Iowa Panel Estimates 3.7% Revenue Growth In Next Fiscal Year
Iowa’s revenue forecasters estimated Friday that Gov. Kim Reynolds will have an additional $296 million to craft a state budget proposal for fiscal year 2022 that starts in July.
The Revenue Estimating Conference predicted Iowa’s revenue will grow 3.7 percent in the next fiscal year compared to the current fiscal year, to a total of $8.26 billion. But the panel members said there is still much of the same economic uncertainty as when they met in October.
“I was hoping for a bit more clarity by the time of this meeting,” said Holly Lyons, fiscal division director of the nonpartisan Legislative Services Agency. “But we just don’t have it. Most of what we’ve learned just muddies the water and adds more uncertainty: the third surge in the virus, unknown timing of the vaccine rollout, and gridlock on federal stimulus.”
Lyons said the nearly $5 billion in pandemic relief Iowa received from the federal government is keeping the economy afloat, and more is needed to sustain economic recovery.
“I would describe our economy as walking to a level where we were prior to the pandemic,” said Dave Roederer, director of the Iowa Department of Management. “But eventually we need to be running to get to where we want to be.”
The panel also revised its estimate for revenue growth in the current fiscal year from -0.2 percent to 0.5 percent. Roederer said it’s unlikely that lawmakers will have to cut the current budget. Many other states saw a major drop in revenue in 2020.
The next revenue estimate will come in March, and lawmakers will use the lower of the December and March estimates to finalize the state budget.
The chairman of the Iowa House Appropriations Committee attributed Iowa’s relatively good financial position to House Republicans’ “responsible budgeting practices.”
“While things currently look positive, we don’t fully know what sort of future impacts the pandemic will have on Iowans’ pocketbooks, our economy, and the state budget,” said Rep. Gary Mohr, R-Bettendorf. “With that kind of uncertainty, we must proceed with caution and resist the urge to spend every last dollar the state collects.”
The top Democrat on the House Appropriations Committee said these “status quo” revenue projections don’t tell the whole story.
“Iowa has regained just half the jobs lost due to COVID, and some individuals have dropped out of the workforce for reasons like child care or long term disruption to their job,” said Rep. Chris Hall, D-Sioux City. “With an unprecedented amount of federal dollars keeping the state’s economy afloat and uncertainty about when the pandemic will end, lawmakers should proceed with caution.”
The 2021 legislative session is scheduled to start Jan. 11, and Reynolds is scheduled to present her budget proposal Jan. 12.