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New Revenue Estimates Mean $1-Billion Shortfall, Layoffs PDF Print E-mail
Commentary/Politics - Iowa Politics
Written by Lynn Campbell   
Friday, 20 March 2009 15:57

More budget cuts are on the way in Iowa after the three-member Revenue Estimating Conference (REC) on Friday lowered estimates of state revenues by $129.7 million this fiscal year and $269.9 million next fiscal year.

"The economy continues to falter," said Holly Lyons, director of the Legislative Services Agency's fiscal services division. "We're witnessing more layoffs. We're witnessing reduced hours and furloughs. We may not even be halfway through this recession."

The lowered revenue estimates, combined with the $700-million budget gap the state already had for Fiscal Year 2010, make for a $1.1-billion gap between expenses and revenues over the next 15 months, according to Representative Scott Raecker (R-Urbandale), ranking member of the House Appropriations Committee.

"That's significant in a $6-billion budget," he said. "I think one of the things we need to listen to very carefully of what was stated today is we have not hit the bottom yet. If we've not hit the bottom yet, that tells us we need to protect our cash reserves for that case when we get to the absolute bottom."

Layoffs will be difficult to implement this year under the collective-bargaining law and the notice that must be given to state workers being laid off, said Charlie Krogmeier, the governor's chief of staff and a member of the REC. However, layoffs are almost a certainty next fiscal year, which begins July 1.

"You can't furlough enough days to get there," Krogmeier said. "Federal stimulus money will help because some of that federal stimulus funding has to be used for Medicaid or education funding. ... It's going to be a struggle over the next week or two to figure this out."

Following the revised revenue projections, Governor Chet Culver must submit within two weeks a new proposal for a balanced budget for fiscal years 2009, and he indicated that he'd be proposing that the state use money from the American Reinvestment & Recovery Act.