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The Elbert Files: Spending a windfall


State government is sitting on a windfall of cash that has piled up during the past year as a result of the COVID pandemic.

It could be as much as $2 billion but is more likely around the $1 billion mark. We won’t know for sure until later this fall. But trust me, it’s a significant number. 

The windfall comes mostly from federal dollars that flooded into Iowa and the rest of the nation beginning in April 2020 and continuing into this summer. The money was designed to keep the U.S. economy from suffering a catastrophic collapse during the pandemic. 

And, for the most part, it has worked. 

Sure, there have been rough spots, particularly in the hospitality, travel and personal service sectors. But other industries – technology and construction, to name two – have flourished. 

Suffice it to say that the roughly $6 billion of federal money that flowed into Iowa during the past 15 months has allowed most of us, including state government, to keep our heads above water and go about our businesses, even as we put on our masks and social-distanced.  

To put all that cash in perspective, $6 billion is three-fourths of the $8.1 billion that state officials have budgeted to spend during the current fiscal year.  

In any case, it’s a lot of money, and many of those federal dollars found their way into state coffers when you and I and all the businesses that received federal grants paid state taxes on our incomes and purchases.  

So, what will state government do with the windfall?

They could do like Gov. Bob Ray did in 1979. When the state government found itself with an unprecedented $50 million surplus, Ray rebated it directly to taxpayers. The giveback was tremendously popular, until two years later when the farm crisis drained state finances and ultimately forced Ray’s successor, Terry Branstad, to increase the sales tax in 1983. 

Actually, today’s Republican-controlled Legislature has already done a version of the Ray rebate by committing part of the surplus to cover a tax cut planned for 2023. 

But let’s assume there is more surplus than is needed for the tax cut.   

Just for fun, let’s speculate on what would be a good use for a billion-dollar surplus. 

One thing we should not do with any surplus is use it to fund ongoing obligations. 

That rules out nearly all educational spending, which is unfortunate because in recent years state lawmakers have woefully underfunded education to the point where Iowa’s once-vaunted public schools are increasingly considered mediocre. 

So if we can’t spend the surplus on ongoing expenses, like education, social services, health care, public safety and such, we should focus on one-time capital expenditures. 

Transportation is one possibility. We know that our bridges and highways have deteriorated and need attention. It also makes sense to build up rail networks because rail is far more efficient for moving both goods and people than traditional highways.  

Transportation would be a valid use for surplus funds, except for one thing. 

The federal government is already planning a massive infrastructure rebuild. So why not let Congress handle those expenses? After all, that’s why we pay federal taxes.

There is however, an infrastructure issue that is growing more challenging by the year and that no one else can or will address. 

You don’t have to go far to find it. Just drive by virtually any river or lake in Iowa and you can see, and sometimes even smell, the problem. 

What has happened to Iowa’s waterways in recent decades is unbelievable. The fact that so many recreational lakes, including Saylorville Lake north of Des Moines, are too polluted for swimming by humans, or even dogs, is disgraceful. 

Water quality in Iowa is a huge problem and it’s getting bigger every day. I’m not sure there’s enough money even in the current surplus to solve it. But I do believe there is enough to make a decent start at cleaning things up.

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