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February 2014 - Volume 22, Number 1

   

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How Much of Our Money Does State Government Really Need?

by Deborah D. Thornton

The FY 2013 year-end report on Iowa General Fund revenues shows that state government taxing and spending is at an all-time record high, and it keeps going up. The FY 2013 net appropriations were $6.413 billion, up over $450 million from FY 2012.[1] The budget has grown from $4.8 billion since 2005, as Graph 1 outlines. This is an additional $1.5 billion per year of workers’ money, their hard-earned private property, that they no longer control.

 

This growth in taxes collected has resulted in a “record” surplus of $927.9 million – almost $1 billion more collected and being held in the state treasury than was appropriated by the Legislature. This is about $333 per person, or about $1,300 for a family of four. My family could have used that money last year.

 

The vast majority of our taxes went to the government schools – $2.7 billion – followed by state employee salaries and benefits at $1.38 billion. The next highest category was Medicaid at just under a billion dollars.[2]

According to the report, “From FY 2004 to FY 2013, General Fund appropriations increased $1.907 billion (from $4.525 billion to $6.432 billion), an average annual increase of 4.0 percent.”[3] Question: Has your salary increased 4 percent per year for the last ten years? Mine hasn’t.

 

School funding has increased even more, at about 5 percent per year, though from the complaints from the Iowa City Community School District delegation (100 percent Democrats) one would think Governor Branstad had taken books right out of the children’s hands. They will be lobbying for a 6 percent increase, though 4 percent was already agreed to last year.[4]

 

The greatest increase has been in Medicaid, which went up 12 percent, even before Obamacare kicked in.[5] Again, Johnson County Democrats take the position that Republicans are dragging people from their doctor’s office and pushing them directly into the grave.

 

However, state government isn’t spending all the money they take from us. The Cash Reserve Fund and Economic Emergency Fund (the “rainy day” funds) have both been completely replenished following the 2008-09 economic down-turn and now have a balance of $611 million.[6] These funds are a necessary reserve and appropriate buffer.

 

In addition, the Legislature (again, led by those awful Republicans) set up a Taxpayer Trust Fund in 2012. As the Revenue Report says, “The Trust Fund was created for the purpose of providing tax relief to Iowans from the … surplus that exceeds the amount necessary to ‘fill up’ the state’s Cash Reserve and Economic Emergency Funds. The statute requires the moneys … to be used solely for tax relief.” As of today the Taxpayer Trust Fund balance is $120 million. The important thing to know about this Trust Fund money is that you will not get it back. When you file your 2013 state taxes in April, you will be eligible for a “non-refundable” tax credit of about $54 per taxpayer.[7] “Non-refundable” means just that – you don’t get a refund, only a credit against the taxes you owe.

 

Yet liberal organizations such as the Iowa Fiscal Partnership (IFP) do not think you should even get that credit. They recently issued a statement lamenting the fiscal irresponsibility of enacting property tax cuts for Iowa small businesses and individual taxpayers and argued for additional growth in spending, calling it a “budget dilemma.”[8] This is even though the state budget has increased by over a billion dollars in the last five years, about 4 percent per year. The question remains: “Has your salary increased by that much, every year, since 2007?” The only budget dilemma is how Iowa workers and families are going to pay their bills with the money left after the government takes over $6 billion of it from them.

 

As a side note, the IFP, based at the University of Iowa, receives a substantial part of their staffing and funding from…state and federal government.[9]

 

As our representatives in the Legislature go about their work – which is supposed to be reflecting the best interests of their constituents – we, the workers who are paying these taxes, need to continue to ask, “How much of our hard-earned money does state government really need?” My answer will continue to be, “Not this much!”

 

Maybe if the government did not take private property from businesses and workers in the first place, these businesses could pay their workers more, workers could afford to buy and invest more, and none of us would need the government to “take care” of us.

 

(Endnotes)
[1] “State of Iowa, FY 2013 Year End Report on General Fund Revenues and Appropriations,”
Legislative Services Agency, Fiscal Services Division, December 2013, p. 1 <https://www.legis.iowa.gov/docs/LSAReports/GeneralFundBudget/Summary.pdf> accessed on January 23, 2014.
[2] Ibid., p. 3.
[3] Ibid., p. 4.
[4] “Long List, Short Session,” Iowa City Press-Citizen, January 10, 2014,<http://www.press-citizen.com/apps/pbcs.dll/article?AID=2014301110023> accessed on January 23, 2014.
[5] “State of Iowa,” p. 4.
[6] Ibid., p. 12.
[7] Ibid., p. 13.
[8] “Iowa Budget Dilemma for 2014,” Iowa Fiscal Partnership, January 13, 2014, <http://www.iowafiscal.org/iowa-budget-dilemma-for-2014/> accessed on January 23, 2014.
[9] “Who We Are,” The Iowa Policy Project, <http://www.iowapolicyproject.org/WhoWeAre.html> accessed on January 23, 2014.

 

Source: https://www.legis.iowa.gov/publications/fiscal

Long-Term Revenue Report, accessed on January 23, 2014.

 

IOWA ECONOMIC SCORECARD is our quarterly economic forecast, arriving in February, May, August,
and November. It consists of statistics about and analysis of the Iowa economy.

 

IOWA ECONOMIC SCORECARD is published by Public Interest Institute at Iowa Wesleyan College, a
nonpartisan, nonprofit, research and educational institute whose activities are supported by contributions from private individuals, corporations, companies, and foundations. The Institute does not accept government grants.

 

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