Over half of the money flowing through state government is subject to the next federal spending crisis.
Iowa’s dependency on Uncle Sam is dangerous. Federal funds could be reduced or eliminated in a flash, such as in the case of a government shutdown. These funds also come with strings attached, often requiring additional state funding to support federal initiatives.
To prove the danger of relying on federal dollars, the recent action of Congress to phase out the Children’s Health Insurance Program will cost the state an estimated $30 million annually. Because Iowa relied on the federal support to fund the Healthy and Well Kids in Iowa insurance program, the state is now on the hook to financially support this federally-created initiative.
Taking a full inventory of federal funds will spotlight the impact of federal dollars, make clear where federal money is going and what regulations are being forced upon Iowa, and as a result, help us prepare for when Uncle Sam is no longer able to provide such generous support to our state. This is not to debate the merit of these federal initiatives, but rather a spotlight on a problem: Federal funding often disappears; when it does, state and local taxpayers are left with the bill.