Under the Golden Dome, Too

Caution Flags
With Halloween upon us next week, that means that the Holiday Season is right around the corner. Soon we will all be getting ready to spend time with family and friends over Thanksgiving and Christmas dinners as we head into the New Year. It’s hard to believe that we are only about two months away from 2016.
Last week the Revenue Estimating Conference (REC) held its October meeting where they projected how much revenue the state can expect to collect during the current fiscal year and next year. The REC consists of three members: one from the Legislative Branch, one from the Executive Branch, and a member from the public.
The REC projected that during the current fiscal year (FY16) the state stands to collect $7.054 billion, compared to the $7.175 billion that the group had projected earlier in March. That’s a reduction of $121 million from what we were anticipating. The panel cited the lagging farm economy and flat sales and use tax growth as the main driver for the drop in revenue.
The REC described the current revenue situation to that of an airplane hitting a patch of turbulence. The first few months of the current fiscal year have seen slow revenue growth, and as a reaction to that, they made a cautious estimate. Iowa’s economy is in relatively good shape. The state has low unemployment, encouraging wage growth, and a low cost of living, so I’m optimistic that state revenue is just experiencing a hiccup and will get back on track in the coming months.
Situations like this are exactly why House Republicans adopted our four principles for responsible budgeting:
We will spend less than the state collects;
We will not use one-time money to fund on-going needs;
We will not balance the budget by intentionally underfunding programs;
We will return unused tax dollars to Iowa’s taxpayers
Had the Legislature spent to the levels that Democrats were proposing last session, the state’s ending balance would have been depleted. Six years ago this month, Governor Culver made a 10 percent across-the-board cut in order to balance the budget because of unsustainable promises. Schools were forced to raise property taxes to cover the shortfall when their budgets had money stripped away at a moment’s notice. House Republicans do not want to return to those days, which is why we fight so hard to maintain our budgeting principles and manage Iowa’s budget like that of a family or business.
Additionally, the REC also made their first projection for next fiscal year (FY17). The committee estimated that the state will collect $7.348 billion in FY17, which would be an increase of $174.6 million compared to what was appropriated last legislative session. The REC will meet again in December to give the final projection before the 2016 session, which we will begin building the state’s budget off of. In the meantime, House Republicans will use this initial projection as a starting point to begin working through the budget, and will update accordingly in December.
            If you ever have any feedback or questions about the budget or other issues before us, please do not hesitate to contact me. I can be reached at linda.upmeyer@legis.iowa.gov or 515-281-4618.