DES MOINES, Iowa -- A strong economy and a low unemployment rate have the revenue estimating conference projecting a 4.7% increase in revenue for fiscal year 2019. That would be an additional 362 million dollars for Governor Reynolds to work with.
However, the REC is only predicting a 1.7% increase from 2019 to 2020. REC Chairman David Roederer says it may be wise to keep some of the 2019 money in the bank.
“Giving a 4% increase one year and a 1% the next year, it's much better to level it off to a 2% or 2.5%, then you have more predictability in some of the areas” said Roederer.
The conservative forecast for 2020 is sparked by several issues including farmers feeling the full impact of trade wars with China, stock market volatility, and federal interest rate hikes; not to mention other issues around the globe.
“Not sure where to start here, Brexit impact on Europe, the Chinese economy, declining oil prices” said member Holly Lyons.
Chairman Roederer says to keep in mind that these numbers are projections.
“It's an inexact science especially when you're doing it quite a bit ahead, because you never know for sure how various taxpayers are going to file their taxes; the same way with the corporate side. Obviously, with the online sales we're not exactly sure how much will be coming in there, but we believe we're going to have a healthy enough balance” he said.
With that balance, he says the state will be able to keep its financial promises.
“There will never be enough money to fully fund everything that everyone comes in the door wanting, that won’t happen. We believe there will be enough funding to do the essentials that government is supposed to do and the commitments that have been made” said Roederer.
Roderer does not expect there to be an emergency budget cut session for fiscal year 2019 like there have been in years past.