DES MOINES — State officials are predicting tax payments to the State of Iowa will drop by a little less than one percent during the current budgeting year due to previously approved tax cuts.
Iowa Department of Management director Kraig Paulsen is the governor’s top budget advisor and chairman of the state Revenue Estimating Conference. “The state is showing a modest slow down in revenue,” Paulsen said Thursday during the panel’s meeting, “however those reductions are planned and driven by the tax rate reductions for Iowa taxpayers.”
The top state income tax rate was reduced 10 months ago and there will be another reduction January 1st. Corporate income taxes have been cut, too. “Corporate tax collections continue to grow, even with the enacted rate reductions,” Paulsen said. “The state continues to see growth in sales and use (tax) receipts. Employment continues to be strong, with some uptick in labor participation.”
Jennifer Acton of the Legislative Services Agency, another member of the Revenue Estimating Conference, said global turmoil as well as Iowa drought conditions and the state’s aging workforce are concerns.
“Despite all this, Iowa continues to be in a solid financial position with full reserve funds,” Acton said.
The group predicts state tax collections in the next state fiscal year will drop 1.8%. Senator Janet Petersen, a Democrat from Des Moines, said the report shows state tax revenue won’t be able to keep up with the corporate tax cuts and private school spending Governor Reynolds has approved. House Democrats say Iowans are tired of endless tax cuts for corporations and the super rich.
Representative Gary Mohr, the Republican who leads the House Appropriations Committee, says lawmakers need to keep lowering the tax burden in a responsible way to help Iowans struggling with wages that aren’t keeping up with inflation.