Iowa’s legislative leaders say they’re not expecting to have to make mid-year budget cuts in the legislative session that gets underway in January. But Senate Majority Leader Jack Whitver, R-Ankeny, says there won’t likely be a big increase in spending, either. He told a forum at the Iowa Taxpayers Association conference in Altoona Friday that’s because of tax cuts lawmakers passed in the last session.
“We need to make sure we have the amount of money we need for the tax cuts to set in over the next few years,” he said. “That’s why we’re going to keep our budget as tight as we possibly can this year…within reason. There’s things we’re definitely going to fund, there are priorities we passed the last couple of years that we’re going to fund, but we can’t get out of control with our spending.”
Legislative Democrats are cautioning against further tax cuts until the state’s fiscal picture is clearer. Last spring, the Republican-led legislature passed a tax overhaul package that’s expected to cut individual and small business taxes by more than $400 million in 2019. Some Republicans would like to consider additional cuts, but Democrats are urging them to go slow.
“So we really need to be cautious about what we’re doing,” said state Sen. Pam Jochum, D-Dubuque. “The tax changes that occurred in this last session, some of those changes have not been fully implemented yet. We don’t even know the full impact, and there’s still a lot of uncertainty in our economy.”
The state’s Revenue Estimating Conference meets in early December to release its projections of how much money lawmakers are likely to have available in the next fiscal year. In October, the REC projected Iowa would see revenue growth of 1.7 percent in the next fiscal year. Lawmakers on the Altoona panel said they expected the projection due out in a couple of weeks to be about the same.
Whitver also said lawmakers will also study the state’s tax credits to businesses next summer. Democratic gubernatorial candidate Fred Hubbell has been among those who have criticized the credits as wasteful, and said during his campaign the state would have more money to fund education if the credits were rolled back. Members of the panel said next year’s study would help clarify whether the tax credits are having their intended effect. Sen. Whitver said information from the study would help lawmakers determine what changes they might propose to the state’s corporate tax structure during the 2020 legislative session.
