DES MOINES — Members of the panel that predicts state tax revenue say recession fears are receding and, while total receipts are down slightly, that’s due to previously approved tax cuts.
The December report from the Revenue Estimating Conference sets the stage as Republican Governor Kim Reynolds and GOP lawmakers signal they hope to eventually eliminate the state income tax. Iowa Department of Management director Kraig Paulsen, the governor’s top budget advisor, is chairman of the Revenue Estimating Conference. “We continue to see modest growth in Iowa’s economy,” Paulsen said during Wednesday’s meeting, “and the revenue numbers coming in support this.”
By January, there will be $3.6 billion in the Taxpayer Relief Fund where unspent taxes are being deposited.
Paulsen said consumer spending in Iowa appears strong and, while, corporate income tax reductions have been made, total corporate tax receipts are up 15% over the past five months. “To me, this indicates continued organic growth within Iowa’s economy,” Paulsen said.
Clear Lake CPA David Underwood is another member of the tax-predicting panel. “The continued discussion of when’s the recession coming — it seems like finally everybody’s decided, well, it hasn’t gotten here yet, so maybe we won’t have one at least in the near term,” Underwood said. “That consensus helps a little bit, that we aren’t just wondering when that bottom is going to fall out.”
The Revenue Estimating Conference predicts the State of Iowa will collect over $9.7 billion in taxes in the current budgeting year that ends June 30t, 2024. The prediction for the following 12 months is slightly less, primarily due to tax cuts approved in 2018 and 2022.