A three-member state panel agrees the Iowa economy is headed in a positive direction, but the group cautions state tax revenue won’t quite rebound to pre-pandemic levels over the next three quarters.
Holly Lyons of the Iowa Legislative Services Agency said the pandemic and damage from the derecho as well as uncertainty about the election and another federal stimulus payments are all a drag on the Iowa economy.
“How do you adjust to an ever-changing situation where the new normal seems to be indefinite uncertainty?” Lyons asked this afternoon.
Lyons and two other members of the Revenue Estimating Conference predicted state tax collections will be down two-tenths of a percent in the current state fiscal year. David Roederer, the governor’s budget director, said there are “modest signs of strength” in Iowa’s economy, helped by the “unprecedented” $6 billion in direct federal aid to Iowa businesses.
“I think the key is at what pace will the economy reenergize and rebound from a pandemic that refuses to leave us or be vaccinated away,” Roederer said. “All wonder when our lives are going to get back to normal, but maybe better yet how are we even going to define normal.”
David Underwood, a CPA from Clear Lake, argued there’s reason for optimism.
“The adaptability of Iowa’s businesses and non-profit organizations to adapt to the new abnormal has just been tremendous,” Underwood said.
The group acknowledged losses in the restaurant, bar and hospitality industry, but cited increases in e-commerce, construction and spending to outfit home offices. The panel predicted state tax revenue will surge 4% higher in the next state fiscal year.