Governor Reynolds and other Republicans say the latest state revenue projections show tax cuts are working as intended. Democrats say the data shows a looming crisis as the governor’s budget plan calls for spending more than the state will collect in taxes and requires using 900 million dollars in state reserves. Kraig Paulsen, the governor’s top budget advisor, says there are no surprises in the numbers.
Paulsen and other members of the state Revenue Estimating Conference predict tax collections will fall well over six percent during the current year and drop nearly seven percent the following year.
Democrats say using one-time withdrawals for on-going state operations is bad budgeting. They point to long-term forecasts from the governor’s budget office showing billions of dollars will be pulled from the state’s reserves over the next five years to balance state budgets. Paulsen says the state is not draining reserve accounts, Iowa’s economy is strong and the tax base is expected to grow in a couple of years.
The other members of the State Revenue Estimating Conference cited concerns about tariffs that will raise the price of goods and services for Iowans and impact Iowa farmers and manufacturers.
