Revenue Estimating Conference
The Revenue Estimating Conference forecasted Iowa’s revenues for fiscal years 2024 and 2025, predicting a slight decline but emphasizing a strong overall budget. Governor Kim Reynolds is required to use this estimate as the basis for the budget she submits to the Iowa Legislature in January.
A broad tax cut package passed by Republicans and signed by Governor Reynolds in 2022 is largely responsible for the continued dip in state income. Iowa Republicans have pledged to introduce legislation to further tax cuts in the 2024 legislative session.
Iowa’s state budget must remain within the confines of state revenues and cannot legally exceed 99% of what the state takes in. The Republican-led Legislature is pointing to a $1.83 billion budget surplus from fiscal year 2023, $902 million in reserves, and $2.74 billion in the Taxpayer Relief Fund as evidence that taxes can be cut even further. The budget has appropriated less than 90% of anticipated revenue for the past few years, which has allowed the state to establish these reserves.
In an interview, Senate Majority Leader Jack Whitver said, “Hundreds of millions of dollars in tax cuts have helped Iowans keep more of their money to fight inflation and increase the reward for their work and investment. Projected revenues are expected to exceed state spending by $1.233 billion this year, setting the stage for Senate Republicans to seek more income tax relief, while implementing another conservative state budget.”
Democrats have criticized the tax cuts as a giveaway of public dollars. Senator Janet Petersen, ranking member on the Senate Appropriations Committee said in a statement, “As we face declining state revenues, it’s troubling to hear that Gov. Reynolds and statehouse Republicans are concocting yet another round of multi-million dollar, multi-year tax giveaways for special interests and wealthy Iowans.”
Kraig Paulsen, director of the Iowa Department of Management and chair of the Revenue Estimating Conference, said that economic growth continues to support healthy employment and has stymied the predicted economic recession.
