The three-member panel that sets the official estimate of state tax revenue has issued a new assessment that highlights the slow-growing economy.
“It’s like when you go to the doctor for your annual physical and the report from the doctor is ‘unremarkable,'” said Legislative Services Agency director Holly Lyons, one of the three members of the State Revenue Estimating Conference. “It doesn’t mean that it’s bad news, but it doesn’t mean that it’s outstanding, either.”
Lyons and the other two members of the group believe state tax revenues will grow by just $25.4 million more in the current state fiscal year which ends June 30. The panel raised its estimate for the following year by just $41.7 million. That’s a very small component of the $6.2 billion in expected state tax collections. According to Lyons, the “bright side” is that the economy did not slide back into recession.
“While Iowa tax revenue growth has been positive since October, the growth percentages are low compared to other economic periods of expansion, with individual withholding tax deposits — and that’s one of the key indicators we look at — only up 2.8 percent since June,” Lyons said. “In periods of good economic growth, this percentage would be in the five to six percent range.”
Iowa Department of Management director Dave Roederer said business owners tell him they’re uncertain about what impact Europe’s finances may have on the world economy, and whether policymakers in Washington, D.C. can iron out their differences.
“For an economic turn-around of any significance, they have to feel that there’s a little more certainty,” Roederer said.
David Underwood, a retired business executive from Mason City, sees “softening” in the world economy that may hit Iowa’s agriculture and manufacturing sectors.
“What that really points to is not necessarily a weakness in Iowa’s economy in what’s going on,” Underwood said, “but really the potential reduced revenue from exports.”
With today’s decision from the state revenue estimating conference, state legislators and the governor now have a target number for next year’s state spending plan.
AUDIO of opening statements from Lyons, Underwood and Roederer.