November 28, 2014

Panel sees no change necessary in state tax revenue prediction (AUDIO)

A three-member panel of financial experts is sticking with its previous prediction of state tax revenue for the coming fiscal year — a decision that means legislators don’t have to reduce the state budget plans they’ve  drafted. Holly Lyons, director of the Legislative Services Agency, is one of the voting members of the state tax Revenue Estimating Conference.

“In Iowa, most economic indicators remain positive,” Lyons said.

Iowa Department of Management director David Roederer said the group’s decision is a sign Iowa’s economy has been “steady” since the group last met in December.

“The economy is starting to move forward in the United States, but not at the pace that I think that anybody would feel real comfortable with,” Roederer said.

AUDIO of Revenue Estimating Conference March 20 meeting, 23:00

Roederer — who joked that he isn’t a member of “the optimistic society” — pointed to warning signs in the state’s agricultural sector, as corn prices are about 40 percent lower than they were a year ago. David Underwood, a retired business executive from Mason City, is another member of the state Revenue Estimating Conference and he cited concerns about falling corn and soybean prices as well as the virus that’s hitting the state’s swine industry.

“Where does that ripple stop? I’m sure that some of those people that make those big green tractors are going to feel that a little bit,” Underwood said. “I would imagine that in the grocery store we’re going to see higher prices which means less disposable income, which potentially means less sales tax collected by the state.”

Representative Chuck Soderberg, a Republican from Le Mars who leads the House Appropriations Committee, said the group’s decision to stick with the same tax prediction it issued in December incides the state’s economy is moving, but moving slowly.

“This will…allow us to move forward with what we have planned for the last couple of months,” Soderberg said.

Legislators appear poised to strike deals on key segments of the state budget for the fiscal year that begins July 1.  There will have to be some adjustment, however, in the budget for bricks and mortar projects. State gambling taxes are used to finance those projects and gambling revenue is now projected to be less than predicted in December.