From Rep. Sharon Steckman –
The Revenue Estimating Conference (REC) held their meeting last week. They set their revenue projection for FY 2012 at $5.975 billion. This represents a 1.3% increase from FY 2011 actual receipts plus transfers. This is a decrease of $17.4 million from the March 25, 2011, REC estimate for FY 2012. This decrease does not account for $106 million of tobacco tax money that was changed by the 2011 General Assembly from the general fund to the Health Care Trust Fund.
If there was a single word that summed up the REC’s opinion of Iowa’s current fiscal climate it was uncertainty. Holly Lyons of LSA noted that while receipts finished ahead of last year, the receipts did not finish as far ahead as hoped. In addition, she noted that the economy now seems to be faltering, due in part to uncertainty in the housing market, doubt about what Washington will do for a jobs bill, higher unemployment, and slow sales tax receipts. REC member David Underwood noted that a review of current economic reports indicates fears that the economy will slip into a double dip recession, although there are indicators, including the strength of Iowa’s ag based economy, that the recession will be short and shallow.
Estimate for FY 2013 an Increase of 3.9%
This REC meeting is the first opportunity the members had to provide projections for FY 2013. The members estimated net receipts plus transfers at $6.2099 billion. This represents a 3.9% increase over their FY 2012 estimate provided at this meeting. Roederer noted after the meeting, as reported in a Des Moines Register article, that over the last 20 years the state’s average annual revenue growth is around 4% per year. REC member David Underwood noted that unemployment benefits have not been increased and the federal government has changed the rules regarding IRAs in a way that may lead to LSA’s estimates for personal income taxes to be a little high.
New Accounting Method Accounts for Dip in Receipts
As mentioned previously, the estimates provided by the REC take into account $106 million in tobacco tax money that was moved by the 2011 General Assembly from the general fund to health care programs. If this money had been included in the general fund the projections provided at the meeting likely would have been slightly positive.