Panel predicts dip in Iowa tax revenue

By O. Kay Henderson (Radio Iowa)

Members of a key state panel say a recession would likely have a limited impact on Iowa’s economy. They’re predicting state tax receipts will decline by 1.9% in 2023 due to cuts in the top income tax rate for individuals and corporations as well as the end of state taxation of retirement income.

Kraig Paulsen is director of state agencies that oversee state tax collections and the state budget. He’s chairman of the Revenue Estimating Conference, which met late this morning.

“I continue to be optimistic that any downturn will be weathered and, at least in Iowa, it will be relatively shallow and short in length,” Paulsen said. “Overall, the state is in an incredibly strong financial position and is well situated to manage whatever future circumstances dictate.”

Paulsen and the other two members of the Revenue Estimating Conference predict the state will collect more than $10 billion in taxes during the current fiscal year, which ends June 30th. Jennifer Acton, a senior analyst with the Legislative Services Agency, is the new member of the Revenue Estimating Conference.

“Inflation appears to be slowing and, in addition, no key Iowa economic indicators are suggesting a downturn in the economy at this time,” said Jennifer Acton, a senior analyst with the Legislative Services Agency, who is the new member of the Revenue Estimating Conference.

Action pointed to the October increase in the Iowa Leading Indicators Index. It includes things like diesel fuel consumption, unemployment claims and data on hours worked in Iowa manufacturing plants.

“This would not suggest an economy on the verge of a downturn in the near future,” she said.

Acton, though, did say it’s an “especially difficult time” to predict the future.

“Inflation appears to be slowing While there are no telltale signs of a future recession, many economists indicate that the 2023 economy may have a difficult time,” Acton said. “Despite households being squeezed by high inflation and high interest rates, many economists indicate there are signs that inflation may be moderating.”

Senator Janet Petersen, the top Democrat on the Appropriations Committee in the Iowa Senate, said Iowa’s labor market continue to lag behind neighboring states and the panel’s “no-growth revenue estimate is yet another warning about Iowa’s economy.”


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