As we move toward the 2016 session, the careful budget-making strategy adopted by the Legislature will allow us to maintain our investments in expanding Iowa’s middle class in all 99 counties. This includes affordable higher education, 21st Century job training and a good education for our schoolchildren.
That’s because we balance the state budget in a fiscally responsible way. Under Iowa law, we never budget for more than 99 percent of what the state takes in, and often significantly less. We use a cautious approach to determining how much to spend by looking at recent revenue estimates of a nonpartisan panel of experts.
Each year, at least 1 percent of the state budget goes into savings accounts, which include a cash reserve fund and an economic emergency fund. This is the money that gets us by in hard times, such as an economic recession or a natural disaster. We currently have more than $700 million in our reserve funds, the largest amount in state history.
Iowa’s approach to budgeting wins widespread praise:
- Based on a comprehensive review of data, 24/7 Wall St. rates the 50 states by how well they’re run. In its most recent study, Iowa ranked number four in the nation. Among our state’s attributes: low debt, a strong credit rating and a well-managed budget.
- Iowa consistently earns a Triple A credit rating from Standard and Poor’s. This top rating means the state of Iowa has an “extremely strong capacity to meet financial commitments” in full and on time.
- Iowa’s rainy day funds equal about 10 percent of the state budget and are among the strongest in the country, according to the Tax Foundation.
- Iowa is one of only eight states to receive an “A” grade from the U.S. Public Interest Research Group because we make it easy for Iowans to see how their tax dollars are spent.