Senate File Will Return Over $700 in Tax Money to Iowa Families

There has been a lot of talk going into the 2013 Legislative session about the huge “surplus” that the state is sitting on. It is important to remember how we put ourselves in such a strong financial position and where this money came from.

When I was first elected, the Governor and the Legislature inherited an extremely tough budget situation. The previous legislature and Governor used one time federal stimulus money and our “rainy day” funds to balance the budget. This left the state with a projected shortfall of around $900 million for 2012. Over the past two years, we have made tough decisions in order to balance our budget and keep spending under control. We used sound budgeting principles to completely turn around our budget situation.

Our first budgeting principle is we should not spend more than we bring in. While this seems like a no brainer, and one every household and business abides by, this was not always the practice in state government. The budget passed in Governor Culver’s final year in office spent $400 million more than ongoing revenue.

The second main budgeting principle is we will not use one time money for ongoing expenses. Using one time money (for example the previous years ending balance or Federal Stimulus money) for ongoing expenses is like winning $10,000 in the lottery and buying a mansion with your winnings. You may have enough money to make the mortgage payments for a few months, but eventually the one-time lottery money runs out. When the money runs out, the mortgage payments on the mansion are not sustainable in the future.

By abiding by these sound budgeting practices, we were able to turn around the state budget very quickly and now have record ending balances. We ended fiscal year 2012 with an ending balance of $688 million, we are projected to end fiscal year 2013 with $822 million, and the Governor’s budget has a projected ending balance of over $1 billion in 2015. This is on top of completely filling up the state’s “rainy day” accounts with over $600 million.

It is important to remember this money is the ending balance of the budget, not an ongoing surplus. The Governor’s budget for 2014 estimates $6.739 billion in tax receipts and $6.538 billion in expenses. This projects the ongoing, yearly surplus at only $200 million, less than 3 percent of the budget.

This week, I co-sponsored a bill to return this ending balance money to the taxpayers. I believe this money is an over collection of your hard earned money. After filling up the reserve accounts, I believe the best use of this money is to give it back to you, to save or spend as you wish.  This bill would return around $700 of over collected tax per family.

As we plan for the future, we must continue to stick to the budgeting principles that have made Iowa one of the top five “best managed states.” We must continue to exercise discipline in our budget in order to keep our state strong for years to come!

As always, feel free to contact me at jack@jackwhitver.com.