Iowa is a beacon of liberty against an onslaught of poor federal policies. President Biden has already proposed $6 trillion in new spending during his first 100 days in office. Iowa is awash with federal stimulus dollars. Iowa is frequently overlooked, but Governor Kim Reynolds is an example of a leader who not only places the interests of her state first but understands the importance of following sound fiscal policies.
Often under criticism by progressives, Governor Reynolds is making difficult decisions. Many of these decisions were saying no to federal policies that were not serving the interest of Iowans. In responding to the current need for more workers, Governor Reynolds ended the $300 federal unemployment benefit. Iowa businesses are desperate for workers, and this benefit was discouraging workers from returning to work.
Governor Reynolds has shown strong leadership in resisting the use of unnecessary and unproductive federal stimulus money. As an example, the Governor announced that Iowa will be returning $95 million in federal dollars that were designated for COVID-19 testing in schools.
The federal government has responded to the pandemic with massive stimulus measures. The most recent stimulus measure is the American Rescue Plan Act (ARP), which is a $1.9 trillion package aimed at providing COVID-19 relief. ARP provides $350 billion to state and local governments in federal aid. Under ARP, Iowa will receive $4.451 billion with $1.379 billion directed at the state government and $1.162 billion for local governments. Iowa schools will also receive $775 million from the ARP. This is on top of the billions Iowa has already received from previous stimulus measures.
The objective of ARP is to provide economic relief, but it is especially geared toward fiscally reckless states such as Illinois, New York, and California. The fiscal houses of these states are now collapsing, and they need a bailout from the federal government. Even before the pandemic these states were confronted with fiscal calamities because of their poor tax and spend policies.
The American Rescue Plan is more about expanding government than it is about economic recovery. The massive stimulus spending is also hurting the economy by creating inflation. Iowa does not even need the ARP money.
Both Governor Reynolds and Republican legislators are holding off from spending any ARP dollars. This is a wise policy. Often, federal money has strings attached, and it can lead to unintended consequences and create future financial obligations for the state. Iowa does not even need the federal dollars.
Iowa’s position entering the COVID-19 pandemic was strong due to many years of conservative budgeting practices. Governor Reynolds has always prioritized the growth of Iowa’s economy and creation of opportunities by expanding economic liberty. These values are shared by the Republican legislature that not only has controlled the growth of government spending, but also passed significant tax reform measures in 2018 and 2021.
Iowa’s fiscal house was not only prepared for the “black-swan” economic emergency caused by the pandemic, but as the 2021 legislative session began, the budget had a $305 million surplus and over $770 million in reserves. Today, as a result of prudent budgeting, a $500 million surplus is projected. In addition, there is plenty of money available for a rainy day, including a combined $817.9 million in the Cash Reserve fund and the Economic Emergency fund and $316.4 million in the Taxpayer Relief fund.
Governor Reynolds recently signed into law a tax reform measure that will provide $1 billion in tax relief for Iowans. This tax reform would not have happened if it were not for the fiscal conservatism that Governor Reynolds has followed. “It’s a great day in Iowa,” proclaimed Governor Kim Reynolds as she signed the law. Governor Reynolds understands that other states are lowering their tax rates and Iowa must continue to lower rates to ensure a more competitive tax code.
Iowa’s economy is roaring back because of Governor Reynolds’s commitment to fiscal conservatism. Governor Reynolds has even announced that she will continue to make tax reform a priority during the next legislative session. The Governor understands that Iowa cannot tax and spend its way to prosperity, and she is a national leader in demonstrating that sound fiscal policy matters.
Governor Reynolds is also leading on national issues. She has rightly criticized President Biden’s disastrous open borders policy, which has created a major crisis. The Governor is also defending constitutional government by joining other governors in opposing any effort to pack the United States Supreme Court. Whereas Washington, D.C. is failing, Iowa, under the leadership of Governor Reynolds is succeeding.
Iowa has overcome a lot over the past year. Governor Reynolds has led Iowa through immense challenges, and it is the conservative values she champions that have made Iowa a national leader.
Author: John Hendrickson
John Hendrickson is a Policy Analyst with Iowans for Tax Relief, West Des Moines, Iowa
