- Associated Press - Thursday, December 10, 2015

DES MOINES, Iowa (AP) - It’s time for caution in state budgeting, as income for farmers is dropping primarily due to low commodity prices and slowing the state’s economic growth, budget experts said Thursday.

Members of the Revenue Estimating Conference said state revenue for the fiscal year that began July 1 is expected to grow to $7.04 billion. That would be about 3.3 percent more than the previous year but nearly $9 million less than the group’s estimate in October.

The group estimates 4 percent revenue growth for fiscal year 2017 that begins next July, or total revenue of $7.33 billion. That is $21.5 million less than the group estimated in October.

Rep. Al Green asks House to consider Donald Trump's 'racism' in drafting articles of impeachment
'Fake outrage': George Conway rips Melania Trump for amplifying 'nothingburger' Barron reference
'Painfully ironic': Trump, Mexico squash border surge after Democrats balk

Department of Management director David Roederer said state economic growth is slowing to a more normal pace after several years of faster growth, fueled by high commodity prices that caused rising farm incomes. A few record crop years produced an abundance of corn and soybeans, which pushed prices below the cost of production, meaning many farmers will lose money on crop sales. Farming income accounts for about a third of Iowa’s economy, and about half of the state’s revenue comes from personal income taxes.

“Until that gets turned around we’re going to have slow growth in the Iowa economy,” Roederer said. “We’re continuing to grow which is a good thing but growing at a moderate to slow pace rather an exuberant pace.”

Roederer sits on the three-member panel with Legislative Services Agency director Holly Lyons and an independent member, Mason City economist David Underwood. They are tasked with looking at a broad array of economic signals and coming up with revenue figures.

State revenue is made up of personal and corporate income taxes, sales and use taxes and other sources.

State law requires Gov. Terry Branstad and the Legislature to use the REC’s December estimate to draft the next fiscal year’s budget, unless the following March estimate is lower, in which case lawmakers would have to use that lower estimate.

Branstad plans to present his budget proposal to lawmakers on Jan. 12, the second day of the legislative session.

“Today’s revenue estimates mean that the Iowa Legislature can maintain our investments to expand Iowa’s middle class during the 2016 session,” Senate Appropriations Chairman Bob Dvorsky, a Democrat, said in a statement.

Rep. Pat Grassley, a Republican, said the estimates mean tight budgeting.

“We will continue to budget like Iowa families and businesses by not spending more than the state collects…” he said.

Sign up for Daily Newsletters

Manage Newsletters

Copyright © 2019 The Washington Times, LLC.

Please read our comment policy before commenting.


Click to Read More and View Comments

Click to Hide