DES MOINES –Governor Chet Culver announced today that he is implementing a 10% across-the-board cut to state government spending. (A revised state budget can be downloaded here.) The cut is in response to yesterday’s unanimous Revenue Estimating Conference projection of declines in state revenue of 8.4%, or $414.9 million. The Governor’s statement, delivered this afternoon at the Iowa State Capitol, is below.
“Good afternoon. I am here today to announce the action I will take to balance our state’s fiscal year 2010 budget.
“In July 2008, while our state was still recovering from the worst natural disaster in Iowa’s history, our revenue was strong. Not long after that, however, the results of failed policies from Washington and bad practices on Wall Street were beginning to be felt in Iowa along with every state across the nation.
“In December of last year, the REC met and unanimously approved lower revenue estimates for Iowa. At that time, I did what I am obligated to do: I balanced the state’s budget by implementing a 1.5% across-the-board cut.
“This past March, the REC met and unanimously approved the official revenue estimate for the current fiscal year. That was the basis for the balanced budget approved by the legislature and signed by me earlier this summer.
“In recent months, the decline in revenue became dramatic. For example, last month alone, revenue dropped by more than 5%. And yesterday, the REC approved another unanimous estimate that projects a decline of 8.4% in revenue for the current fiscal year, a loss of nearly $415 million.
“The fact is clear: Iowa has not spent too much, rather our revenue has fallen off by significant amounts as the result of this national economic recession.
“Our state is faced with simple but painful choices: to increase taxes, cut spending, or both. I have been clear on this: I believe now is not the time to raise taxes on hard-working Iowans.
“As Governor, I have two options to cut state government spending. I can implement an across-the-board cut in state government spending or call the legislature into a special session.
“I have ruled out a special session for two reasons. First, the outcome of a special session would be uncertain. Second, the effects of a special session, and any action taken, could take weeks to be actually implemented.
“Therefore, I have decided to implement an immediate across-the-board cut in state spending. I have arrived at this decision after long and thoughtful deliberation. So, this afternoon, I will be signing Executive Order Number 19, to implement an across-the-board cut of 10%, which will become effective today.
“After the Revenue Estimating Conference meets in December, I will consider asking the legislature, to the extent possible, to backfill funding to three key areas. One is basic health care services, especially for our children. Another key area is public safety, in particular correctional officers, troopers and others on the front lines to keep our communities safe.
“Finally, workforce development. Iowa has lost nearly 50,000 jobs over the past year, and we need to ensure that those Iowans who have or will lose their jobs – including state employees impacted by these cuts today – have the support they need during these challenging times, for them and their families.
“Let me conclude with the following points:
“First, some programs will continue without costing the state any revenue, such as our effort to prevent the new flu in Iowa.
“Second, I am appointing my Deputy, Joni Klaassen, as my special liaison to the unions representing state employees to help address the reduction in our state government workforce.
“Third, I am calling upon the legislature to make the first bill they pass in January to require public school districts to spend money from their cash reserves rather than raising property taxes, to make up for the loss of revenue as a result of this across-the-board cut.
“I believe these steps will get us to January, at which time we begin work on the FY2011 budget. In the meantime, my administration will do a line-by-line review of the more than 250 budget items in the state budget to identify and recommend further reductions in state government spending.
“This is a tough decision, but I believe it reflects our Iowa values of common sense and fiscal responsibility. This is not a challenge we’ve asked for, but it is one that we will meet together as Iowans.”
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