State budget revenue grows, but Branstad urges discretion

DES MOINES - State tax revenues are projected to grow by nearly 5 percent, giving Gov. Terry Branstad and Iowa lawmakers an additional $340 million to use in planning the next state budget.

But a top official in the governor's administration remained cautious, saying it will be a tight budget as Medicaid costs continue to rise and the state honors previous commitments made for tax relief and education reform.

The state's tax revenue estimating committee on Friday said the state will take in more than $8 billion in total tax revenue and, after refunds, count roughly $7.2 billion in tax revenue for its fiscal year 2016 budget.

Nonetheless, the purse strings must remain tight, Department of Management director David Roederer said.

'(The revenue increase) will be enough to cover the out-year commitments, but it's going to take some belt-tightening in order to get through in FY15, but also in FY16,” Roederer said. 'When you have growth at 4 percent, you can't be spending at a rate that's up into 6 and 7 percent.”

Friday's was the final projection the Revenue Estimating Conference will make ahead of the legislative session, which begins in January. Branstad and state lawmakers will use the estimates as guidelines in budgeting for the next fiscal year.

'Our economy is showing strength, but also there's some signs of slowing down,” Roederer said. 'Our recommendation to the governor will be that he take that into account when he's preparing his budget.”

Branstad will take a cautious approach to his budget proposal, his spokesman said.

'Given the uncertainty created by the dysfunctional budgeting at the federal level, the governor believes Iowa ought to remain cautious while fulfilling our ongoing budget commitments like the historic teacher leadership program and property tax reduction backfill,” Branstad spokesman Jimmy Centers said in an emailed statement.