Vander Linden Capitol Update – March 16, 2017
House Republicans continued their hard work to ensure that more of your money stays in your pockets. With the negative revenue forecast that came in this last week, we are taking a look at tax credits and other areas where we can save money and still keep taxes low. Below you will find some helpful information concerning some issues the legislature is addressing you may have.
State Budget Outlook
The State Revenue Estimating Conference (REC) met Tuesday and lowered expected FY 17 revenues by $105.9 million. That comes after the REC had already previously lowered expected FY 17 revenues in December by $117 million.
Inaccurate revenue projections are not limited to Iowa. At least 30 states nationwide have had to make budget reductions in the middle of their fiscal year.
Gov. Branstad has proposed using money in the state’s Cash Reserve Fund to make up for this second reduction in state revenues. If that happens, $131 million will need to be borrowed and paid back.
The $25 million difference is due to the use of $25 million in non-recurring funds to help patch the hole left in December when the REC first lowered the revenue level.
The House Republican plan to deal with this is threefold:
*First, taxpayers and the Legislature need more accurate revenue estimates from the Revenue Estimating Conference. We understand this is a difficult task that many states are struggling to deal with right now, but we need to find a way to better predict state revenue. Changes in how the state tracks and
collects revenue need to be made to make estimates more reliable.
*Second, a very hard look needs to be taken at the “what” and “where” taxpayer money is used to make sure Iowans are getting the best value and their priorities are being met. This very well could mean the state needs to curtail or end longstanding spending.
*Third, every tax credit is on the table. The sacred cows need to be reevaluated to make sure taxpayers are getting a good deal. A complete approach needs to start immediately instead of the piecemeal, year-by-year strategy that has been in place.
With only a few months left in the fiscal year, additional budget reduction opportunities are limited. This likely means that the Legislature will have to dip into the Cash Reserve Fund. House
Republicans will not adjourn session without a plan to repay the Cash Reserve.
Thankfully, House Republicans rejected over $1 billion in additional spending plans offered by Democrats over the last two years. Without that strong stand, key areas like local school budgets would be facing deep cuts. Iowans can count on House Republicans to stand strong against reckless government spending ideas.