Governor Chet Culver's proposed budget for Fiscal Year 2011 exceeds the state's 99-percent spending limitation and fails to address roughly $400 million in state costs, State Auditor David Vaudt said this week.

"He's actually spending $25 million more than the expenditure limitation, rather than the $61 million under the spending limitation that he presents in his budget document," said Vaudt, a Republican. "The governor's budget numbers just don't add up."

Culver defended his proposed budget, maintaining that it's balanced and spends less in his fourth year in office than when he began his term as governor in 2007.

Governor Chet Culver received a standing ovation at the Iowa State Building & Construction Trades Council convention and shook the hand of almost everyone in the room after signing an executive order that presumes state agencies will use project labor agreements (PLAs) whenever possible.

"It adds stability and structure to a job site that could be chaotic," said Bill Gerhard, president of the Iowa State Building & Construction Trades Council.

"There's a thousand people working big jobs, 17 different unions, all have different work rules, all have contracts that expire at different times," Gerhard said. "It sort of ensures that there's going to be some stability that people, if they go on strike on their contract, they'll keep working on the project. ... The state should have this tool in their toolbox to use."

Revelations last fall about the mismanagement of Iowa's film-tax-credit program came at a convenient time for the governor and the state legislature, as they provide an opportunity to evaluate tax credits at a time when the state budget is tight.

Governor Chet Culver has included two major cost-cutting features in the budget proposal he released last week: reorganizing state government (saving $341 million) and making changes to the state's more-than-two-dozen tax-credit programs (saving $52.5 million). The governor's budget proposal reads: "In Fiscal Year 2011, state tax credits are expected to cost the state $525 million if no legislative changes are made. ... [T]he Culver-Judge Administration believes that state tax expenditures must ... be scaled back in light of declining state revenues."

Culver did not specify how he wanted the legislature to achieve cost savings by $52.5 million, only referring to seven recommendations of his Tax Credit Review Panel, which released its report on January 8.

The legislature has one easy option to achieve the governor's cost-saving target. The review panel estimated that following its recommendations would result in first-year savings of $55.2 million and second-year savings of $106.3 million. Basically, lawmakers could rubber-stamp the report.

But this is also an opportunity for the state to re-think the way it does economic development through tax credits. If it's so inclined, the General Assembly could do a more-comprehensive overhaul of tax credits, making them better tools.

Governor Chet Culver has proposed a $5.3-billion state spending plan for Fiscal Year 2011 that uses more than $200 million from the state's cash reserves and $48 million in federal stimulus money, while reducing tax credits by $52.5 million and saving $341 million from state-government reorganization.

Culver said the budget would leave an ending balance of $117.3 million and would leave $265.2 million in the state's cash reserves.

"We have achieved this lower budget by continuing the 10-percent across-the-board budget cut made last fall in Executive Order 19 for most of the General Fund budget," Culver said. "Only 31 percent of programs or agencies would receive any increases over the revised FY 2010 budget ... reflecting the need to reduce state-government spending while preserving critical services for protecting vulnerable adults and children."

Culver's budget recommendations include a $6.9-million increase for the Department of Public Safety to prevent potential layoffs of up to 122 people, and a $25-million increase for the Department of Corrections to avoid layoffs at state prisons.