State revenue estimates offer stronger budget outlook
Iowa's budget picture is getting brighter.
Revenue projections for the next 15 months increased Friday by almost $87 million, compared with a December estimate.
The projections were approved by Iowa's three-member Revenue Estimating Conference, which provides the official numbers that lawmakers use to craft the state budget.
An increase in employment and steady growth in overall tax collections for the past year drove the higher projections, members said.
"It looks like jobs will be restored to pre-recession levels by the end of fiscal year 2012," said Holly Lyons, a conference member who is also director of the Legislative Services Agency's Division of Fiscal Services. "We've added back about 11,000 jobs of the 64,000 jobs lost during the recession."
At this point in the legislative process, the figures are more symbolic of where the state's economy is headed rather than influential in changing the bottom line in budget decisions. State law mandates that legislators use the lower of two estimates — a December estimate and the March estimate - although lawmakers sometimes agree to use a provision that allows them to use the March estimate.
Iowa is projected to have a budget surplus and balance in so-called "rainy day" accounts of roughly $900 million in the fiscal year that ends June 30. However, some of that money has strings attached.
Lawmakers still must close a budget gap because of roughly $700 million considered "one-time money" used in the current year's budget. The bulk of the one-time money was federal stimulus money intended to help states pay their bills after tax collections fell during the recession.
"The numbers of the REC indicated that the economy is moving in the right direction," said Rep. Scott Raecker, R-Urbandale, chairman of the House Appropriations Committee. "And while we still have significant budget challenges to replace the one-time money that's been used to balance the budget in the last several years, it's moving in the right directions rather than needing to have further cuts."
House Democrats used Friday's projections to emphasize a contention they've made throughout the legislative session: Cuts to education and critical responsibilities like nursing home inspectors are unnecessary.
"There is no reason to kick 20,000 kids out of preschool or leave school funding at zero for the next two years with a $1 billion surplus," said Rep. Tyler Olson of Cedar Rapids, the top-ranking Democrat on the House Appropriations Committee. "Democrats will fight to keep the state budget balanced without giving up on Iowa's middle class."
Iowa's new general fund revenue estimate for the current fiscal year is $5.86 billion, up by $48.6 million from estimates made in December, but still almost $78.5 million less than the fiscal year that ended June 30, 2009.
The upcoming fiscal year that begins July 1 will grow by an estimated $38.3 million over the current year's projections.