Revenue Panel: $360 Million Less For Iowa Next Fiscal Year Due To Pandemic's Effect On Economy
State revenue forecasters estimated Friday that Iowa will have $360 million dollars less for state services in the next fiscal year than their pre-coronavirus estimate.
Iowa’s legislative session is scheduled to resume June 3, and lawmakers will have less money for the state budget than what they were expecting in early March.
Department of Management Director Dave Roederer said that was before the state’s economy went into a “self-induced coma” necessary to slow the spread of the coronavirus.
“While bruised and somewhat battered, our fundamentals are still strong in this state,” Roederer said. “The largest question that myself and my colleagues are trying to get the answer to is, when and how fast will we reenergize and rebound from a pandemic which is likely to be with us for a while?”
The state revenue estimate for fiscal year 2021, which starts July 1, was revised from $8.24 billion down to $7.88 billion. Roederer said Gov. Kim Reynolds will soon submit a new budget proposal to lawmakers.
Revenue forecasters are also expecting the state to bring in about $150 million less in the current fiscal year that ends June 30. Budget cuts for this fiscal year aren’t likely because the state in March was expecting a $539 million surplus, which could cushion the fiscal year 2020 reduction.
Total revenue for the current fiscal year is now estimated to be $7.94 billion.
One member of the revenue forecasting panel thought the estimate for the next fiscal year was too optimistic, but ultimately agreed to go along with the other two members.
“Yes there are people still looking for people to go to work, but other industries are struggling right now,” David Underwood said. “And I’ve heard some companies talking about layoffs. They’re just not going to be able to sustain this much longer unless the economy picks up significantly.”
The panel members agreed there is still a lot of economic uncertainty, and the revenue estimate could change significantly if businesses close down again during a future spike in virus activity.