KDSN RADIO News
Big dip in Iowa tax revenue during state’s last fiscal year
The governor’s budget office has released a brief report to close the books on the state fiscal year that ended in June, and it shows that state tax collections dropped significantly.
Republicans say the 8% drop in state tax revenue was expected after Governor Reynolds approved five tax cuts over a six year period. The state’s individual income tax dropped to a single rate of 3.8% this past January. Total tax revenue for the state budget year that ended in June was far less than a panel of experts had predicted in March.
Democrats like House Minority Leader Brian Meyer of Des Moines say the state is in a “fiscal death spiral.”
“We are in serious trouble,” Meyer said. “I’m not sure the Republican leadership and the governor fully understand what is about to happen.”
Republican lawmakers say they’ve kept the state budget lean over the past few years and built up enough state reserves to tide the state over until the tax cuts spur economic activity and tax collections rise.
“We have reserves that eventually will run out,” Meyer said. “I don’t think the economy’s getting any better, I don’t think the ag economy’s getting any better, and it’s going to be a very difficult couple of years.”
Senator Janet Petersen of Des Moines, the top Democrat on the Senate Appropriations Committee, agrees.) “We knew at the end of the last legislative session that Republicans were taking Iowans on a deficit spending trip, really with no end in sight,” Petersen said, “and the picture has gotten worse, not better.”
Senate Majority Leader Mike Klimesh said Republicans have carefully budgeted to ensure the state is in a strong fiscal position and the state has “healthy reserves” that will withstand changing situations.
The Iowa Department of Revenue released a spreadsheet yesterday with a list of tax receipts during the last state budget year. The non-partisan Legislative Services Agency released a more detailed report last week. Next week, a three-member panel of financial experts will meet and issue a new prediction of state tax revenue.
