The three-member panel of economic experts today lowered the estimated state revenue by nearly $100-million  for the current fischal year. They also cut next year’s projected revenue by $130-million.

Department of Management director, Charlie Krogmeier says the numbers are not a surprise. "Iowa entered this recession a little later than the rest of the country but there’s no question that were in it. If you look at the leading indicator numbers that are put out for Iowa were dropping very rapidly, much more rapidly than the rest of the country. We haven’t hit bottom, I don’t think the country has hit bottom -hopefully sometime in the next twelve months we will and we’ll see some growth back out of it but I think it’s going to be a slow process," Krogmeier says.

Earlier this week Governor Culver announced $77-million worth of state budget cuts. Krogmeier says the new revenue estimates will require the governor and legislature to trim another 40 to 60-million dollars this year to balance the budget.

Governor Chet Culver issued a news release saying he will announce steps next week to reduce state spending by an additional $60 million, which represents one percent of the State’s General Fund revenues.

Here’s the Governor’s statement:

"When I announced more than $75 million in budget cuts and cost savings earlier this week, I reminded Iowans that our state is being hit on two financial fronts: a national economic recession and the natural disasters of last summer. Both events are having an impact on families, businesses and government across the state.

"At the same time, we cannot lose sight of the fact that Iowa has benefited from strong financial management. While bordering states are facing deficits that are measured in billions of dollars, Iowa has a record level of cash reserves, the highest possible bond rating, and a diversified economy.

"The budget savings that I announced on Tuesday, which included asking the legislature to de-appropriate $37 million for a new state office building, not only met our immediate needs but also anticipated today’s new estimates. However, we are going to need to find additional savings in order to reduce spending, maintain an appropriate year-end budget balance, and continue to be fiscally responsible.

"Next week, after carefully reviewing our options, I will announce additional steps to reduce state spending by $60 million, which represents one percent of our General Fund revenue. These savings will come from a combination of further administrative spending reductions, transfers of unused funds to the General Fund, and recommendations to the legislature for additional de-appropriations when they convene in January.

"As economic conditions have changed, my Administration has neither overreacted nor under-reacted, but has taken prudent steps to balance our strong fiscal management with the services Iowans need. As Governor, I will continue this approach, not only during this current fiscal year but as we head into what will likely be a very difficult budget year in 2010. But I am confident that, working together in a bi-partisan way, we will meet these economic challenges."

(Updated at 1:36 p.m.)

Democrats control both the House and Senate and House Speaker Pat Murphy, a Democrat from Dubuque, released this statement on the revenue estimates:

"We will take action in January to keep the 2009 budget balanced. There will be difficult decisions to make, but we will not balance the state budget on the backs of middle class families in these difficult times.

Last week, Governor Culver took the first step in tightening our belts, but there is more that must be done. When the Legislature convenes next month, we will keep the state’s fiscal house in order and provide more security for Iowans facing economic hardship and recovering from last summer’s devastating storms."

  Republicans also responded to the news with this statement:

"Democrats have put this state in a precarious position," said House Republican Leader Kraig Paulsen of Hiawatha. "At a time when the national economy was on it’s way down, Democrats increased state spending by over $2,000 per family, over the span of two years they’ve hired more than 2,600 new state employees, and loaded up budgets with pork projects for their preferred constituents. The only thing they have left to show for it is a gaping hole in the budget."

House Republicans stated when the Legislature reconvenes in January, they plan to protect the Cash Reserve Fund in order for the state to pay commitments on time and will oppose any attempt to raise taxes on Iowans. If the Economic Emergency Fund is tapped, it should only be used to help address the problems associated with the treacherous flooding and tornadoes that devastated Iowa communities this summer.

"In his original budget message to the Legislature, the governor called for a common sense approach to budgeting, not spending more than we take in and not using gimmicks," said Paulsen. "It’s time to stick to those principles, that’s what Iowans do and they expect nothing less from us."

The REC had previously met in October where they stated there would only be a net revenue increase of $7 million for 2010. Fiscal Services reports that $640 million of built-in (already approved) spending is on the books for FY 2010, which shows the budget is obviously out of balance.