Throughout Iowa, city and county officials are scouring their recently approved fiscal 2004 spending plans, looking for areas to absorb the cuts that would be required as a result of a $128 million budget-reduction bill approved by the Legislature. On their lists are large layoffs, facility closings and service reductions. They complain they’ve already trimmed the fat from their budgets, and that the further reductions required if Gov. Tom Vilsack signs the bill would cut them to the quick.

Proposed by Minnesota-based Public Strategies Group Inc. and known as the “government reinvention bill,” the legislation would reduce state aid to local governments by $70 million, but do little to relax costly state mandates. Vilsack has indicated he will sign the bill, though the final version contains about $39.5 million more in cuts than he initially recommended.

By signing the bill, Vilsack would send a clear message that Iowa’s system of local government, which has bloated the public-sector payroll to the point that the state ranks eighth in local government employees per 10,000 people, is out of step with the times and must be reinvented. He’s absolutely correct about that. Without the threat of withholding state aid, local governments have no incentive to change. They’d be content to protect their turfs and put off until another time talks about governance consolidations, service sharing and other tools that would enable them to operate more efficiently and effectively.

But the legislation is an example of good intentions gone awry. Iowa would benefit substantially if the “reinvent government” bill actually did that, but it merely shifts fiscal responsibility to local governments. In the case of the city of Des Moines, the provisions of the bill are particularly onerous, forcing an additional $5.5 million to $6 million in cuts this fiscal year. Des Moines’ options to absorb the cuts are limited, because more than a third of the property is exempt from taxes and officials have already looked deeper for cost-cutting measures than ever before in history.

The bill has very nearly created a civil war between local and state governments, putting Vilsack in a particularly challenging position. He should use his line-item veto power judiciously to eliminate the most onerous provisions of the bill while still sending a strong message to local governments that they need to seriously explore changes to their antiquated operating procedures.