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After Back to Back Years of Cuts Governor Reynolds Announces Budget Surplus, But Opponents Say There is More to the Numbers

DES MOINES, Iowa -- For the first time in years Iowa has a budget surplus, exceeding what experts projected. The governor announced the news on Tuesday, and on Wednesday her political opponents answered back.

The state’s fiscal year ended with a 127-million-dollar surplus, a little more than 95 million than what lawmakers were told to expect.

“It's out of trend and also not anywhere close to what economists have been projecting for our state budget. We're coming off of two years straight of mid-year budget cuts” said Democratic Representative Chris Hall.

Hall is the ranking member of the house appropriations committee. He says those mid-year cuts have totaled in the tens of millions, impacting everything from public safety to state funded education.

“If you're making 34 million-dollars in cuts one year, only to say you've got a surplus later, the math doesn't pencil out in a way that really makes people feel comfortable or like they have a strong sense of its truth” said Hall.

Governor Reynolds’ opponent in the upcoming election, Fred Hubbell, also shared Hall's surprise, releasing this statement which reads in part:

“It's surprising Governor Reynolds would tout this as an example of good fiscal management, as her tens of millions in mid-year budget cuts decimated our state. I am sure our University of Iowa and Iowa State students who had to shoulder $11 million in mid-year cuts, forcing 30 staff layoffs and 13 center closures, are surprised by this surplus”

So where did the money come from? Part of the surplus comes from the budget cuts, but DMACC business administration professor Josh Daines says there's more than one answer.

“I think it's a combination of the fact that we've got really low unemployment right now, that along with an increased business incentives that have been offered in Iowa we may be seeing an uptick in business activity, along with the cuts as well that all could play a part” said Daines.

And those numbers are up. According to the Iowa Department of Management in August, income tax, sales tax, and corporate income tax are all higher than they were in August of 2017. Department director Dave Roederer says the committee which forecasts Iowa's revenue underestimated the impact federal tax cuts would have on Iowa’s economy.

On Wednesday, Governor Reynolds said Iowans can chalk up the surplus to a growing economy and how her administration has handled the state's finances.

“I think it speaks to the policies we put in place and that this economy is moving in the right direction and so we're really excited to continue moving Iowa in the right direction” said Governor Reynolds.

Representative Hall says moving forward the appropriations committee needs to prioritize giving funding back to programs which had the budgets slashed the last two years.