Good News about the Iowa Buget!
The economic downturn affecting the entire nation is also affecting Iowa. Iowa was fortunate to hold out so long, but it was inevitable that last summer’s floods and the national recession would eventually cause a slow down in Iowa revenues. We are not alone in this situation. Some states are facing billion dollar deficits. Fortunately, Iowa Legislators prepared for these bad days by creating and filling our “rainy day” funds.
As a result, the Legislature approved a package of budget safeguards, which includes a provision that the state not spend more than 99% of revenues. The other 1%, or about $60 million per year, is used to fill up two special accounts that hold 10% of the state budget. Today, those accounts are full at the maximum level of $620 million. This is an all time high amount in our savings accounts and this cushion should help us weather this economic downturn. The state also has a non-partisan group of budget experts that predict state revenues each year. This group met last week and reduced projections, but will meet again in December and give us a better estimate to use during the 2009 session.
Since the state’s fiscal year runs from July 1 to June 30, it’s not unusual for the Legislature to make some mid-year adjustments when we come into session in January. Iowans can be assured we will balance the budget again next year and take the steps needed to help Iowans recover from the storms this summer. The Legislature always has a “wish list” of things previous Legislatures have suggested we do. If there is not enough money, our job is to prioritize and balance the budget, which we did last year and which we will do again next year. Those who say we have spent ourselves into a hole do not understand the budget process. Our wish list will be reviewed, as will all the budget areas next year. The state must have a balanced budget and changes will be made to make sure that happens.
It is this flexibility and fiscal management that prompted Standard and Poor’s to raise our credit rating from AA+ to AAA. S&P cited the Iowa’s “good fiscal management with a demonstrated willingness to restrain spending and make midyear corrections to maintain fiscal integrity; ... supported by quarterly financial forecasts and rainy day reserves; …and very low debt burden.”
Governor Chet Culver announced that 414 students attending 39 Iowa colleges and universities will receive grants averaging $1,208 to help pay college expenses. This award is being given to students who were impacted by the numerous natural disasters that swept through Iowa this year. Nearly 700 applications were received for the Iowa Disaster Relief Grant. The State’s commitment of $500,000 will assist 414 recipients from 45 Iowa counties. Student awards were based on family loss from the disasters as reported by FEMA and financial need determined from the Free Application for Federal Student Aid (FAFSA). The Iowa Disaster Relief Grant is administered by the Iowa College Student Aid Commission (Iowa College Aid). More information about the program is available on the Iowa College Aid website at www.IowaCollegeAid.gov or by calling Iowa College Aid’s information service center at 877-272-4456.