The three-member Revenue Estimating Conference (REC) held its annual December meeting to revise state revenue projections for the current fiscal year (FY 2022) and to set the official revenue estimate for the next budget year (FY 2023).
The panel maintained its view that Iowa’s economy and tax revenue are continuing to grow, in spite of various challenges. State revenue collections have been “remarkably resilient” over the last two years and state GDP for the year is right now running at 7.7 percent growth rate.
Fiscal Year 2022 (Current) – The panel increased expected revenue for the current fiscal year to $9.0606 billion. When compared to FY 2021’s final revenue number, state revenue would be up 3.0 percent in FY 22.
Fiscal Year 2023 (Next Year’s) – For the new budget year, the REC is now projecting that General Fund revenue will be $9.2106 billion. This is the number that will guide the legislature in setting next year’s budget and the number we cannot exceed. This would be $150 million more in revenue when compared to the forecast for FY 2022. This amounts to a growth rate of 1.7 percent over FY 22.
Gaming Revenue: As for state gaming tax revenue, the state is expecting to collect $317.6 million in gaming tax each year, FY 2022 and FY 2023. These funds are deposited into the Rebuild Iowa Infrastructure Fund.
Challenges: Iowa’s economic outlook would be even stronger if the state was not facing the economic headwinds of growing inflation and supply chain issues that are the hallmarks of the Biden economy, as well as continued challenges from the COVID pandemic and the state’s continuing need for more workers. While the state has added 27,000 jobs over the past year, Iowa still has 64,000 unemployed Iowans and over 100,000 job vacancies. The panel noted that at current pace, it will still take the state two more years to reach pre-pandemic employment rates.
Priorities for the Session
Balanced Budget – We will focus on balancing our budget just as we have done the past 9 years, keeping spending under control and making sure the budget is stable, predictable, and sustainable. We will basically manage the taxpayer money the same way you do your own budgets in your home or business. Guiding principles will be spending within our means, not using one-time money for ongoing expenses, not overcommitting and then wind up under-delivering, and not intentionally underfunding programs in order to be able to say we balanced the budget. Budget priorities will be education, Medicaid, public safety, skilled workforce, broadband, mental health, and soil conservation and water quality commitments. No matter what, there will be always be more needs and requests than the taxpayers for state government can fulfill.
Taxes – We will build on the income tax cuts, repeal of the inheritance tax, and the repeal of the mental health property tax levy all passed last session. Iowa’s 2 “Rainy Day” funds are filled to the limit required by law. In addition, the Taxpayer Relief Fund (where excess revenue goes) has accumulated over $1 billion due to strong revenue collections. This means the state of Iowa is taking in more money than it needs. It amounts to an “overcollection” of taxes from the taxpayers and our priority is to return it to Iowans. We will look at any worthwhile one-time money projects that may be needed but our primary goal is to give back this money to the taxpayers and find the best way to lower taxes for all Iowans. Money in Iowans’ pockets is the best way to stimulate the economy.
Workforce – Iowa’s economy has 64,000 unemployed Iowans and 110,000 unfilled jobs. We will be working with the governor on more ways to strengthen our workforce, such as building on Future Ready Iowa which helps get young people into the workforce and focusing on job skill training for inmates being released from prison. More incentives for housing for the workforce are also being looked at. Demographics play a big part in this problem because if it were not for abortion we would have roughly between 40,000 – 60,000 more Iowans of working age available for those jobs that are looking for people.
Broadband – We will continue to invest in incentives to build out broadband services into rural areas, unserved and underserved, as that is critical for the success of rural economic development.
Parental Choice in Education – We will continue to work to expand parental choice in education, building on what we did last session. Last session we required schools to offer an in-person learning option, expanded the charter school program, expanded the tuition & textbook tax credit and teacher expense deduction, required free speech training, and banned race-based stereotyping and political bias from being taught in our public schools. Some schools are driving the school choice issue by digging in against efforts to get rid of race-based stereotyping and now recently against parents’ efforts to get rid of pornographic materials from schools. They are not helping by being unresponsive to parental concerns.
Other – There are many other issues that I am urging that we address:
- COVID Vaccine Mandates – With the 6th Circuit Court weighing in in favor of Biden’s COVID vaccine mandate for companies of 100+ employees, Governor Reynolds and other states and business groups have asked the U.S. Supreme Court to intervene. We will be monitoring this to find the best pathway forward to protect the 4th Amendment right of Iowans to be “secure in their persons” regarding choice of health care treatment.
- Religious Liberty – We still need to do more to protect the rights of people to live and work according to their beliefs without fear of punishment by the government, which includes the 1st Amendment freedom of speech and religious freedom.
- Pornography – We need to address the issue of pornography as it is totally pervasive now in society, especially on the internet, destroying children, marriages, and families virtually unhindered.
- Big Tech Censorship – We should do what we can at the state level to protect citizens’ 1st Amendment free speech rights on social media.
- Election Integrity – We need to build on the measures passed last session to protect our elections and now address the cyber side of election integrity and take stronger measures to protect Iowa’s election system from outside interference.
- Private Funds for Elections – We should address the threat of private funds being given to selected county or city governments to be used for their election expenses.
- End the Disaster Emergency – It is time to end the state of public health disaster emergency so the basis for restrictions on the rights of citizens, families, businesses, and churches is removed. Emergency law needs to be updated to include greater protections for these rights.
- Women’s/Girls’ Sports – We also need to preserve female sports by ensuring women’s and girls’ sports teams are based on biological sex, as leaving female sports open to biological males does nothing to help those who struggle with sexual confusion but instead provides the basis to threaten women’s and girls’ opportunities for titles and scholarships.
There are many other concerns that I and others are working on that are important but for lack of space I did not cover those. Please feel free to contact me if I did not cover something of concern to you.
I am looking forward to the many challenges and opportunities that lie ahead in the coming legislative session!
