Governor Terry Branstad and Lt. Governor Reynolds.

A critical meeting at the capitol tomorrow will determine whether the current year’s state budget needs to be cut more and whether legislators will have to dramatically scale back their tentative plans for the next year.

“That could definitely happen,” State Representative Pat Grassley, chairman of the budget committee in the Iowa House, says of looming budget cuts.

The reason for the uncertainty? State tax collections are running far behind expectations, barely two percent ahead of a year ago.

“Although the revenue news is fairly grim thus far for fiscal year 2017, the bulk of tax year 2016 income tax processing remains and there are reasons to believe the tax filing season, when completed, will be positive for revenue growth,” Jeff Robinson, a fiscal analyst for the Legislative Services Agency, said last week in a video address to lawmakers.

Although the charts show the state of Iowa has collected $88 million more in taxes during the past eight months, Robinson said there are processing issues that make revenue growth over the previous year far, far lower — in the range of only $8 million.

With just three months left in the state’s current budgeting year, Lieutenant Governor Kim Reynolds suggests any new spending cuts will likely lead to layoffs in state agencies.

“There’s just not a lot of other areas that we can cut,” Reynolds told reporters last Wednesday.” We’ll just have to wait to see what the REC says and go from there.”

The Revenue Estimating Conference is a three-person board that sets the official estimate of future state tax revenue. Their estimates govern how much state officials may spend. State agencies are already implementing the agreement legislators and the governor made last month to cut $118 million in spending, to avoid a deficit.