There were audible gasps from the crowd as a panel of experts dramatically lowered their prediction of state tax revenue yesterday. Their decision now forces the governor and legislators to cut about $130 million from the current year’s state budget and another $270 million from the preliminary plans for next year’s state budget.
Holly Lyons, a top administrator in the Legislative Services Agency, is one of the three members of the Revenue Estimating Conference — the panel of financial experts who make an official guess at state tax revenues. "Estimating general fund revenues in good times is difficult enough," she told the crowd, "but in these turbulent times that we have now, it’s really difficult."
Lyons offered a sobering assessment of the economy, concluding the recession may last ’til the summer of next year. "Unemployment claims continue to increase and they’re at an all-time high. We’re witnessing more layoffs. We’re witnessing reduced work hours and furloughs," Lyons said. "…I saw something (at www.economy.com) that said nationally, the jobless rate is not expected to peak until early or mid 2010, so we may not even be halfway through this recession."
The national recession is into its 15th month. The recession didn’t hit Iowa for a few months, but according to Lyons the state’s economy has been in recession for about 11 months because state tax revenue started to decline in April of 2008. "We started experiencing significant job losses last fall and so the question is: has the economy bottomed out?" Lyons said. "And in my opinion, no, I don’t think we’ve reached the bottom."
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