The experts that make predictions on state revenue today revised their estimates of state tax receipts down by 38 million dollars — meaning the legislature will have little money to spend. The Revenue Estimating Conference says income and sales tax receipts will grow by only 1.2% this year — compared to the April projection that had been closer to 2%.
Department of Management Director Charlie Krogmeier says there’s no question the Iowa economy is slowing down. Krogmeier says, "We are not as slow yet as the national. But we’re moving downward. I don’t think we’ll get as low as the national economy is."
For next fiscal year, they’re predicting essentially no growth at all. That compares to nearly 8% growth last year. Retired business executive David Underwood is on the panel and says Iowa’s manufacturing sector is slowing down.
"The manufacturers that I talk to, they’ve been seeing this for several weeks, and in some cases, for several months," Underwood says. The report says exports of Iowa products have been protecting the state from the slowing economy elsewhere. That’s now softening, and prices for Iowa farm products are dropping. They say a construction boom in eastern Iowa following the floods may help the state’s economy.
Iowa Governor Chet Culver, a Democrat, issued a statement after the Revenue Estimating Conference downgraded its revenue projections. Culver says in his statement he understands Iowans are concerned about the national financial situation and "As people across the state and around the world face tough economic times, it is critical that government is fiscally responsible and living within its means, just like Iowa families must do each and every day."
Culver says the state has "practiced strong fiscal management and good financial operations in Iowa, which has led to reserve funds of more than 600 million dollars and an increase in the state’s bond rating". Culver says because the state has been prudent with our finances, revenue reductions can be absorbed in our year-end budget balance.
Culver says he will continue to monitor revenue estimates and says if things change he won’t rule out midyear budget cuts. The governor says he has directed all the departments to submit status quo budgets for the 2010 fiscal year.
House Republican Leader Christopher Rants of Sioux City says the state budget is in much worse shape than the governor is saying. Rants says there’s about seven million dollars in new money for the next year, but there’s 560-million dollars in new expenditures that the state doesn’t have the money to pay for them.
Rants says Democrats are trying to downplay the problem. "It is time for the governor and the Democrats to quit running around the state telling everybody ‘everything’s is fine, everything’s is fine’, it’s not fine, everybody on mainstreet, every shop keeper, every farmer every restaurant owner, everybody knows, it is not fine," Rants says. Rants says legislators have to face up to the problem.
Rants says it’s probably the biggest fiscal challenge facing them since 1993 and he says it’s time for people to be honest on the campaign trail about how they’re go fix the problem. Rants says Republicans will stop the pork barrel spending and make the legislature live within its means.
Rants says,"The Democrats spent a billion dollars in the last two years, and we didn’t have the revenue to pay for it." Rants says they have to reign in the "out of control spending."