By O. Kay Henderson (Radio Iowa)
State officials have reduced their prediction of state tax revenue for the current budgeting year by 46 MILLION dollars, but the governor’s budget direcor says there is no need to cut state spending plans for the next three months.
Iowa Department of Management Director Kraig Paulsen said officials have reserves to cover the gap. “The money’s there to meet those needs,” Paulsen a member of the State Revenue Estimating Conference, told reporters after today’s meeting.
Since July 1, there’s been a more than 8$ decline in the amount of taxes paid to the State of Iowa. The drop is due to the state income tax cut Republican lawmakers approved in 2024, along with federal tax cuts for corporations and for individuals who earn tips and overtime pay.Those changes were automatically triggered in Iowa’s tax code. “The state has $5.6 billion cash on hand,” Paulsen said during this morning’s meeeting, “…The reserve funds are full and the Taxpayer Relief Fund has a balance of $4 billion.”
House Democratic Leader Brian Meyer said it’s wrong for Republicans to cover that deficit by making withdrawals from the Taxpayer Relief Fund.”That fund should be used to lower property taxes in the state and other taxes in the state,” Meyer told reporters at his weekly news conference, “but they’re just raiding it to cover their budget mess.”
The State Revenue Estimating Conference has reduced its overall prediction for tax collections for the next state budgeting year. Jennifer Acton is direcctor of the Fiscal Services Division in the Legislative Services Agency and is a member of the panel that makes that tax prediction. She said most economic indicators in Iowa are positive, but gas prices are up considerably due to what’s happening in the Middle East and tariffs continue to be drag on the manufacturing and ag sectors. “We believe it is prudent to be cautious as we look to the future,” Acton said.
In January, Governor Reynolds proposed a nearly $9.67 billion budget for the next state fiscal year, a nearly 2% increase and $1.2 billion more than the state is expected to collect in taxes next year.
