State officials have made no change in the official estimate of state tax revenue during the current budgeting year.
The governor and legislators will still have to cut at least $35 million from the current state budget soon, based on a previous tax revenue estimate set in October.
A three-member panel met this afternoon to discuss the state’s economy and set their official prediction of future state tax collections. Retired businessman David Underwood of Mason City said the farm sector is worrisome.
“Somehow or other our farmers enough reserves built up when prices were good that they were able to survive a couple of years of down commodity prices and fluctuations in cattle prices and hog prices,” Underwood said, “but just recently I’ve heard some of the bankers talking about farmers really in trouble now.”
Dave Roederer, the governor’s budget director, said agland values seem to have “stabilized” and he predicted the manufacturing sector is poised for growth.
“Manufacturing is starting to hire, both large and small (factories),” Roederer said. “…Manufacturing represents on a wage basis about 22-25 percent of the wage income that comes into the state, so that is one of the reasons I think that we are a little more positive.”
Legislative Services Agency diretor Holly Lyons sees little change in the U.S. economy this fall.
“Iowa revenues, while still growing, are disappointing for the first five months of the fiscal year,” Lyons said. “There is nothing, however, to indicate that the growth will turn negative, but growth is very slow.”
Lyons, Roederer and Underwood are members of the panel that estimates state tax collections. The group has come under fire for missing recent predictions, forcing legislators to vote to cut the budget and the governor to dip into the state’s reserves to ensure the last state budget didn’t dip into a deficit.
The governor’s budget director characterized the panel’s predictions this way today: “From my perspective, we’re very firmly on the side of we’re not sure what’s going to happen.”
Lyons offered a similar sentiment.
“Forecasting state revenues 18 months or more in the future is always risky and one this is certain: we know that we will be wrong,” Lyons said. “We will either be too high or too low.”
The panel is predicting tax collections will grow by four percent in the next state fiscal year. That’s $9.3 million less than the group’s October forecast.
AUDIO of Revenue Estimating Conference meeting, 27:00
Roederer told reporters after the meeting some or nearly all of the $98 million ending balance could be used to cover some of the expected shortfall in the current year’s state budget.