Wednesday, June 18, 2008

Recovery: Real Leadership and Visionaries needed.

We all know that the floods of 2008 will have an impact on Iowa long after the waters subside and the klean up is komplete.

The Iowa blogosphere is full of kommentary about the komments made by Governor Culver and Senate Majority Leader Mike Gronstal calling for a special session to appropriate relief funds with the possibility of going into debt.

David Yepsen realized that he might actually have to write some original kontent and proposed that Iowa should create a $1 billion dollar public works program, thus making the state taking on some massive debt.

I guess I want to take a different approach today. I have my thoughts on the above topics, and I’ll try to get to those, but I think Iowans need to hear the kold hard truth when it comes to the budgeting practices of our state. So who should we turn to? That’s right the Tax Payers' Watchdog, Auditor Dave Vaudt.

At the end of May, Auditor Vaudt released his review of the 2009 budget. It's something our elected officials need to be looking at now more than ever. Here is the key part as it pertains to the recent floods.

Rainy Day Funds Provide False Sense of Security

“With $620 million sitting in the “Rainy Day” funds, it’s easy to get a false sense of security,” Auditor Vaudt cautioned. Considering the $569.3 million spending gap built into the Fiscal Year 2010 budget, even a small revenue shortfall could wipe out the “Rainy Day” funds in just one year, Auditor Vaudt warned. “With a looming threat of recession, such a scenario is increasingly likely.”

The gist of what Vaudt is saying is simple. For the past few years, state revenues have grown at a decent clip. However our elected officials still spend more money then the state takes in. While Iowa has a balanced budget law, the legislators and the Governor get around it by shifting the financial burden to the next fiscal year and by raiding our other funds to balance the books.

The floods and a weakening economy have made Vaudt’s worst case scenario a reality. We now have a real need for our emergency Rainy Day Fund, but next year's legislative session, or any special session for that matter, already have to contend with a $569.3 million deficit before they pass one piece of legislation. To think that state revenues will grow next year by 5 or 12% is ludicrous. The downtown of Iowa’s 2nd largest city was wiped out, and farmers are looking at the worse krops they have had in years.

So what should we do? It will be difficult to do, but we need a little patience (just for you Grant). The last thing we need is a Katrina type response where federal dollars were wasted. It would be even worse and cause a much larger impact to the financial health of the state if we just throw money at the problem like politicians tend to do under these circumstances.

In the1993 flood, the state only spent around $14.9 million of the total $1.4 billion that was spent on flood relief. Gronstal and Culver made it sound as if they would wipe out the $620 million in the Rainy Day Fund then borrow more. We obviously need to know what the federal government is going to pay for, and then the state should figure out what it needs to do.

So what do we need to do?

Rep. Hershel Krustofski would want to have an open and honest konversation about giving federal and state funds to people wanting to rebuild in a flood plain. This would be extremely emotional as it deals with one's home and property, but I don’t think it’s in the tax payer’s best interest to give someone assistance when there is a possibility that the same type of damage kould occur again.

Rep. Hershel Krustofski also would be supportive of a massive infrastructure project as long as it’s a statewide initiative. Not only do the areas which flooded need attention, but I thought the closure of I-80 made it clear that Highway 30 in eastern Iowa needs to be completed as does Highway 20 in western Iowa. The one thing that legislators must not do is increase taxes on Iowans; such a move would be devastating on our economy.

In regards to the flooded area, we need to find a way to spur business growth and development. If you are a business in downtown Cedar Rapids are you thinking about relocating? I would be. We need to make sure these businesses stay in Iowa, but we also need to encourage them to stay in their local kommunities. It seems like now might be a good time to look at corporate income taxes here in Iowa.

Our elected officials need to look at this crisis as an opportunity to focus on the long term financial health and safety of our state.

  1. They must end the budgeting games that put our state at risk in times of great need.

  2. They must focus on creating a better business climate here in Iowa to retain and help grow existing Iowa businesses, while encouraging out of state companies to locate here.

  3. They need to find a way to invest in infrastructure all across the state in a way that doesn’t increase taxes at the pump or on pay day.

This is the time for real leadership; this is the time for a real visionaries to step up and lead Iowa into the future.


  1. I like your ideas to recover from the floods. It seems a lot more fiscally sound than any one else's up to this point.