State faces another budget cut in the millions

A panel of state financial experts says Iowa’s economy is still in a “no growth” phase, and lawmakers will have to trim the state budget by at least 60-million dollars. Legislative Services Agency director Dennis Prouty says the Governor and legislators have a few options. Prouty says they could have a special session to develop a list of cuts in the state budget, or the Governor could order an across-the-board cut in the state budget. Prouty, who is a member of the panel that tries to predict state tax revenues, says the Iowa economy just hasn’t turned the corner.Prouty says Iowans are paying less in income taxes and are buying less, which means state sales taxes are down, too. David Underwood, an accountant from Mason City, sits on the revenue estimating panel with Prouty and he says Iowa’s in a “no growth” period. Underwood says at best, there’s been a “reduction in the decline” which means the economy may just now be starting to bottom out. He says Iowa’s economy tends to lag any upturn in the national economy. Underwood says the Iowa economy isn’t exactly rosy but it is “less dreary.” Holmes Foster, a retired banker who is the other member of the State Revenue Estimating Conference, says there’s a sort of “prevailing pessimism” on the panel which has been criticized for recent misses in its guesses of state tax collections. Foster says as far as the economy’s concerned, nothing has really changed. He says the panel may have been a little “over-optimistic” in its earlier forecast of state tax collections.