State revenue forecasters are a bit more optimistic about how much money is flowing into Iowa’s coffers than they were two months ago. On Thursday, they predicted state revenue for this fiscal year and the next will be slightly higher than they first thought.
The Revenue Estimating Conference determined Republican Gov. Kim Reynolds will have about $234 million more than last year to put together a budget proposal that will total about $8 billion. That represents an estimated 2.9 percent increase in revenue.
“All in all, we feel things are moving well,” Department of Management Director David Roederer said. “That doesn’t mean we should look at everything going gangbusters, but it actually is a little stronger growth that what we thought back when we all met in October.”
The three-member panel remains “cautiously optimistic” about the economy and Iowa revenue.
Legislative Services Agency Fiscal Division Director Holly Lyons said she does not anticipate a recession in the next year and a half. But she said economic growth has slowed, wage growth is lower than expected given the tight labor market, the tariff war with China continues, and Iowa’s 2018 income tax cuts are cutting into state revenue.
Panel member David Underwood said it is too early for the U.S.-Mexico-Canada Agreement to have a positive effect on state revenue, because it is expected to be ratified next year.
Gov. Reynolds will use Thursday’s estimate to guide her budget priorities that she is scheduled to announce January 14.
Lawmakers will use Thursday’s estimate or the prediction made in March 2020—whichever is lower—to craft state budgets next spring.
Rep. Gary Mohr, R-Bettendorf, said in a statement the revenue estimate shows Iowa’s economy is growing and that Republican tax cuts and budgeting are positively impacting the state.
“Iowans can count on House Republicans to continue our successful investments in priorities like education, health care and public safety in the 2020 session,” Mohr said. “We will continue to demonstrate strong budget leadership as we move forward.”
Democratic lawmakers say Republicans have been underfunding education and health care.
Rep. Chris Hall, D-Sioux City, said he was concerned to hear Lyons say the U.S. economy is “on borrowed time.”
“We need to plan prudently, keep a lean budget in the coming year, but also make sure it’s one that helps the average person, not just those at the top,” Hall said.
He added he is worried about slower-than-expected wage growth, and he said Republicans’ 2018 income tax cuts are mostly helping higher-income Iowans.