Officials: Iowa's budget shortfall won't prompt special session - KWWL - Eastern Iowa Breaking News, Weather, Closings

Officials: Iowa's budget shortfall won't prompt special session

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A projected shortfall in Iowa's roughly $7.2 billion budget has shrunk and will not require a special legislative session to fix, state officials announced Wednesday.

Budget experts who work under the administration of Republican Gov. Kim Reynolds presented documentation that shows the state budget that ended in June will have a shortfall of about $13 million once final figures are tallied. That is much smaller than a roughly $100 million shortfall projected earlier this summer by a nonpartisan agency.

The announcement means Reynolds will not have to call lawmakers back to the state Capitol ahead of the session that starts in January. She has authority without legislative action to transfer up to $50 million in emergency funds to plug a budget shortfall.

Reynolds had said for weeks that her staff was waiting until the end of September, when final accounting would be tallied for the budget year, to assess whether a special session was needed. Budget officials said final adjustments on a range of incoming tax revenue shrunk the expected shortfall.

"We have been monitoring funds daily since the end of the fiscal year on June 30 and took a measured approach in dealing with the state's finances," Reynolds said in a statement. "We continue to closely monitor the current fiscal year's balance sheet and do not believe action is needed at this time."

The $13 million that Reynolds will end up transferring from emergency reserves will need to be paid back during the budget year that's currently in effect, which could translate into additional funding cuts down the road. Iowa lawmakers already tapped reserve funds earlier this year to address a separate budget shortfall of about $131 million. In January, they cut more than $100 million from the same budget in part by reducing agency spending.

The nonpartisan Legislative Services Agency said data does show major revenue improvements in the final months of accounting.

"On June 30 things did not look so good for FY 2017," said agency analyst Jeff Robinson, referencing the budget year that ended in June. "A rough calculation showed the revenue shortfall to be about $100 million. However, as if a switch was thrown, the revenue steam began to improve right after June 30."

Some Democrats in the Republican-controlled Legislature still expressed skepticism at the figures. Des Moines Sen. Nate Boulton, who's seeking the Democratic Party's nomination for governor next year, said he wants to review the numbers to ensure there isn't deferred billing at work.

"It was surprising to see these numbers come out as healthy as they did at a very convenient time," he said.

Cedar Rapids Mayor Ron Corbett, Reynolds' challenger next year in the GOP gubernatorial primary, also said he wanted to see how the math added up. He suggested Reynolds call a special session anyway to address budgeting concerns.

"It looked like a lot of smoke and mirrors as they're trying to cover themselves from too much spending," he said.

David Roederer, director for the management agency, said his office used the same budgeting principles in place for decades. He noted regular audits ensure accuracy.

Although a special session will be avoided, Democrats used Wednesday's announcement to accuse GOP lawmakers of mishandling the budget, pointing to what they see as excessive corporate tax breaks. Republicans argue that Democrats agreed to many of the budget plans passed in recent years, and several of their spending proposals are unsustainable.

Reynolds was not present at the Capitol for the budget announcement. She was scheduled Wednesday to make multiple stops in southwest Iowa as part of an economy-themed tour.

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