Vanishing State Budgets: Iowa's Response to the 2001-2004 State Fiscal Crisis
Iowa Policy Project
New Report Compares Responses of Iowa, Other States
DES MOINES, Iowa – Iowa's handling of the recent fiscal crunch differed markedly from other states as Iowa opted to cut revenues at a time services already were being threatened, according to a new report.
“Iowa is
not in the mainstream of other states in its response to the fiscal
crisis of the last few years. We have eroded our ability to provide
public services in ways that will require significant work to repair,”
said Charles Bruner, executive director of the Child & Family
Policy Center (CFPC) and a co-author of the report with Mike Crawford,
senior research and administrative associate for the CFPC.
The
report is the first of several to be released in the coming weeks by
the Iowa Fiscal Partnership, an initiative of the CFPC and the Iowa
Policy Project, two Iowa-based nonprofit, nonpartisan organizations
that collaborate on Iowa tax and budget policy analysis.
The
series will illustrate the impact of Iowa's budget decisions on
education, human services, local governments and fiscal stability
during the fiscal crisis of 2001-2004. Among findings of the first
report, which compares responses of Iowa and other states to those
challenges:
-Iowa
already had contained general fund growth more than other states from
1995 through 2001, but also enacted somewhat larger tax cuts from 1996
to 2001 than those enacted in other states. Between 2001 and 2004,
unlike the national trend, Iowa actually cut general fund spending and
reduced taxes further.
-While
states overall increased general fund spending by 7 percent from 2001
to 2004, Iowa actually cut general fund spending almost 8 percent
during the period. Only Michigan (10.6 percent) and South Carolina (9.6
percent) cut spending more.
-States overall raised taxes 4.3 percent from 2001 to 2004; Iowa cut taxes 2.2 percent.
-While
Iowa's K-12 education spending growth was lower than that for the
country overall, K-12 expenditures fared better than general-fund
expenditures as a whole.
-States
that did increase taxes from 2002-2004 went to a variety of sources for
revenue. The largest source came in personal income taxes, with
cigarette and tobacco taxes next, followed by sales and use taxes and
corporate income taxes.
Iowa Fiscal Partnership reports will be available on the web at www.iowafiscal.org. The CFPC is on the web at www.cfpciowa.org, and the IPP is at www.iowapolicyproject.org.
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