Most Iowans recognize that the federal budget process is broken. Confirming that understanding is the fact that our federal government has been shut down for more than a week as a result of partisan gridlock. However, this kind of stalemate can also happen at the state level. Policymakers in North Carolina are locked into ongoing budget negotiations right now, long since their new budget year began. Similarly, Michigan only recently reached an agreement for their annual budget that, while overdue, narrowly avoided a shutdown.
Thankfully, even though North Carolina’s legislature remains at an impasse, the government continues to operate because of its budget-continuity law. That law provides that if the legislature fails to pass a budget by July 1, the previous year’s budget essentially remains in effect until a new one is enacted.
What would happen if the Iowa Legislature, due to partisan disagreements or unforeseen events, failed to pass a General Fund budget? The Legislature is constitutionally required to both balance and pass a budget each session. Article III, Section 24 of the Iowa Constitution states that “no money shall be drawn from the treasury but in consequence of appropriations by law.” If a new budget were not approved by the start of the fiscal year on July 1, funding would not be available for programs supported through the General Fund.
There are, however, limited exceptions:
Iowa’s Constitution and statutes are silent on whether a state government shutdown must occur in such a scenario. That does not mean it couldn’t happen. Without a new budget, decisions about which services and employees are funded would fall to individual departments and branches of government.
For example, the Judicial Branch could redirect internal resources to maintain operations, while the Executive Branch might attempt to continue work—potentially with or without pay—subject to administrative rules, protocols, and collective bargaining agreements.
In past years, when the Legislature extended beyond its regular session, continuing resolutions were used as temporary measures to maintain funding for a specified period. This occurred in 2020 due to the COVID-19 pandemic, when the Legislature reconvened later in June to pass a new budget.
Looking ahead, the Legislature should provide greater clarity in the budget process. Whether faced with an emergency—like the pandemic—or a political stalemate, Iowa needs a transparent and predictable process to avoid a potential shutdown.
A budget-continuation measure could address this uncertainty and strengthen the balance between the legislative and executive branches. Without such a policy, a governor or one of the legislative chambers could threaten a shutdown to pressure other officials into adopting certain priorities. A continuation provision would help prevent such political leverage and ensure government operations continue uninterrupted.
Most importantly, establishing a budget-continuation rule would provide stability and certainty for Iowans. Our state should never mirror the poor fiscal practices of Illinois or Minnesota, nor the dysfunction of the federal budget process.
In simple terms, the Legislature could pass a rule stating that if a new General Fund budget is not enacted by the start of the fiscal year, the previous year’s funding automatically continues until a new agreement is reached. Currently, 16 states have procedures in place for such situations, with Kansas, Wisconsin, North Carolina, and Rhode Island all providing strong models. For example, Rhode Island law states:
In an emergency caused by a failure of the general assembly to pass the annual appropriation bill, the same amounts appropriated in the previous fiscal year shall be available for each department and division thereof…provided, that expenditures for payment of bonded indebtedness of the state and interest thereon shall be in such amounts as may be required, regardless of whether or not an annual appropriation bill is passed by the general assembly.
Iowa is not immune to partisan gridlock, and a time may come when divided government prevents timely budget approval. That is why adopting an automatic continuing resolution or budget-continuity provision would bring much-needed stability, protect essential services, and prevent the dysfunction that now plagues Washington, D.C.
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