A three-member panel of financial experts has concluded the state’s economy is on the rebound — and the group predicts the state will collect nearly $50 million more in taxes from now through the end of June than previously estimated.
Legislative Services Agency director Holly Lyons is one of the three members of the State Revenue Estimating Conference. Lyons says the economy bottomed out about this time last year and things are on the upswing.
“We’re still climbing the hill,” she says. “We haven’t plateaued and we’re not on the downside of that hill.”
Iowa Department of Management director Dave Roederer — another panel member — also sees “encouraging” signs in the state’s economy.
“The good news in all of this is we’re not sitting here talking about how big a reduction we’re going to have in the economy,” Roederer says.
However, Roederer worries rising gas prices may dampen economic growth.
“The other statistic that bothered me somewhat was that consumer confidence remains at pre-recession levels. That has not bounced back yet,” Roederer says. “Consumers are still nervous.”
The third member of the revenue estimating group is David Underwood, a retired C.P.A. from Mason City. Underwood sees the economy in recovery mode, but he considers it tenuous because while wages are starting to increase and workers are getting more overtime pay, there haven’t yet been huge gains in hiring.
“The farm economy continues to remain pretty strong and the estimates that I’ve seen for the current year, anyway, are continued strength in the farm economy which has really helped Iowa a lot during this recession because it’s the one part of the economy that did hold up rather well,” he says, “and supported our manufacturing of the farm-related items as well.”
Underwood and the other two members of the Revenue Estimating Conference predict the state will collect $48.6 million more in taxes from now through June 30th. Legislators won’t be able to spend that money, but Republicans are pressing to put the money that remains unspent at the end of the state budgeting year into a new “Taxpayers Relief Fund.” Democrats dismiss it as a “slush fund” to provide tax breaks for big corporations.
The Revenue Estimating Conference predicts state tax collections in the 12-month period that begins July 1, 2011 will be 5.7 percent higher. It means the group added about $38 million more in tax revenue to its estimate of tax revenue for state fiscal year 2012.