncle (Uncle Sam) to balance the family budget – not worrying about where they would make up the difference – this year or next.

Mid-year, it was clear that there was not enough revenue to cover expenses so the family made some mid-year budget cuts and decided not to pay for some commitments that had previously been made.

Now the family is planning their budget for 2011 – and even after the mid-year expense savings from the previous year, they still have $62,000 in expenses and only $53,000 in revenue to balance the budget – except this year Uncle Sam does not have the same financial windfall so they decide to find efficiencies and reorganize the family expenses to save money and take the rest from their savings account. After weeks of talking about expense savings, they come up with their best effort to reduce expenses and they save $700 from their $62,000 in spending. They then decide to take the money in their savings account to balance the budget and will worry about next year when it comes.

The other thing they do to balance the budget is for about $2,000 in expenses they will have someone else (aka: the property tax payer) pay for them.

The state made commitments to spend $6.2 billion next year. We have $5.3 billion in on-going revenue. The state has some one-time money from the federal government to spend as if it came from a great uncle. To balance the budget, the Legislature and governor reorganized government to save $70 million and the rest will come from the state savings account.

To balance things out, the commitments that were made to fund Iowa’s K-12 education system will not be fully funded by state dollars – so local districts are left to cut teachers and raise property taxes.

The state budget can be very complex – but in reality the principle is very simple – the state should not spend more than it takes in. Just like Iowa families and businesses, we must be responsible in meeting our needs with our available resources.

Balancing the budget isn’t good enough if it’s on the back of the taxpayer.

See the Des Moines Register take on this at: http://www.desmoinesregister.com/article/20100405/NEWS10/4050314/1007/NEWS05/Big-revenue-gap-awaits-lawmakers-next-session

As always, if you have any questions or concerns, please don’t hesitate to contact me via email at kraig.paulsen@legis.state.ia.us or call my office at (515) 281-3521.

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