DES MOINES - The state's 2013 budget marks an improvement over past years when Iowa lawmakers relied heavily on federal stimulus programs and other one-time revenue sources like trust funds, but the state still spends more than it brings in and has huge unfunded pension liabilities.
State Auditor David Vaudt, a Republican, is often critical of lawmakers and the governor over budgeting practices but this year has issued a largely favorable report.
Vaudt said the state's fiscal 2013 budget uses $71 million from one-time sources, far better than the 2011 budget when the state spent nearly $700 million from the federal stimulus program and other nonrecurring revenue sources.
He said that's a bad practice because the state has to find the money for programs when temporary revenue runs out, a shift of resources that can create serious budget problems.
"That's been my number one concern over the last several years, and it's refreshing to see the progress that we're making," he said. "We're well on the way to accomplish eliminating these particularly bad shifts."
Still, the state spends $161 million more than it brings in through ongoing revenue like tax receipts. That's far better than the $760 million spending gap of 2011, and Vaudt says it shows budgeting progress.
Much of the credit for closing that gap goes to Iowa's strong farm economy, which has helped generate an 8.8 percent annual revenue growth between 2011 and 2013. That has created revenues for the 2013 fiscal year of nearly $1 billion more than 2011, Vaudt said.
He said Iowa's unemployment rate has remained much lower than the national average and the housing market had a minor correction compared to other states.
The budget is not without problems, Vaudt said. In the 2013 budget lawmakers spend $1.03 for every $1 in revenue. While that's down from $1.14 for every $1 in 2011, it still needs to be down to a dollar or less, Vaudt said.
The Legislature also failed to pay for salary and benefit cost increases for state workers, which means state agencies must absorb increased costs for the fourth consecutive year.
Continuing that practice will mean services the agencies provide will be reduced.
Vaudt also points out that the state is falling further behind on funding its pension liability. The Iowa Public Employees' Retirement System has $5.7 billion of unfunded actuarial liabilities, significantly higher than the $327 million it had in 2000.
Vaudt says IPERS is 80 percent funded today. It was 98 percent funded in 2000.
He says lawmakers cannot lose sight of that going forward.
The budget also underfunds the Medicaid program by $41 million.
Gov. Terry Branstad agreed that the state has made progress on its budgeting practices but can improve.
He said Vaudt has been critical of Republicans and Democrats and offers good advice on what should be done to make the budget sustainable.