Revenue Forecasters: Too Early To Predict COVID-19 Impact On Iowa Economy
State revenue forecasters said Thursday it is too early to know the impact the new coronavirus will have on Iowa’s economy as it sends shockwaves through the world economy.
The Revenue Estimating Conference is predicting the state’s revenue will hold steady in the next fiscal year that starts July 1.
The state is still expected to bring in more than $8.2 billion in state fiscal year 2021, which is the year that lawmakers will have to pass a budget for before the legislative session ends. The new estimate gives them about $12 million less than December’s REC estimate.
“When we were putting our estimates together, we did not attempt to predict the fiscal impact of the virus on the state’s economy based on the information that we know,” Department of Management Director Dave Roederer said. “But as additional info becomes available, and if necessary, the REC can always reconvene and take the temperature of where we believe the economy is.”
He added the stock market is fluctuating a lot, but the “fundamentals” of the state and national economies are still strong.
Holly Lyons, fiscal director for the Legislative Services Agency, said the state’s economy has been stable and growing slowly, but there is a lot of uncertainty.
“So it’s like we’re chugging up the hill slowly, but we’re in a dense rolling cloud bank and we can’t really see if we’ll keep slowly climbing or we’ll start heading down the other side of the peak,” Lyons said.
Republican leaders said the latest numbers show state revenue is in a good place, and they can move forward with their priorities.
“We feel like we’re in good shape,” said Rep. Gary Mohr, R-Bettendorf. “Conservative budgeting principles have paid off.”
Roederer said the REC estimate shows Republican Gov. Kim Reynolds’ proposed tax changes that she’s calling the “Invest in Iowa Act” could still work.
But Rep. Chris Hall, D-Sioux City, said the economic uncertainty means it’s not the right time for tax cuts.
“We need to be very cautious and we also need to be conservative in how we’re approaching the possibility that revenues could take a downturn,” Hall said.
He said the REC should meet again in a few weeks, and said lawmakers should start thinking about what the state might have to spend on responding to COVID-19.
Senate Majority Leader Jack Whitver, R-Ankeny, and House Speaker Pat Grassley, R-New Hartford, said they are prepared to consider future funding requests from the governor’s office.
They also said the Iowa Capitol will stay open to the public, and lawmakers will continue to meet there on Monday. Hundreds of people visit the building each day.
Whitver was asked if he’s concerned about having groups of people gathering in small spaces for subcommittee meetings next week.
“We’re working with [the department of public health] to figure out exactly what we need to be doing, and we’re going to continue to monitor that daily, if not hourly, and so we’ll work with them and the governor and the House to make those decisions,” Whitver said.
He said members of the public should consider whether they need or want to come to the Capitol amid concerns about the new coronavirus. Sixteen people in Iowa had tested positive as of Thursday evening.
One Democratic senator has called on leaders to suspend the legislative session to prevent the spread of COVID-19.