The Iowa legislature will have an additional $120 million to spend than previously thought according to projections from a panel of state budget experts. The three member Revenue Estimating Conference (REC) today forecasted a nearly 3% increase in tax collections this year and a 4% increase next year.
REC member Holly Lyons, the Director of the Legislative Services Agency, says automobile sales, housing and construction are all improving but still have a long way to go. “The U.S. and Iowa economy continue to show signs of modest improvement and while that’s encouraging, the pace needs to quicken up a bit,” Lyons said.
“The reality is that the positive signs are compared a very low 2009 and while we’re encouraged, it is going to be a very long climb out of the hole and back to the pre-recession levels.” The REC predicts the state will collect more than $6 billion in taxes next year. That’s $85 million more than the last estimate in October.
The chair of the House Appropriations Committee, Scott Raecker, a Republican from Urbandal, says that’s good news, but it won’t eliminate the need for budget cuts. “It does not fully answer the $1.3 billion gap of built in expenses, but about halfway. We will continue to need to have an open process where we get Iowans’ input on what savings and efficiencies we can find in state government,” Raecker said. “What are things we may be doing that are good but not necessary?”
Raecker said House Republicans will consider reducing everything from the state vehicle fleet to funding for youth anti-smoking programs. Senate Democratic Leader Mike Gronstal says the additional revenue is helpful but not enough to replace the federal stimulus money used to balance last year’s budget.
“While it’s good news, it does not by a long shot solve all of our problems and we’re going to struggle through a very challenging budget year,” Gronstal said. Gronstal says Iowa’s revenue picture is better than most states.
Raecker predicts the legislature will have to cut up to $700-million worth of proposed spending to balance the budget.