After higher than expected tax revenue and a mid-year round of budget cuts, the final report on the recently-concluded state fiscal year shows a $127 million surplus.
The 12-month state fiscal year ends on June 30, but the books aren’t closed until September to account for last minute bills and tax payments.
Due to federal tax law changes, many Iowans have more tax-home pay. That extra income is subject to state taxes, which accounted for part of the higher-than-expected windfall. Tax cuts passed by Republican legislators and signed into law by Republican Governor Kim Reynolds this spring will start kicking in next tax season.
Another contributing factor to the surplus was the budget reduction plan Republican lawmakers approved in March. It pared about $25 million dollars from state agencies and shifted $10 million in gambling taxes to cover other state expenses.
Governor Reynolds says the final report on the most recent state budget shows the state’s economy is growing and the state’s cash reserves are full. A year ago, Reynolds had to borrow $13 million from those reserves to balance the state budget.
State tax revenue grew 4.5 percent during the 12-month state budgeting year that ended June 30, 2018.
Several state officials released written statements to Radio Iowa this afternoon and early this evening.
Republican Governor Kim Reynolds said: “We are striving to be fiscally responsible with your tax dollars, and I am proud to announce Iowa will end the fiscal year with a $127 million surplus.
“Our economy is growing, incomes are rising and our state’s budget is a reflection of that. But I’m never satisfied. I’m going to continue to push for policies that grow our economy, invest in education and affordable health care and maintain Iowa’s status as the #1 state in the country.”
Senator Joe Bolkcom (D-Iowa City), ranking member of Senate Appropriations Committee said: “The fiscal mismanagement and misplaced budget priorities of Governor Reynolds and legislative Republicans are still bad news for everyday Iowans.
“Last year, the Governor took a victory lap because she didn’t need the Legislature to have a special session to fix her budget mess.
“The Governor is cheering today because there’s still money in the state’s bank account. That would be great news if she and the Republican-controlled Legislature hadn’t slashed funding for job training and higher education, reduced protections for seniors and other vulnerable Iowans, and made health care less accessible for thousand of Iowans.”
Representative Chris Hall (D-Sioux City), ranking member of the House Appropriations Committee, said: “Iowans won’t be fooled by today’s press release from Governor Reynolds.
“Just a year ago, Reynolds illegally transferred millions and put $130 million on the state’s credit card.
“Earlier this year, Governor Reynolds and Republicans made $34 million in mid-year budget cuts for FY 2018 and raised tuition on Iowa students to pay for it. Today, we learned those cuts were made to pad the state budget for a press release in an election year.
“Iowans have had enough of the budget gimmicks, shell games, and tax giveaways that have left our education and mental health systems underfunded for the last eight years.”
Representative Pat Grassley (R-New Hartford), chairman of the House Appropriations Committee, tweeted the following statement: “Thanks to strong leadership from @IAGovernor, @IAHouseGOP, @IASenateGOP, Iowa ends FY2018 with 127 million surplus. Great budget management provides record education investment in FY2018 for IA schools. Stark contrast with what happened 10 years ago.”