Tax Receipts Fall Short Again; Farm Economy Languishes
There was bad economic news from the statehouse today and budget writers are making plans to adjust.
A panel of economic experts revised downward their projections of growth in state tax receipts for the fiscal year that ends in June.
We are facing a difficult time. -Holly Lyons, Legislative Services Agency
They estimate growth of less than 3%, while the budget was based on expected growth of nearly four-and-a-half percent.
Holly Lyons with the Revenue Estimating Conference stresses the state is not heading into a recession.
“But we are facing a difficult time,” Lyons said. “State revenues are still experiencing growth, just slow growth, and unfortunately, at the present time, very, very slow growth."
The Conference reports that farm income has once again fallen below the previous year, pushing a range of tax receipts down.
They added farmers are producing corn and soybeans at a loss or just breaking even.
A survey of rural bankers suggests there’s still a recession in the countryside.
“Their survey indicates that more than one third of the CEO’s believe their rural communities are still in an economic downturn,” Lyons said.
The REC says sales taxes and income taxes are both coming in below projections. They say wages are down in the manufacturing sector, which is affected by the farm economy.
The new shortfall for the fiscal year that ends in June exceeds $130 million. But this year’s budget has already been cut mid-year by $118 million.
Additional cuts are not feasible. -Branstad spokesman Ben Hammes
Officials with the Branstad administration say they expect to tap cash reserves this time rather than making more budget cuts.
“With just over three months remaining in the current fiscal year, additional cuts are not feasible,” said Governor Branstad’s spokesman Ben Hammes in a statement.
The shortfall also extends into next fiscal year. The REC lowered their projected tax receipts by over $190 million.
Governor Branstad will submit a revised budget to accommodate the lower revenues.