Good news on Iowa’s finances renews calls for tax cuts

DES MOINES - Iowa's state finances remain on steady ground despite the ongoing COVID-19 pandemic, and lawmakers should need no significant course corrections as they craft the next budget, according to projections issued Friday by the state's budget estimating panel.

Some statehouse Republicans used the good financial news to renew calls for state tax cuts.

The three-member panel projected Iowa will have an $8.4 billion state budget in the fiscal year that begins July 1.

That's a slight increase from the $8.3 billion the panel had projected at its December meeting, and 3.8 percent growth over the current fiscal year despite the pandemic's toll.

The state panel, called the Revenue Estimating Conference, is comprised of one appointee each from the governor's administration, the state's nonpartisan fiscal and legal analysis agency, and the public.

'(Iowa's) economy has been remarkably resilient to the COVID-19-induced recession, largely because our primary industrial sectors are manufacturing, finance and insurance, and agriculture. And those sectors were not as vulnerable as the service sectors,” said Holly Lyons, a panelist from the state's Legislative Services Agency.

In statements about the latest projections, Gov. Kim Reynolds and Iowa Senate Majority Leader Jack Whitver, both Republicans, called for state tax reductions by way of eliminating economic triggers that were put in place in 2018 - also by Republicans - to ensure the reductions were not enacted until the state budget was sufficiently healthy.

'Today's forecast shows that Iowa's economy is strong, and we can make it even stronger by ensuring that our historic 2018 tax cuts are fully implemented, giving Iowans certainty that they'll see more in their paychecks,” Reynolds' statement said. 'We can easily do that by removing the unnecessary triggers, which are no longer needed and only stand in the way of our future growth.”

The Iowa Senate this past week approved - on a bipartisan, unanimous vote - legislation that would eliminate the triggers and enact the tax cuts. The bill now is in the Iowa House, where the leadership has taken a more wait-and-see approach.

'Thanks to a decade of responsible budgeting by Iowa House Republicans, Iowa's financial position continues to look strong and our budget has shown great resilience even in the face of a global pandemic,” Rep. Gary Mohr, R-Bettendorf and chairman of the House budget committee, said in a statement. 'Responsible, conservative budgeting is what got us here. We will continue with that approach as we address the state's budget for Fiscal Year 2022.”

The panel also projected an $8.7 billion state budget for the ensuing fiscal year, which starts July 1, 2022. That would be a 4.5 percent increase over the previous fiscal year, if the panel's projection proves accurate.

Rep. Chris Hall, D-Sioux City and the top Democrat on the House budget committee, in a statement attributed the state's fiscal health to Iowa's economic resilience and boosts in vaccinations and federal pandemic relief - giving credit to Democratic President Joe Biden's administration.

Hall also accused the Reynolds administration of attempting to inflate projections in order to justify the tax cuts the governor desires.

'The partisanship displayed at today's REC meeting made for a spectacle,” Hall said in a statement. 'The Revenue Estimating Conference exists to provide the legislature and citizens of Iowa with an objective view of the state's economy and budget. Today, it was apparent the governor's office was coaching budget numbers for political gain and to trigger tax cuts.”

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