Statewide Iowa (RI) – The panel that meets quarterly to estimate state tax revenue predicts consumer spending will drive state tax collections a bit higher this year, but total revenue will still fall by over a billion dollars due to income tax cuts that took effect January 1st.
Jennifer Acton, head of the Fiscal Division of the Legislative Services Agency, is a member of the State Revenue Estimating Conference.
Acton says persistent inflation continues to challenge consumers and businesses, while some tariff impacts have been delayed as large and small businesses boosted inventory at this time last year to try to avoid tariffs.
Iowa Department of Management Director Kraig Paulsen, the governor’s top budget advisor, says uncertainty at the federal level makes predicting state tax revenue gains and losses difficult.
Paulsen says the state has more than enough cash in reserve accounts to cover the drop in state income tax collections.
Income taxes from individuals and corporations account for the largest share of state tax revenue, but Paulsen says there’s growth in the state sales taxes despite surveys indicating consumers intend to spend less this holiday season.
Senator Janet Petersen, the top Democrat on the Iowa Senate’s budget committee, says no matter how Governor Reynolds and her fellow Republicans try to spin it, the State of Iowa faces a historic, billion-dollar state budget deficit due to tax cuts.
KIWA Staff Photo
