Iowa budget gap could top $1B

DES MOINES (AP) — Iowa will face a budget gap of more than $1 billion next year, the largest in state history.

The shortfall is now expected to reach $1.07 billion in the fiscal year beginning July 1, according to a Legislative Services Agency budget review released Wednesday.

The state already had ordered a 10 percent across-the-board cut in spending, which state agencies said would entail laying off nearly 800 employees.

But with the new estimate, Iowa House Majority Leader Kevin McCarthy said the state is likely to eliminate entire programs, though it isn’t yet clear which ones would be on the chopping block.

“We don’t have the answer yet on which programs may be eliminated,” McCarthy said. “That’s the charge of the legislative committees to actually make tough decisions.”

The state is likely to offer early retirement to about 2,700 employees, he said.

Members of state government’s largest union, the American Federation of State, County and Municipal Employees, have already voted on whether to reduce layoffs by having workers take five unpaid furlough days and letting the state suspend contributions to workers’ deferred compensation program — a government employee system similar to private programs such as a 401(k). Results of that vote are expected next week. The union represents 20,000 state workers.

AFSCME Council 61 president Danny Homan has said that the furloughs would save the state about $22.7 million and that suspension of the deferred compensation contribution would reduce costs by an additional $3.7 million.

The state’s Revenue Estimating Committee will meet Dec. 11. Its report will dictate how much Gov. Chet Culver can spend in the next budget year.

Republicans blamed Culver and Democratic lawmakers for the gap.

“Irresponsible spending by legislative Democrats has left Iowans with a $1 billion problem,” House Republican leader Kraig Paulsen said.

Democrats responded that falling revenues are a global problem, and Republicans are using the opportunity to score political points.

Culver spokesman Troy Price said the new report is simply an estimate, and new revenue estimates Dec. 11 will offer a better look at the budget situation.

“It’s easy for Representative Paulsen and his dour band of Republicans to criticize from the sidelines, but Governor Culver has done the hard work and made the difficult decisions to keep our budget balanced,” Price said.

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