The state’s Revenue Estimating Conference (REC) met today and forecast another strong year for Iowa’s budget and economy. With more than one quarter of the fiscal year taxes collected, the experts predicted the state general fund will end Fiscal Year 2007 (FY 07) with an additional surplus of $214.1 million, after funding the expected supplemental appropriation for Medicaid.
“The revenue forecast by the Revenue Estimating Conference is more good news about the strength of our economy and the health of the state budget,” said Governor Vilsack. “We have made key investments in our state’s economy that are continuing to produce real results.”
When added to the Fiscal Year 2006 reserves, the state will hold $535.1 million in reserve with both the Cash Reserve and Economic Emergency Funds filled to their legal maximums.
Further, the Senior Living Trust is expected to receive transfers totaling over $200 million.
Net General Fund receipts are forecast to grow at 2.9 percent or $157 million more than Fiscal Year 2006 (FY 06) and $179 million more than the REC set in March 2006. This takes into account one-time revenues received in FY06, such as intergovernmental transfers for Medicaid payments of $54.6 million, Touch Play revenues of $27.3 million and unclaimed property revenue of approximately $20 million.
This revised revenue figure produces a current estimated general fund ending balance for FY 07 of $214.1 million. This does include an assumption for supplemental appropriations in FY 07 of $42.3 million for Medicaid and Pandemic Flu.
Forecasts of solid growth in personal income (4.7 percent), sales (3.7 percent) and corporate income (16.3 percent) taxes reflect continuing growth for Iowa’s employers and personal incomes. For the fiscal year to date, all three of these categories are growing even faster than the forecast at 7.0 percent, 4.6 percent and 49.6 percent respectively.
Today’s news builds on other positive news showing Iowa’s ranking in Per Capita Personal Income was the highest it has been in 22 years. The U.S. Commerce Bureau of Economic Analysis recently released state rankings showing Iowa as 28th for the second consecutive year.
The price of state government has also dropped. At a cost of 6.1 percent of Iowans’ personal incomes, it is the lowest percentage since 1972, a level that has been maintained for three of the last four years.
“We have changed the landscape of our state’s economy and created momentum that will benefit our communities for years to come,” said Vilsack. “By continuing to invest in emerging industries and proactively capitalizing on Iowa’s unique strengths we will continue to see progress like we’ve seen in the last several years.”
Forecasts for Fiscal Year 2008 of 3.2 percent growth also reflect continuing steady growth in the state’s economy.