DES MOINES, Iowa -- The state's top revenue forecasters offered another sobering take on Iowa's finances, and that could mean another round of emergency budget cuts.
"Growth is disappointing," Holly Lyons, Legislative Services Agency Director and Revenue Estimating Conference member, said on Monday afternoon. "It is slow," she added as the three-member R.E.C. panel officially made its budget predictions.
The state's economy, while growing, is still not improving at the rate forecasters had hoped. So it appears Governor Kim Reynolds and the Republican-led legislature will now need to come up with $45-90 million in additional cuts before June or possibly transfer the money from the state's reserves.
Leaders already had to implement several rounds of emergency spending cuts last fiscal year and shift money from reserves to close the books.
The panel on Monday said farmers continue to struggle. Strong worldwide commodities production means ample supply, and some Iowa farmers are forced to sell goods at less than their cost of production. Members also talked of the strain a lack of skilled workers puts on companies and their abilities to create higher-paying jobs.
The R.E.C. forecasts growth of four percent for the 2018-2019 budget year (the state's fiscal year runs from July 1 to June 30th). That is a slight decrease from previous estimates.
Lawmakers must now use these latest projections to put together the next budget.
Governor Kim Reynolds' office put out a statement touting the state's financial management:
Iowa is 3rd best-run state in nation, according to new study
(DES MOINES) – Citing Iowa’s 17-year low unemployment rate, strength of the state’s pension fund, AAA credit rating and low poverty rate, Iowa has been named the 3rd best-run state in the nation, according to a 24/7 Wall St. analysis. That’s up three spots from No. 6 in 2016.
The study’s authors ranked states using four criteria: 2016 unemployment, pension funded ratio, credit rating and outlook, and poverty.
Here’s how Iowa fared:
- 2016 unemployment: 3.7% (10th lowest)
- Pension funded ratio: 85.1% (13th highest)
- Credit rating and outlook: AAA/stable
- Poverty: 11.8% (18th lowest)
The study said of Iowa:
“Iowa has one of the healthiest job markets in the country. Just 3.7% of the Iowa workforce were unemployed in 2016, the 10th lowest unemployment rate of any state. For the small share of residents looking for a job, Iowa has one of the most generous unemployment insurance systems of any state. Some 40% of unemployed residents in the state receive unemployment benefits, far more than the 27% national rate. Also, the average weekly UI benefit is $398, or 45% of Iowa’s average weekly wage — the fifth highest replacement rate of any state.
“Iowa is also one of the most fiscally responsible states in the country. While across all states, average state government debt amounts to 52.2% of total state tax revenue, Iowa’s debt load amounts to just 26.1% — one of the smallest shares in the country. Additionally, Iowa’s rainy day funds could cover about 10% of the state’s 2018 fiscal year budget, slightly better than the average across all states.”
Democrats, who make up the minority in both the House and Senate, put out statements blaming Republicans for the economy:
From Rep. Chris Hall, Ranking Member of House Appropriations Committee
"The state budget has become an embarrassment to all Iowans, regardless of their political beliefs.
Paychecks and family income are stagnant. Iowa now ranks dead last in the country for economic growth, and the next legislative session will be spent paying off $144 million of debt.
Republican lawmakers and Governor Reynolds have failed to make life better for working families in education, healthcare, and stewardship of their tax dollars.”
Statement on the updated revenue estimates by Senator Joe Bolkcom,
Ranking Member of Senate Appropriations Committee
“Economic prosperity and fiscal responsibility will only return to Iowa if Governor Reynolds and Republican legislators start working in a bipartisan way to make smarter investments in Iowa workers and their families.
“With complete control of the Iowa Capitol, Statehouse Republicans adopted a my-way-or-the-highway approach to budget and policy decisions during the 2017 session. This meant that they ignored the voices of working Iowans who were begging Statehouse Republicans to keep their two biggest campaign promises: Raise family incomes by 25% and create 200,000 new Iowa jobs.
“Governor Reynolds and legislative Republicans continue to break those big promises and working Iowans – especially those in smaller towns and rural areas – are paying the price.
“Senate Democrats remain ready to work with legislative Republicans and the Governor on a mid-course correction that will restore fiscal stability to our state budget by investing in successful job-creation initiatives and taking a serious look at out-of-control spending on tax credits.”