Democrats in the Iowa Senate sent out a fundraising pitch criticizing Republican Governor Kim Reynolds for “mismanaging” the state budget to the point that state income tax refunds “are taking much longer to get back to you.” Earlier this month, Iowa State Treasurer Michael Fitzgerald said the state nearly drained its cash reserves in April because it didn’t have enough cash on hand to pay those refunds AND all its bills. Reynolds dismissed Fitzgerald’s assertion that state finances are “on the brink.”
The state has two “savings” accounts. One is the Economic Emergency Fund and the other is a cash reserve. Reynolds announced last week that she intends to use up to 50 million from the Economic Emergency Fund to cover any shortfall in the current year’s state spending plan. The budgeting year ends June 30th. Reynolds is also disputing the idea the state’s precarious finances caused the delay in income tax refunds. Reynolds says the Iowa Department of Revenue’s effort to prevent identity thieves from stealing income tax refunds is the reason refunds have been delayed.
And Reynolds has rejected the state treasurer’s idea of having the state engage in short-term borrowing to improve cash flow. Reynolds says the state will have enough cash on hand to pay its bills and any income tax refunds.
