Strengthen Iowa’s Government Spending Limit
“How can the state stop spending so much money?” This is a common question asked across Iowa. While there are many ways this could be accomplished, one of the broadest solutions would be to strengthen the existing spending limitation that exists in Iowa by adding language to our state’s constitution.
The Iowa legislature is restricted to spending 99 percent of the revenue they collect each year. Because this limit only exists as a statute, a future legislature could simply pass a new statute that further weakens this limit or removes it altogether. A constitutional amendment would be the strongest way to control the growth of government and future spending.
Since spending and tax limitations can take various forms, Matthew Mitchell, a senior fellow at the Mercatus Center, contends that the most effective solution will have the following characteristics:
- A spending limitation formula based on the sum of inflation plus population growth.
- Be based upon spending rather than revenue.
- Require a supermajority rather than a majority to be overridden.
- Would immediately refund revenue collected in excess of the limit.
Is written in the state constitution rather than in code.
During the 2017 legislative session, the Iowa Senate passed a resolution that could have created a spending limitation constitutional amendment. This measure would “limit the annual increase in spending from year to year to the lesser of 99 percent of the estimated revenue for that fiscal year, or 4 percent above the prior year’s revenue.” Fiscal analysis of by the Legislative Services Agency (LSA) applied the rules of the resolution to the past ten legislative sessions and found that “appropriations would have been lower than the enacted appropriations in seven of the fiscal years.”
State Senator Charles Schneider wrote that the analysis “shows that if the spending limit had been in place since fiscal year 2012, state government could have spent $488.2 million less than it has.” The impact of this would have been substantial.
“Going into fiscal year 2017, we could have had a carryover surplus of at least $442.8 million. Had that been the case, we would not have had to deappropriate funds for fiscal year 2017, and we would not have to dip into the cash reserve fund to fill the remaining budget gap for this fiscal year,” stated Senator Schneider.
Critics of spending limitations argue that they will deprive the state of the ability to fully fund government programs, but even the most stringent state limitations have demonstrated that they did not cut government spending but merely slowed its growth rate. Iowa policymakers should seriously consider a state spending limitation amendment to ensure the taxpayer remains on equal footing with special interests.