The Revenue Estimating Conference (REC) met on Friday and projected the number of tax dollars pouring into the state’s coffers will continue to increase for the next fiscal year (FY 2022). Friday’s estimate predicts Iowa will collect $8.266 billion, an increase of $296.4 million over the current fiscal year (FY 2021) estimate.
ITR Vice President Chris Hagenow said, “Today’s estimate shows the resiliency of Iowa’s Economy during the COVID-19 pandemic. While other states make dramatic budget cuts, the leadership of the Governor and legislature have put our state in an enviable fiscal position.”
In 2018, the Iowa Legislature took on significant tax reform for the first time in decades. The bill was a good first step; however, much of the tax relief in that legislation was subject to revenue triggers that must be met before lower rates are enacted. These revenue triggers create a high bar that makes it uncertain when, or if, Iowans will see the final reduced rates promised by the legislation.
Understandably, triggers were used to protect Iowa’s budget from unpredictable revenue levels in the future and to ensure the state’s continued financial stability. The future, though, is here, and Iowa’s financial picture is promising. We now know that Iowa can responsibly have these new rates take effect. While Iowa’s tax picture has improved, so, too, has our state’s financial situation.
Hagenow added, “Strong economic growth coupled with spending discipline provides an excellent foundation for the legislature to move forward with additional tax relief. The Governor and legislature should confidently seize the opportunity to further boost Iowa’s economy and put money back in the pockets of Iowa taxpayers.”
During the upcoming legislative session, policymakers need to remove the revenue triggers, deliver the promised tax cuts, and look for additional ways to cut taxes.