The state officially closed the books for the 2010 fiscal year on Thursday, with a higher than expected surplus of $335.6 million and an additional $419 million in the state’s savings accounts. The Iowa Democrats responsibly balanced the state budget without raising taxes while laying the groundwork for Iowa’s economic recovery, while keeping the state’s savings accounts full.
State officials and the Legislature had anticipated a $100 million surplus but the improving economy and fiscal discipline of legislators led to an additional $234.9 million surplus when the year ended. This surplus is the second highest surplus in the state general fund in the last ten years. The highest was in fiscal year 2006, when the year ended with $361.9 million in surplus, according to the Department of Management.
Under Iowa’s budgeting laws, the state can only spend 99% of projected revenues with the surplus flowing into the state’s savings accounts. The state’s savings accounts, which are limited to 10% of general fund revenues, were created to help the state weather economic recessions, emergencies and disasters. The two savings accounts, which are the Cash Reserve Fund and the Economic Emergency Fund, will now have a combined balance of about 8%, just short of the 10% limit.
When the 2011 session begins in January, legislators will begin work on the fiscal year 2012 budget.