Iowa

State Fiscal Briefs

September 2020

Iowa’s budget basics

According to the National Association of State Budget Officers (NASBO), Iowa’s total expenditures in fiscal year (FY) 2019 were $23.6 billion, including general funds, other state funds, bonds, and federal funds. NASBO reported that total expenditures across all states in FY 2019 were $2.1 trillion, ranging from $4.5 billion in South Dakota to $311.3 billion in California.

Each state allocates spending and taxes differently among different levels of governments, and local governments often administer programs with state funds, so combined state and local government data show a more complete picture of individual benefits and contributions when comparing states.

Per the US Census Bureau, Iowa’s combined state and local direct general expenditures were $31.0 billion in FY 2017 (the most recent year census data were available), or $9,864 per capita. (Census data exclude “business-like” activities such as utilities and transfers between state and local governments.) National per capita direct general expenditures were $9,446.

Iowa’s largest spending areas per capita were elementary and secondary education ($2,126) and public welfare ($1,797). The Census Bureau includes most Medicaid spending in public welfare but also allocates some of it to public hospitals. Per capita spending is useful for state comparisons but is an incomplete metric because it doesn’t provide any information about a state’s demographics, policy decisions, administrative procedures, or residents’ choices.

Iowa’s combined state and local general revenues were $34.4 billion in FY 2017, or $10,942 per capita. National per capita general revenues were $9,592. Iowa uses all major state and local taxes. Iowa’s largest sources of per capita revenue were charges ($2,370), such as state university tuition and highway tolls, and federal transfers ($1,956).

Iowa’s politics

Governor Kim Reynolds, a Republican, was elected in 2018 with 50 percent of the vote. The next gubernatorial election is in 2022.

Republicans control both the House of Representatives (53 Republicans to 47 Democrats) and Senate (32 Republicans to 18 Democrats). Control of the governor’s mansion and each house of the legislature gives Republicans a trifecta in Iowa. All Iowa House seats are on the ballot in 2020 because representatives serve two-year terms. Senators serve four-year terms; roughly half the senatorial seats are on the ballot in 2020, and the other half will be up for election in 2022.

Iowa’s budget institutions, rules, and constraints

Iowa uses an annual budget. The legislature is not required to pass a balanced budget, but the governor is required to sign one. Deficits may be carried over into the following year. Iowa also has an appropriations formula that limits spending growth, but the limit may be overridden by a simple legislative majority. There are also limits on total authorized debt incurred by the state but not debt service.

(Note: Some states have informal budget institutions that constrain overall spending growth or a specific expenditure’s growth.)

Iowa’s recent fiscal debates

Iowa’s current budget

Governor Kim Reynolds presented her proposed FY 2020 budget in January 2019. The governor’s budget message led with her proposals to increase funding for education and workforce development programs. In Reynolds’s 2019 state of the state address, she also called for higher spending on programs that help the state’s rural communities.

The legislature passed its budget in May 2019 and mostly agreed with the governor’s priorities.

Governor Reynolds released her proposed FY 2021 budget and gave her 2020 state of the state address in January 2020.

For more on Iowa’s budget, see