KDSN RADIO News
Double digit dip in state tax collections expected over 24 month period
State tax revenue is projected to drop by 11.6% over a 24-month period — a decline the governor’s budget chief said was expected due to recently approved tax cuts.
Kraig Paulsen, director of the Iowa Department of Management, said there is enough available revenue to fulfill the spending promises outlined in the current fiscal year’s budget. “There is no issue with meeting the needs of Iowans,” Paulsen said. “The state continues to be in a very strong financial position in no small part because of the continued spending discipline.”
Paulsen and the other two members of the State Revenue Estimating Conference met Thursday. They project tax collections will fall 5.3% between this past July 1 and June 30 of next year. In the following 12-month fiscal year, the group estimates state tax revenue will fall even more — by 6.3%
“The tax cuts are having the intended effect,” Paulsen said during the Revenue Estimating Conference meeting. “They’re leaving more money in Iowans’ pockets and they’re leaving more money in the pockets of Iowa’s employers.”
Jennifer Acton, director of the Fiscal Services Division of the Legislative Services Agency, is another revenue estimator for the state. “Major tax reductions began in January 2023 and continue to slow the accumulation of General Fund revenue,” she said, “as expected.”
Governor Reynolds issued a written statement after the meeting, saying she and her fellow Republicans in the legislature believe “the government has been taking in too much taxpayer money: and they’ve “fixed that by cutting taxes.” Democrats in the legislature said these new estimates show the state will be taking in a billion dollars less in taxes in the next budgeting year. Democrats say that means more tax cuts “for corporations and wealthy Iowans,: while more money will be “siphoned away from public schools” to support the state program for private schools.
