- Associated Press - Friday, September 29, 2017

DES MOINES, Iowa (AP) - Iowa’s treasurer on Friday warned Gov. Kim Reynolds she will not be in compliance with state law if she taps an emergency fund to address a budget shortfall, a move the Republican governor’s staff criticized by pointing out the treasurer is a Democrat.

Reynolds later borrowed the money through an official proclamation.

Treasurer Michael Fitzgerald said in a letter to Reynolds and some legislative leaders that a certain drop in Iowa’s revenue for the budget year that ended in June did not meet the legal threshold required to utilize the state’s economic emergency fund. Reynolds’ press secretary, Brenna Smith, said Fitzgerald was reviewing the wrong numbers.

“Democrats should quit manufacturing problems where they don’t exist,” she said in an email.

Fitzgerald said he disagreed with Smith’s assessment. He reached his conclusion by calculating budget figures presented this month; Reynolds’ office did not include those numbers, according to Smith. Instead, the office compared budget data between March and late last year.

Fitzgerald said he’s just pointing out the law, but added he won’t take further action. He warned that others might seek legal input.

“It leaves her open to being challenged,” he said.

It’s unclear how far the issue will stretch beyond Friday. A spokesman for the attorney general’s office, which reviews legal matters related to state government, said the office had a copy of Fitzgerald’s letter. The spokesman declined to comment further.

This month, Reynolds’ budget experts said a shortfall to the roughly $7.2 billion budget was about $13 million once final figures were tallied. That was much smaller than a roughly $100 million shortfall projected earlier this summer by a nonpartisan agency. Her office pointed to last-minute financial adjustments, which Democrats have called suspicious.

Reynolds has the authority to transfer up to $50 million from the emergency fund, but it requires some technical criteria. In this instance, Fitzgerald argued, one of the thresholds on the extent of the budget shortfall was not reached. Reynolds’ ability to transfer money from the fund allowed the governor to avoid calling lawmakers back for a special legislative session.

Rep. Chris Hall, D-Sioux City, is the ranking member of a key appropriations committee, though Democrats have no legislative power in the GOP-controlled Statehouse. He has recently requested a closer audit on the budget. He said if Reynolds is challenged on the legality of her move and it’s determined she can’t use the fund, it would raise questions about whether lawmakers must be called back to address the budget.

“Maintaining a sound and transparent budget is the most fundamental thing that state government does,” he said. “Taxpayers expect it. It doesn’t make a difference whether it is a Republican or a Democrat in office.”

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