Governor Reynolds and Senator Whitver call for tax cuts in Iowa
Gov. Kim Reynolds and Senate Majority Leader Jack Whitver R-Ankeny on Friday called for income tax cuts in response to estimates from the Iowa Income Estimates Conference that net revenue will increase by 1.5% in 2022 and 2023.
âNow, with full reserve accounts and record surpluses, it’s time to definitely cut income taxes and continue to reward hard work and investment,â Whitver said in a press release. “Iowa should remain a national leader in implementing successful economic policies to make the state an even better place to live, work, and raise a family.”
Gov. Kim Reynolds said in a statement that the REC forecast “reaffirms the need to cut taxes and pay back the overcollection of taxpayer dollars.”
Reynolds continued, saying she would work with her administration and lawmakers to draft a bill to further reduce taxes for Iowa residents.
While overall gross tax and other revenues would decline by approximately 1.1% in FY2022, lottery transfers will increase by 4% (up $ 103 million) and Reimbursements for school infrastructure (accumulation) will increase by 5% (up from $ 588.2 million). REC predicts that corporate income tax revenues will decrease by 10.1%, personal income tax revenues will decrease by 2.1% and sales / use tax revenues will decrease. will increase by 3.5% in fiscal year 2022. Estimates for fiscal year 2023 show a 4.1% increase in corporate income tax, a 1.5% increase in revenue from personal income tax and a 3.2% increase in sales / use tax revenue from fiscal year 2022.
Holly Lyons, director of the Legislative Services Agency’s tax services division, said the agency was “cautiously optimistic” in its estimates.
Lyons said general fund net income for fiscal 2021 increased $ 870 million, 11%, from fiscal 2020, beating the conference estimate of $ 737.1 million, or 9%. Fiscal 2021 revenue was “much higher” than the conference forecast in March, particularly in the fourth quarter, which allowed “a very strong rebound” after the low growth rate induced by pandemic in fiscal year 2020, Lyons said. Growth in FY2021 exceeded any year since at least FY2001, âshe said.
The growth that several states experienced in the third and fourth quarters of fiscal 2021 “reflected positive consumer confidence in the form of pent-up demand for goods and services, an improving economy and a growing economy. massive federal aid, âshe said.
Lyons warned that the majority of Iowa residents might not have as much money to spend in late spring and summer 2022 as they did in 2021. She said the COVID-19 delta variant has slowed down economic growth during the third quarter of calendar year 2021 in terms of consumption expenditure and services and is expected to continue to do so until the end of 2021.
âWe continue to be in a strange time, with an incredible level of uncertainty,â she said.
Conference chairman and director of the management department, Kraig Paulsen, said there was room for growth in labor force participation rates and that supply chains were “currently very stressed â. Personal savings rates have declined from peaks reached at the start of the pandemic, but are still “slightly higher” than pre-pandemic levels. . Inventories are “unbearably low, another precursor to growth,” he said.
In Iowa’s agriculture industry, commodity prices have declined from “near record prices” in early 2021, but are “far from the lows of 2019 or 2020,” he said. Exports “remain strong” and farmland prices are “near record highs and remain stable while demand remains strong”.
âFuel costs are a concern, and rising energy costs could be a drag on growth if not addressed in a meaningful way,â he said.
He said the state is closely monitoring inflation and its impact on consumer spending, but as other measures “normalize”, inflation “is expected to decline.”
Conference member, CFO on DEMAND David Underwood, said he expected wages to rise and the Federal Reserve continued to talk about letting interest rates rise. He said interest rate increases would be good for Iowa because “a lot of Iowans have cash investments where they get interest.”
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Key words: News, State, Iowa
Original author: Mary Stroka, The Center Square contributor
Original location: Governor Reynolds and Senator Whitver call for tax cuts in Iowa