A three-member panel of state financial experts estimate state tax collections will be nearly $415 million less than previously expected. This afternoon’s Revenue Estimating Conference action represents a more than seven percent reduction in their estimate or guess of how much the state will collect in taxes for the current budgeting year.
Governor Culver has scheduled a news conference at three o’clock and he may announce an across-the-board cut in state spending. Dick Oshlo, the governor’s budget director, is one of the three members of the panel that met at one o’clock this afternoon.
“One thing that we at the Department of Management have been concerned about is the drop off in September, generally, but more specifically corporate income tax,” Oshlo said. “We think it was alarming and we’re concerned about what that portends for the rest of the year.”
Oshlo, however, did not indicate how deep a cut Culver might order in response to the “alarming” tax data.
Legislative Services Agency director Holly Lyons is the legislature’s representative on the Revenue Estimating Conference. “What we’ve witnesses since last March, what looked like might be a mild Iowa recession turned into a significant and severe recession, not just for Iowa, but for all states,” Lyons said. “The national economy has shown some signs of recovery, but the Iowa economy — but for a few economic indicators — has not.”
David Underwood, the third member of the Revenue Estimating Conference, recently retired from a business in Mason City where he served as the company’s chief financial officer.
“I think what all of us have been surprised by is the depth of job loss in Iowa,” Underwood said. “We’re approaching the 50,000 employees in the non-farm employment numbers.”
Democratic legislative leaders issued a statement this afternoon, saying they would work with fellow Democrat Chet Culver to “ensure” the state budget is balanced. Senate Democratic Leader Mike Gronstal said: “It’s clearer than ever that the aftershocks of this deepening national recession will require quick action to balance the current state budget.” House Speaker Pat Murphy, a Democrat from Dubuque, said Democrats would work to try to maintain state services to “schoolchildren, older Iowans, unemployed workers and others.”
Senate Republican Leader Paul McKinley of Chariton says it’s apparent state spending must be cut significantly. “It should come as a surprise to nobody that has watched what has happened over the past three years — spending beyond our means. This is the result of irresponsible fiscal behavior on the part of an administration and a (Democratic) party,” McKinley says. “We’re reaping the benefits of what they’ve sown.”
Hear the entire meeting on revenue estimates here: REC meeting. 22:30 MP3