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Despite Budget Surplus, Branstad Aide Warns Against State Fiscal Cliff

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DES MOINES, Iowa Although Iowa has an "abundance of riches" compared to where state revenues were when he took office two years ago, Gov. Terry Branstad's 2013 budget won't call for spending all of an estimated $1.4 billion surplus.

Iowa law limits state spending to 99 percent of available revenues, including carryover funds, which likely will push the budget surplus well over $1 billion by the end of the current fiscal year, Branstad Chief of Staff Jeff Boeyink said Dec. 18.

"By law, we could spend nearly $1 billion more next year," he told the Des Moines Conservative Breakfast Club.

"We will not be doing that," he quickly assured his audience. "We don't budget based on simply what's available. We budget based on 'What are our priorities?' and 'What does it take to most efficiently fund those priorities?'"

One of those priorities, Boeyink said, will be returning that surplus "to the people who paid for it."

Making budget decisions when the state's coffers are overflowing is not as easy as it might seem, Boeyink said. This is a "big crunch week," he said, explaining he and other staff will be sitting down with the governor and Lt. Gov. Kim Reynolds for most of three days to put together the framework for the budget Branstad will present the Legislature Jan. 15.

Two years ago, when the state was using $900 million in one-time funds to pay for on-going operations, people "tempered their requests and they took 'no' for an answer and they took it rather graciously," Boeyink said.

This year, however, "they understand the state has some resources, the requests are exponentially more from more people," he said.

That means saying "no" more often to more people.

"I'm not sure they are going to take it as graciously or as happily as they have in the past," he said.

Branstad, Boeyink continued, is "absolutely committed" to avoiding the budgeting mistakes of the past.

"We are not going to set ourselves up for our own fiscal cliff because if we spend up to the spending limit this next year it would mean nearly $1 billion increase in new spending," he said.

That may appeal to some legislators, he said, but it would mean the state would need a 9 percent increase in revenues the following year just to fund that budget with no increases.

That seems unlikely. The state Revenue Estimating Conference recently revised its projections, but predicted a 3.4 percent increase in state revenues from $6.52 billion this fiscal year to $6.74 billion in fiscal 2014.