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Neighbors Growing Together | Mar 22, 2018

Gov. Kim Reynolds encouraged by higher Iowa revenue forecast

Governor says she is watching federal trade discussions closely
By James Q. Lynch, The Gazette | Mar 12, 2018

CEDAR RAPIDS — A $33 million boost in anticipated state tax revenues should help minimize disruption to Iowans and state agencies, Gov. Kim Reynolds said Saturday during a stop in Cedar Rapids.

The increase in the state’s Revenue Estimating Conference predictions for tax collections is good news for the governor and lawmakers trying to resolve a $27 million shortfall in the current year budget. Friday, the three-member Revenue Estimating Conference boosted Iowa’s tax collections forecasts by $240 million over the next 16 months — mostly due to the positive effects from federal tax cuts — to nearly $7.271 billion total.

However, Reynolds expects her recommendation for $34 million in adjustments in the budget year ending June 30 will continue to be the starting point for negotiations with the Legislature.

“That’s what we’ll base our decisions on going forward, Reynolds said after getting a standing ovation at the Linn County GOP county convention at Elmcrest Country Club.

“We’ll just continue to watch the numbers and, hopefully, we can minimize the amount of deappropriation we have to do,” she said. “That’s my goal.”

She’s optimistic the state economic indicators will continue to grow.

There are a number of factors, however, that could put a damper on the latest forecast.

One is how businesses adjust their behaviors under changes in the federal tax code, Reynolds said.

The economy is “heading in the right direction, but there are a lot of things that impact revenue in Iowa, especially as an AG state,” said Reynolds, who had been to the Black Hawk GOP convention and also planned stops in Johnson, Scott and, possibly, Muscatine counties.

“So we’re talking about (the North American Free Trade Agreement) and we’re talking about tariffs. We’re watching all of that very closely. That potentially could have an impact,” the governor said.

She said she was encouraged because Iowa business and industry leaders “tell me business has never been better.”

“They’re very optimistic. I say over and over we just need to get them (employees) and we’ll really see this economy grow exponentially.”

Democrats were less optimistic after seeing Friday’s forecast, insisting the governor and her Republican colleagues leading the Legislature still face a budget crisis after already borrowing $144 million from state reserves to balance last year’s budget.

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