Reynolds weighing state budget options as revenues falter

DES MOINES - Gov. Kim Reynolds said Monday she closely will be watching state tax collections and conferring with financial experts on the best course of action - including a call for a special legislative session - if faltering revenues bring about a budget shortfall for the current fiscal year.

'We are monitoring this daily. It fluctuates daily,” Reynolds told reporters when asked at her weekly news conference about lower-than-projected May receipts during the biggest month of the year for tax collections. 'We've not made any decisions at this point on what we're going to do. We're going to look at all the options.”

Iowa's rocky path to the June 30 conclusion of the current fiscal year has been marked by state revenue estimators three times downgrading their expectations. On Monday, tax collections were running only about 1 percent over last year - with less than a month to go on a budget built around a projected increase of 2.8 percent and an ending balance of $1.7 million.

The latest monthly revenue report issued by the Legislative Services Agency indicated the state treasury took in $966.3 million in gross tax receipts in May. However, that was 6.2 percent below the $1.03 billion collected in the period the previous fiscal year. Coupled with a higher demand for tax refunds this year, it left net revenues lagging significant below the projected target of $6.982 billion by June 30.

'We've had a very tough year,” Reynolds told reporters. Even so, she added, 'we are one of the few states that are seeing growth although it is not at the rate we had projected.”

The governor said she planned to meet with leaders of the state's management and revenue agencies later this week to discuss the ongoing state general fund situation and possible options to address a projected shortfall if that materializes. The books do not formally close on the fiscal 2017 budget until September after accruals, reversions and other issues are tallied.

Downgrades of the state general fund already forced former Gov. Terry Branstad to make $117.8 million in midyear spending adjustments that included $88.2 million in cuts and $25 million in fund transfers, and later to borrow $131 million from the state's cash reserve to keep the budget balanced with the promise of repaying the funds in two years.

State revenues for fiscal 2017 would need to finish $190.2 million ahead of last year to hit the 2.8 percent growth estimate from the Revenue Estimating Conference.

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