Iowa government revenue projections down due to legislative changes
State revenue will continue to grow in the coming years, members of the state’s Revenue Estimating Conference say, but not as fast as they would like. The three-member group tasked with determining how much money will come into the state lowered it’s March estimate for fiscal year 2012 based on legislative changes and set new growth levels for that fiscal year and the next on Friday.
Jul 31, 2020620 Shares155K Views
State revenue will continue to grow in the coming years, members of the state’s Revenue Estimating Conference say, but not as fast as they would like.
The three-member group tasked with determining how much money will come into the state lowered it’s March estimate for fiscal year 2012 based on legislative changes and set new growth levels for that fiscal year and the next on Friday.
The REC voted 3-0 to set it’s new FY 2012 estimate at $5.97 billion, or 1.3 percent more than actual FY 2011 returns of $5.89 billion. That’s about $210 million less than the REC’s March 25 estimate for FY 2012, which put net receipts at $6.18 billion.
The group said legislative changes since that March meeting resulted in $196.5 million less coming into the general fund, largely due to a change in the way cigarette and tobacco taxes are collected. Revenue from the sales and use tax is also likely to decrease, the group agreed.
The REC painted a brighter picture for FY 2013, estimating revenues of $6.2 billion or 3.9 percent growth compared to the FY 2012 estimate.
David Roederer, the director of the Department of Management and the chairman of the REC, said uncertainty at home and abroad has threatened economic growth.
“I think that we do have a real mixed bag,” he said. “The part that I think is most uncertain that is really hard to get a handle on is the international situation that we have.”
The good news, Roederer said, is companies and corporations are making money and agriculture is doing well in the state.
“I think once they start getting some kind of a signal as to what direction government policy is going to go, I think that in fact is going to speed up the recovery,” he said.
Holly Lyons, director of the fiscal services division of the Legislative Service Agency, also pointed to uncertainty as a deterrent to economic growth. But she said Iowa has a diversified economy and is still reporting job, income and revenue growth, just not to the levels she would like to see.
“As we predicted a year ago, we’re chugging up the hill but it’s a long, steep hill,” Lyons said.
David Underwood, the citizen appointee to the REC, said he was unable to find anyone that is confident the economy will continue to grow without seeing another dip into recession.
“But one silver lining I did find was any recession in the next few months is likely to be short and shallow,” he said.
The group will meet again in December to revise its estimates. The governor and Legislature must use that number when putting together their budget plans. If the REC’s estimate decreases when the group meets again in March, the lesser of those two estimates must be used.
Hajra Shannon
Reviewer
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