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Panel Cites Economic Uncertainty, Lowers Revenue Estimate PDF Print E-mail
Commentary/Politics - Iowa Politics
Written by Lynn Campbell   
Thursday, 20 October 2011 11:48

Widespread economic uncertainty and the possibility of another recession led a state panel on October 14 to adjust Iowa’s projected state revenue downward slightly for the current fiscal year.

The panel, however, still is predicting slight growth over last year.

The Revenue Estimating Conference (REC), a three-member panel that makes the state’s official prediction of state revenue, lowered the Fiscal Year 2012 estimate to $5.97 billion, which is $17.5 million less than the panel’s projection in March. The new estimate paces growth at 1.3 percent, or $75.9 million, from last fiscal year.

“Uncertainty, I think, is what I hear from just about everybody I talk to as to what’s going to be happening in the next year and a half,” said REC member David Underwood, a retired chief financial officer and treasurer for AADG, a Mason City manufacturer and supplier of hollow metal doors and frames.

Underwood said economists predict a “double dip” recession; the main question is whether it will be mild or severe. He also said Missouri River flooding caused $207 million in lost crop sales and related economic activity in six western Iowa counties, according to a study by the Iowa Farm Bureau Federation, an agricultural advocacy group.

“We’re chugging up the hill, but it’s a long, steep hill,” said Holly Lyons, director of the fiscal services division of the Legislative Services Agency, the nonpartisan support arm of the legislature. She said the economy is faltering, and the first three months of the fiscal year haven’t been as good as the panel had hoped.

But David Roederer, director of the Iowa Department of Management, said the slight change in revenue should have little impact on this year’s $5.9-billion state budget.

“We’re only into three months of it. If that’s all we’re off, that’s going to be very, very good,” Roederer said. “We’re cautiously optimistic, but we also realize that we have to have tight control on all of our spending, as well. We do have healthy reserves, in case we have emergencies, that we have to tap into.”

The REC on October 14 also took the first step toward making its estimate for Fiscal Year 2013, which begins July 1. The panel projected revenue at $6.2 billion, which is a growth of 3.9 percent – or $235 million – above the current fiscal year.

Roederer wouldn’t say whether any of that money could help pay for a 10-year plan by Governor Terry Branstad to transform Iowa’s education system. The plan would end promotion for third-graders who read poorly, change the pay system for teachers, and require students to pass end-of-course exams to graduate.

“That’s still being reviewed – how much will be new revenue and how much will be reconfigured from what we currently have,” Roederer said.

The REC will meet in December to finalize its estimate for Fiscal Year 2013, which is the number the governor and legislature will use to craft the state budget. The legislature reconvenes January 9.

This article was produced by For more stories on Iowa politics, visit

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