Iowa’s Dependence on Federal Funds

Dependence on Federal Funds

Iowans for Tax Relief gives taxpayers a voice so they can be empowered with economic freedom: Less government spending. Lower taxes. Limited regulations.

Sometimes the solutions to these issues are obvious, like reducing tax rates. But some hurdles to economic freedom are harder to see…so much so that even legislators may be unaware of them.

For instance, did you know that the State of Iowa received $8.5 billion from the federal government in 2017, an amount that eclipses our current state budget of $7.5 billion? Roughly half of the money flowing through Iowa isn’t even funded with state income or sales tax at all; it’s funded with federal money that often comes with strings attached.

This means even fiscally-conservative legislators who are trying to keep spending in check and return dollars to the taxpayers are stymied because so much of our budget must be used to match funds from federal programs.

This week Rep. Pat Grassley, who chairs the House Appropriations Committee and is responsible for setting the House’s budget proposal, introduced HSB 205. This bill would require all state departments to submit a federal funds inventory.

State agencies and departments would have to report not just how much federal money was received, but what strings were attached to it: how many matching state dollars were required, how many full-time employees had to be hired, and what other obligations were incurred by the agency in order to accept those federal funds.

The bill also would require identifying a potential or foreseeable end date for each federal grant. This would allow our state to understand and plan for the time when each set of federal dollars may no longer be coming to Iowa.

Federal funds inventories already exist in Utah, Idaho, Mississippi, and Indiana. Our neighbors in Nebraska are advancing legislation to track federal funding programs in that state, too. ITR supports Rep. Grassley’s introduction of  HSB 205 and the creation of a federal funds inventory in Iowa.

It is critical that everyone has a clear picture of just how reliant Iowa is on federal money. Our legislators especially need this information when budgeting how to spend taxpayer money. There’s no such thing as a free lunch, and there’s certainly no such thing as free money.

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