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Gov. Reynolds sued for ‘unlawful misuse of state funds’

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Gov. Kim Reynolds — photo courtesy of the Office of the Governor of Iowa

The ranking Democrat on the Appropriations Committee in the Iowa House of Representatives, Chris Hall of Sioux City, is suing Gov. Kim Reynolds for her use of $13 million from the State Economic Emergency Fund to balance the state budget in September.

In the lawsuit filed on Tuesday in the state district court for Polk County, Hall alleges that Reynolds’ actions constituted an “unlawful misuse of state funds.” The lawsuit also names Director of Iowa Department of Management David Roederer for his role in carrying out the transfer of funds the governor ordered.

State Treasurer Michael Fitzgerald warned Reynolds when she issued the order in September that she lacked the legal authority to order the use of emergency funds and could possibly face legal action for doing so. The governor’s office publicly responded to the warning by saying Fitzgerald, a Democrat, should “quit manufacturing problems.”

At issue is a state law that permits a governor to transfer money from the emergency fund to the state general fund to cover budget shortfalls, if the state’s general fund revenue is at least 0.5 percent below the projection made by the Revenue Estimating Conference. In his lawsuit, Hall notes that in September the general fund revenue was only 0.15 percent below the conference’s March 2017 revenue estimate. Reynold’s “aides argued the governor’s transfer authority was triggered when the March 2017 estimate came in 1.5 percent lower than the estimate at its prior meeting in December 2016,” according to the Associated Press.

According to Hall’s lawsuit, Reynolds should have called a special session of the legislature, because the transfer of funds required legislative approval. “A special legislative session, however, would have created a political problem for GOVERNOR REYNOLDS by drawing attention to her inability to adequately manage the State’s fiscal affairs,” the lawsuit states.

“This is a political lawsuit with political motivations,” Brenna Smith, the governor’s press secretary, told Little Village via email.

“Everyone agrees the state budget needs to be balanced — which it now is — and Governor Reynolds is focused on the upcoming legislative session,” Smith said. “The legislature is free to change the outdated transfer statute, and we’d encourage them to do so.”

Hall is asking the district court to hold a trial and issue an order that Reynolds and Roederer violated state law by their actions. In his filing, Hall contends that Reynolds and Roederer are “liable to the state for $13 million together with interest and costs.”


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