A three-member panel of financial experts says Iowa’s economy appears to be “chugging along” and state tax revenues are likely to top $6.8 billion in the next fiscal year.
Legislative Services Agency director Holly Lyons says wages are growing at an “above average” rate.
“Other indicators, such as personal income, retail sales, the Consumer Price Index are all positive,” Lyons says, “and while none of them could be considered to be strong, there’s nothing to suggest an impending downturn.”
Lyons is one of the three members of the state Revenue Estimating Conference. The group today raised its estimate of state tax collections for the current fiscal year, which ends June 30, by $120 million. Lyons and the other two members of the panel predict state tax receipts will be 5.2 percent above the previous year.
“The economy is chugging along at a very modest pace,” Lyons said, “despite some pretty serious head winds.”
David Underwood, a retired businessman from Mason City who served on the Revenue Estimating Conference, sees the housing sector as a bright spot in the economy.
“Existing U.S. home sales hit a three-year high, which is really good,” Underwood says. “Builders are caught off-guard by a surge in demand for new homes which a lot of businesses in Iowa will jump on that because they have construction tied a lot to new homes around the country.”
Underwood os “more optimistic” about the economy than he was in December, because of the deal in congress that made many of the Bush-era tax cuts permanent.
“But still no surge in growth that I can see,” Underwood says.
Iowa Department of Management director Dave Roederer — the other member of the Revenue Estimating Conference — is the governor’s budget director.
“I think we are inching more on solid ground as far as our economy goes. I wouldn’t say that we’re rushing into it and I wouldn’t say we’re rapidly going into it, but we’re starting to move in the right direction,” Roederer says. “We’re seeing somewhat of a modest job pace, certainly not what we would expect coming out of a recession like this.”
According to Roederer, business owners have a “great reluctance to expand” due to the uncertainty about the federal health care reforms set to kick in next January. Roederer and the other two members of the Revenue Estimating Conference predict state tax collections in the next state fiscal year that starts July 1st to be three-and-a-half percent above the current year.
“A kind of a cautionary approach, but I also am not predicting a meteorite that’s going to strike the state either, so all in all we’re encouraged by what is happening in the economy,” Roederer says. “But it seems like every time we just get to the brink, where you think, ‘O.K., now we’re really just going to start growing quite rapidly,’ there’s some negatives that start holding us back.”
The financial experts did joke among themselves after hearing media reports about beer sales connected to the NCAA wrestling tournament in Des Moines, suggesting there might be a temporary surge in state beer taxes this weekend.