Governor To Tap Emergency Funds to Cover Budget Gap; No Special Session

Sep 20, 2017

The Kim Reynolds administration is closing the books on the fiscal year that ended in June, and, as predicted, revenues fell short of what was needed to cover all the spending the legislature approved.  

But the shortfall wasn’t as bad as feared, and the governor won’t be calling lawmakers back into special session.  

"The governor was careful not to do speculation." -Dave Roederer

At the end of June, the non-partisan Legislative Services Agency estimated that tax receipts had fallen more than $100 million short, far more than the governor could cover with emergency funds.  

Instead, once past-due tax collections that spilled over into July, August, and September are counted, the shortfall is only $14 million.         

Department of Management Director Dave Roederer said in the end,  tax receipts for manufacturing, insurance, and online purchases were stronger than expected.    

“The governor was careful not to do speculation until it was done,” Roederer said. 

Department of Management Director Dave Roederer
Credit Joyce Russell/IPR

Reynolds will cover the shortfall by borrowing $13 million from emergency funds.  

Jeff Robinson at the Legislative Services Agency explained the turnaround.

“One hundred million dollars of new revenue came in after June 30 that were credited back to 2017,”  Robinson said.   “Also refunds were lower in July and August.”

But the final estimates sparked some skepticism from critics of the Reynolds administration.    

“The numbers don’t add up,” countered Rep. Chris Hall (D-Sioux City), ranking Democrat on the House Appropriations Committee.   

"The numbers don't add up." -Rep. Chris Hall

Cedar Rapids Mayor Ron Corbett, who is challenging Reynolds for the Republican nomination for governor in 2018, also weighed in, questioning the administration’s accounting practices.

Roederer defended the accounting principles behind the revised numbers.  

"This is the exact same thing that was done for 30 years, the system that we are using,” Roederer says. "This is also audited every year by the auditor."

The money Reynolds is borrowing to cover the shortfall will be paid back out of next year’s budget.

“They’re borrowing money on a credit card and leaving Iowa families with the bill,” Hall said.