Reynolds touts $305 million state surplus for budget year 2020

Iowa has ended its 2020 budget year with a surplus of $305.5 million — a number that shows how the state's conservative budgeting practices have helped it weather the coronavirus pandemic, said the state's Republican leadership on Wednesday

Democrats said they don't believe the surplus figure alone shows a full picture, and they called for more transparency in how the state has been using federal coronavirus aid to support its financial situation. 

In a Wednesday news release announcing the total, Republican Gov. Kim Reynolds said the state has shown fiscal responsibility over the years, putting it in a strong position to face challenges, including the coronavirus and disruptions to trade. 

"In Iowa, we have turned those obstacles into opportunities, making significant investments in education, agriculture, workforce, technology and healthcare," Reynolds said. "The actions we have taken this year will help Iowa emerge from this unprecedented pandemic stronger than ever before."

Iowa's 2020 fiscal year ended in June, but the state releases final budget figures at the end of September. Last year, Iowa saw a surplus of $289 million. 

►More:Iowa has received billions in federal COVID-19 funds: Here's where it's going, and who's crying foul

Iowa Department of Management Director Dave Roederer said in a statement that the state continues to be in a strong position due to cash reserves of more than $770 million.  

The state's Revenue Estimating Conference will meet next month to update its revenue projections for the current fiscal year, which began July 1. 

"We will continue to monitor the impact COVID-19 has on our state budget for the coming fiscal year," Roederer said. 

Rep. Chris Hall, the ranking Democrat on the House Appropriations Committee, told the Des Moines Register it's "hard to tell with a statement and one number" where the state's financial position has been. He said it's been difficult during the pandemic to receive full transparency on how all of the state's federal coronavirus assistance has been spent. 

"The governor's office has consistently painted a rosy picture of the state budget that doesn't reflect the economic reality felt by working Iowans," Hall, of Sioux City, said in an emailed statement. "To portray a generous ending balance does not tell us how the governor used federal dollars to plug budget gaps, or what programs may have been cut by her office to create savings." 

Hall said he is sending the governor's office a letter asking about the state's use of funds, including the use of federal relief dollars to pay some staff salaries. Reynolds, during a Sept. 16 news conference, acknowledged the use of some federal coronavirus money to cover salaries, but she said the practice is permitted under federal funding guidelines. 

The coronavirus pandemic delivered a blow to state government coffers around the country as business activity shut down and unemployment rose. Iowa relies primarily on sales and income taxes for its revenue. 

But a July study commissioned by the nonpartisan Council on State Governments put Iowa among states with the lowest risk and highest resiliency in their financial position as they weathered the pandemic. 

In May, the revenue estimating conference predicted Iowa would take in $7.877 billion in the 2021 fiscal year, which was a $360 million drop from its previous estimate for 2021 and a $65 million drop from its revenue estimate for the 2020 fiscal year. 

Before adjourning in June, the Iowa Legislature passed a mostly status-quo budget for the 2021 fiscal year. The budget included some increases, including a commitment to roughly $100 million in new funding for K-12 education. 

Ian Richardson covers the Iowa Statehouse for the Des Moines Register. Reach him at irichardson@registermedia.com, at 515-284-8254, or on Twitter at @DMRIanR.

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