Guest Column by Senate Republican Whip Steve Kettering (Lake View)

Confessions of a Shopaholic is a play that normally you would find on stage or screen at a downtown Des Moines venue. This week the troupe opened at the Capitol. The legislative version is - How much of your money do we need to spend? Initial calculations total at least $10.6 billion. The main players include a federal stimulus package of $2.1 billion, disaster relief of $1.5 billion, the Governor’s bonding proposal of $700 million, and state tax revenues of $6.1 billion. However, on stage first is a $175 million remake of a 2009 bond offering that attracted no buyers.

Our story begins there. You may recall that the 2008 Legislative Session ended with spending up nearly one billion dollars over a two year period. While the shopping was nearly complete, some items remained. The problem was lack of cash for the budget, so a tobacco bond was proposed. The state could simply borrow the money; spend now and pay later. But, no bond buyers showed up with cash for the state in exchange for those tobacco bonds.

Now a budget crisis looms. The state has more shopping to do, but where to find the money? Swinging on stage from high above stage left is the State Treasurer recommending an annual appropriation bond instead of a tobacco revenue bond. “You don’t even have to have a source of repayment,” he shouts. Spend now and future legislatures can simply appropriate every year for 20 years - enough to pay back what is spent this year. It is a simple and easy procedure. Pain free! Not to worry, the anticipated bond rating should be no more than one notch below the usual usurer rating. There may not even be a debt service reserve fund required. Spend away. This appropriation bond can be paid from any future source of revenue. Just let the next 20 legislatures worry about the repayment. A great idea. For 2009 we can cruise easy and trouble free; with that the Treasurer exits – stage left.

This annual appropriation bond moved out of the Senate Appropriations Committee this week. It will be debated on the floor in the near future. On the floor this week was also the 2009 appropriation adjustment bill. This formally deals with the changes the Governor has articulated in the past several months. Thus ends Act I.

An important budget date in the near future is March 20th. That is the scheduled date of the next Revenue Estimating Committee meeting. The projections announced at the conclusion of that meeting will have far reaching implications. They could render the Governor’s budget proposal and the recently announced Democrat targets meaningless.