Reynolds faces lawsuit

IOWA CITY (AP) — Republican Gov. Kim Reynolds and a top aide broke the law when they transferred $13 million from a reserve fund to balance the budget, a Democratic lawmaker argues in a lawsuit filed Tuesday.

The lawsuit was filed against Reynolds and Department of Management director Dave Roederer by Rep. Chris Hall of Sioux City, ranking member on the House Appropriations committee.

It asks a court to declare that Reynolds’ proclamation ordering the fund transfer in September was illegal and to void “all actions” taken as a result. The lawsuit notes that Reynolds and Roederer could be “liable to the state for $13 million together with interest” if a jury agrees that the transfer was a misuse of appropriations but stops short of asking for that result.

Reynolds’ press secretary Brenna Smith said the governor’s office is reviewing the lawsuit, which she called politically motivated.

At issue is whether the administration acted legally in September when transferring $13 million from the State Economic Emergency Fund, which was created to cushion the blow of fiscal downturns on core services. The case could be a headache for Reynolds, who succeeded Terry Branstad last May, as she runs for her own four-year term in this year’s elections, although its merits might not be decided until 2019 or beyond.

State law allows governors to transfer up to $50 million from the fund when certain conditions are met, including that annual general fund revenue collections be at least 0.5 percent less than estimated by the state’s revenue-estimating panel during the third quarter of the year. The $7.1 billion collected for the general fund in fiscal year 2017 was only 0.15 percent — or $11 million — lower than the panel’s March 2017 estimate, not enough to trigger the governor’s transfer authority, the lawsuit claims.