Did Kim Reynolds “Cook The Books” On State Budget?

Governor Reynolds’ continuing budget crisis is raising additional questions regarding her administration’s basic lack of competence in managing the state’s finances. The Governor’s lack of transparency and accountability in dealing with her budget mess is contributing to growing suspicions that the fix is in.

It was nearly certain in June that Reynolds would need to call the Legislature back this fall for a special session to fix the budget. That would likely be a tough political move since it would indicate she isn’t capable of controlling the state’s budget. A special legislative session would open up a much broader public discussion of her overall mismanagement of state government.

Magically, a sudden unexpected burst in revenue between June and September rescued Reynolds from calling the Iowa legislature back for a special session. The immediate conclusion for many political observers was that they “cooked the books” to avoid a special session. When the state closed the books in September the estimated $100-million-dollar shortfall had mysteriously been reduced to just $13 million. That sleight of hand raises serious suspicions about their accounting methods.

The Reynolds’ administration claims that revenues had somehow miraculously exceeded the historic three-month revenue average in a year of slow growth stretches credibility. Since 2004, the state has averaged just $19.7 million in accrual revenue during the June to September period. In September they reported a huge windfall of $73 million which defies historic patterns. This is by far the largest amount of revenue generated for this period since 2004. This opens the door to speculation that some irregular or inappropriate actions may have inflated the numbers in a desperate attempt to avoid a special session. How else do you explain a revenue increase of nearly four times the average increase in a year in which Iowa’s economic activity is experiencing slower than normal growth?

Iowa taxpayers deserve an administration that not only professionally manages their tax dollars, but a governor that honestly owns up to her administration’s failures. Skeptics of Reynolds’ management are calling for a public audit and in addition are raising questions about the legality of her actions. The fact that Reynold’s Republican administration has driven the state budget from a nearly $1 billion surplus into a huge $250-million hole leaves Iowa taxpayers questioning both the Governor and her Republican colleagues’ management competence.

Representative Chris Hall, D-Sioux City, the ranking member of the House appropriations committee, is calling for an audit of the budget. That certainly seems like a reasonable request in light of so many unanswered questions and suspicious accounting methods.

“A special session may not have been the press cycle that she hoped for, and so they were able to fudge the numbers in such a way that they could avoid it,” Hall said. “And an audit might find otherwise. An audit might find that these are perfectly normal numbers…I believe Iowa taxpayers deserve to know whether Gov. Reynolds and Republicans used budget gimmicks (delayed payments), shell games (transfers), or kept two sets of books to close the fiscal year and avoid a special session.”

Another troubling development was raised last week by State Treasurer Michael Fitzgerald. Fitzgerald suggested that Reynolds’ plan to transfer $13 million from the state’s emergency fund to balance the budget may violate state law. Fitzgerald explained that certain contingencies must be met for such a transfer to meet the requirements of Iowa law.

“If this is what it appears to be, then you are going to have to find another answer, which probably would be a special session,” Fitzgerald said. “But that is the law, and that is the way that I see it.”

Reynolds’ spokesman pushed back on both Hall and Fitzgerald. She accused Democrats of playing politics and “manufacturing problems.”  Governor Reynolds has driven the state budget bus in the ditch and now blames Democrats for manufacturing problems. Iowa taxpayers have a right to expect their Governor to be both accountable and transparent in her actions.


by Rick Smith
Posted 10/5/17

2 Comments on "Did Kim Reynolds “Cook The Books” On State Budget?"

  • Well, in her defense, she only took over driving an out-of-control vehicle. But she obviously never took drivers’ ed and has only burned up the brakes and balded the tires. (and she – or her “accountants” – probably had trouble with math, as well…)

  • It looks like Iowa is being governed by liars and con-artists. If we want to be a progressive state, it’s time to clean house. Otherwise we will end up like Alabama and more of our citizens will move to California. There are many reasons that Iowa has more pigs than people.

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