Federal funds could be reduced or eliminated in a flash, such as in the case of a government shutdown. These funds also come with strings attached, often requiring additional state funding to support federal initiatives.
- Itemize all federal funds.
- Measure the dollars and obligations.
- Identify the end date.
- Develop a contingency plan.
What Has Happened:
- A bill was introduced in the House and assigned to a subcommittee.
- No action was taken by the Senate.
Work Left to Do:
Tell legislators that Iowa must protect itself from Washington’s mismanagement.
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Iowa Must Protect Itself From Washington’s Mismanagement
Over half of the money flowing through state government is subject to the next federal spending crisis.
We all know that the federal budget deficit created in Washington, D.C., is unsustainable. We also know federal budget fights lead to rash spending cuts and government shutdowns. But, 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?
Iowa’s dependency on Uncle Sam is dangerous. Federal funds could be reduced or eliminated in a flash, such as in the case of a government shutdown. These funds also come with strings attached, often requiring additional state funding to support federal initiatives. Iowans should be concerned that over half of the money flowing through state government is subject to the repercussions of the next federal spending crisis.
To prove the danger of relying on federal dollars, the recent action of Congress to phase out the Children’s Health Insurance Program will cost the state an estimated $30 million annually. Because Iowa relied on the federal support to fund the Healthy and Well Kids in Iowa insurance program, the state is now on the hook to financially support this federally-created initiative.
Local programs are also subject to the repercussions of federal funding. Beginning in 2001, the Sioux City School District received a federal grant from the Safe Schools/Healthy Students initiative. This grant helped provide mental health services to students. As anticipated, this grant funding recently expired, and as a result, the school district is now asking for nearly $800,000 from Woodbury County to continue to provide the grant-funded services.
The point of a federal funds inventory is not to debate the merit of these federal initiatives, but rather to bring attention to a problem: Federal funding often disappears, and state and local taxpayers are left with the bill.
What steps does Iowa need to take to ensure we aren’t reliant on the mercy of political outcomes in D.C.?
- Itemize all federal funds coming into Iowa so lawmakers and taxpayers can clearly and easily see the programs that are the ultimate recipients of those funds.
- Measure the dollars and obligations to which Iowa must commit so we understand what strings are attached.
- Identify the end date, scheduled or foreseeable, for funding that is likely to come to an end.
- Develop a contingency plan to deal with potential federal cuts and the impact they would have on Iowa’s budget and the services provided to citizens.
Taking a full inventory of federal funds will spotlight the impact of federal dollars, make clear where federal money is going and what regulations are being forced upon Iowa, and as a result, help us prepare for when Uncle Sam is no longer able to provide such generous support to our state.