Financial picture for state gets worse with new revenue estimate

A three-member panel of financial experts today dug huge hole in this year’s state budget. The state “Revenue Estimating Conference” met this morning and reduced their guess of state tax revenue for the current fiscal year which ends June 30th. Holmes Foster, who’s a banker, is a new member of the panel, says it’s not an exact science, it’s rather a “very intelligent guess.”Legislative Fiscal Bureau director Dennis Prouty says their previous guess was off for a number of reasons, primarily because they under-estimated the amount of income tax refunds Iowans would claim. He says corporations are adjusting their sales and income taxes, which led to a bigger drop than he anticipated. He says when they made the estimate in December, he thought the economy was turning around, but then they had to make a downward adjustment in February. Then the receipts dropped in April and have continued to drop.It all means legislators will have to come back in special session, soon, to erase up to 203-million dollars of red ink in the present year’s state budget. Prouty says it’s hard to reduce spending any further, so there’ll have to be cuts and a look at other sources of money such as the economic emergency fund.In addition, lawmakers will have to make more cuts in next year’s budget plan, perhaps as much as 212-million. Iowa is among 41 states that’re cutting state budgets due to the recession and declining tax revenue.