Solving Iowa's Budget Problem
Brian Gongol

Iowa has a serious budget problem. Despite laws mandating that the state legislature and governor spend just 99% of projected revenues each year, they have managed to cheat the system by spending "special funds" to the tune of $346 million in 2005, according to the state auditor.

Republican gubernatorial candidate Bob Vander Plaats has proposed fixing the budget problem with cuts to middle management in state government.

Would those cuts be enough?

The state general fund allocations for FY 2006 total $4.9 billion. Assuming that wage and salary costs are 60% of the total budget, that would total about $2.94 billion per year.

Cutting $346 million from a $2.94 billion wage and salary budget would equal a 12% reduction. While a 12% reduction in any organization is significant, firms like, the BBC, and Corning have all reduced staffs by 15% or more at different times. Thus, it's plausible that cuts in state employment would be enough to bring the state's financial house back in order.

Curiously, though, the state committed more than $292 million to the Vision Iowa program, and continues to spend taxpayer funds on new projects that include direct subsidies to business.