Craig Paulsen. (Photo from Governor’s office.)
A state panel is predicting tax payments being made to the State of Iowa will grow slightly more than they’d predicted three months ago.
The Revenue Estimating Conference cites the continuing increase in sales tax payments to the state, an indication of consumer confidence.
“The State of Iowa continues to be on very solid financial footing.” said Kraig Paulsen, the governor’s top budget advisor who is also director fo the Iowa Department of Revenue,” and I see no reason to expect that to change for the foreseeable future.”
Paulsen and the other two members of the Revenue Estimating Conference now predict total tax collections for the current state fiscal year will be 4.2% higher than the previous year, but will start to decrease after July 1 due to the tax cuts Republicans recently enacted. David Underwood, a CPA from Clear Lake, said there’s been two years of wage growth, but that seems to be leveling off in Iowa — and the war in Ukraine has injected uncertainty in the economy.
“I would suggest we not be too optimistic, given the current circumstances,” Underwood said.
Holly Lyons, director of the fiscal services division in the Legislative Services Agency, expressed a similar opinion.
“As long as employment numbers continue to improve, tax revenue growth should remain positive,” Lyons said. “The headwinds facing the economy I mentioned at the December meeting still exist, it just seems a little more turbulent now.”
State tax collections over the past eight months are running 7,8% ahead of the same period in the previous fiscal year. The panel expects that pace to decline over the next few months, but remain in positive territory.
Republican lawmakers and Governor Reynolds say the group’s analysis shows there’s room in the current fiscal year for the tax cuts they approved last week. Democrats say the report shows a large drop off in tax collections after July 1 that will make it hard for the state to meet its obligations.