UNI Legislative Update
The Office of Governmental Relations provides legislative updates to the campus community through online communication and bimonthly campus presentations. These updates will inform faculty, staff and students of hot topics facing the legislature and legislative actions affecting UNI and the Regents institutions.
October 9, 2009
Gov. Culver orders 10% budget cut
From the Des Moines Register...
Hundreds of layoffs are on the horizon for state employees, and the pink slips are likely to appear quickly.
State government leaders were left reeling Thursday by Iowa Gov. Chet Culver's order to immediately whack an unprecedented $565 million from the state budget.
"We will start cutting today," Culver said.
The 10 percent across-the-board cut will mean a wide swath of Iowans - including the poor, unemployed, mentally ill and elderly - will feel the pinch of reduced state services.
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The Iowa Constitution requires that the state budget be balanced. Culver had to make only a 7.1 percent cut to do that, or $415 million, but he instead chose to go deeper. Raising taxes isn't an option, he said.
The decision came about 24 hours after a three-member panel of budget experts predicted that collections of taxes and fees will plunge between now and the end of the fiscal year in June. The Revenue Estimating Conference lowered its March prediction of $5.853 billion in tax and fee collections to $5.438 billion.
"The fact is clear," Culver said Thursday. "Iowa has not spent too much; rather our revenue has fallen off by significant amounts as the result of this national economic recession."
Culver said no government office that gets money from the state's general fund will be spared.
The exact number of layoffs is unclear, but it will "certainly be hundreds of state employees," he said.
State workers - and that means everyone from corrections workers to school food service staff, state librarians, workers at the school for the blind, addictive disorder counselors, social workers, state attorney general's office staffers, auditors, state crime investigators and treasurer's staff - now face the uncertainty of possibly losing their jobs.
"I would assume there's a great deal of them sitting around on pins and needles," said Danny Homan, president of Council 61 of the American Federation of State, County and Municipal Employees, which represents about 20,000 state employees.
"I think this will have the magnitude of a plant closing," Homan said. "This is the most devastating thing that could happen to the state of Iowa at this particular time.
A mid-2008 report put state employment at 63,400.
AFSCME members have a contract giving them a 2 percent wage increase on July 1, 2010, and a 1 percent raise on Jan. 1, 2011. Homan said it will be up to members to decide whether to renegotiate that.
Union layoffs are by job classification and seniority. Culver appointed Joni Klaassen, deputy chief of staff for administration, to help unions address reduction in the state government work force.
The cuts will be felt immediately at the state's universities. David Miles, president of the Iowa Board of Regents, ordered a systemwide freeze on hiring for positions paid through general operating funds, and a moratorium on all new building construction projects, except those directly related to flood restoration projects at the University of Iowa.
For everyday Iowans, the cuts are likely to mean fewer state troopers on their roads, less government oversight by inspections and auditing staff, long lines at state offices, longer waits for treatment for drug addiction, more students per class in elementary schools, fewer elective classes at high schools and fewer tuition grants for college students.
The cut for the Department of Human Services alone, which provides services to the most vulnerable Iowans, is about $132 million. Total cuts to education are the highest, at $332 million.
Culver said he will try to find about $30 million in December or January to beef up staffing in public safety, especially corrections officers and state troopers; basic health care services; and the state's unemployment agency. But the money simply may never materialize, he said.
Departments will have some flexibility in how to approach the cuts. They have a target reduction amount, but they can implement the cuts and layoffs as they choose, Culver said.
Culver's executive order requiring the 10 percent cut does not affect the Iowa judicial branch. A governor, who heads the executive branch, can't order cuts in the legislative and judicial branches. Culver said he would talk with Chief Justice Marsha Ternus about voluntarily imposing cuts for the court system. Legislative leaders are discussing a 10 percent cut, too.
A governor can order across-the-board cuts on his own, but cutting budgets of specific departments and not others requires action by the Legislature.
Culver said he would not call for a special session of the Legislature because it would have taken weeks to bring the lawmakers back to the Capitol, then to secure 51 votes in the Iowa House and 26 votes in the Iowa Senate, he said. "The fact is, we need to act. We need to move," Culver said.
And an across-the-board cut "avoids the unfair and unrealistic picking and choosing of important programs," he said in an executive order Thursday.
Part of the reason the cut is so deep is that Culver said he wants to leave a cushion of around $100 million. The current ending balance for this budget year is $97 million. And the more cuts now, the better off the budget for fiscal year 2011 will be, Culver said.
Culver's plan does not call for dipping further into the state's cash reserves. The state has already drawn down a third of its reserves for the current budget year, fiscal year 2010, "and we're still short," he said.
Republican lawmakers and tax watchdogs immediately worried that Culver's cut will cause property-tax increases.
"With the cut to education funding, it will put greater pressure on the 365 school districts to bond or borrow to pay the bills," said Ed Wallace of the Iowa Taxpayers Association.
Culver said he will ask the Legislature to require school districts to spend money from their cash reserves rather than raise property taxes. Districts have roughly $400 million in cash reserves, he said.
In coming days, each department in state government will submit a plan for cuts to the Department of Management.
The deadline is "as quickly as humanly possible," Culver said.