Many unknowns at the Capitol on taxes and the budget

Center Focus

Many unknowns at the Capitol on taxes and the budget

 

This week was a rush of last-minute subcommittee meetings at the Capitol this week, followed by committee meetings and long nights of debate as legislators concentrated on moving the priority bills for their caucus. This brings the second funnel to a close. As we mentioned last time, that's the deadline for bills to pass at least one chamber and the other chamber's subcommittee and committee process.

That means most committee work is now finished, although Senate committees will still meet to complete appointments by the Governor. Ways & Means, Appropriations and Government Oversight bills are exempt from the funnel, so these committees will continue to meet. Read more about tax and budget work still facing those committees below. 

Rumor is legislative leaders want to adjourn before Easter, but that leaves a lot of work to do in the next couple of weeks!

Lots still unknown on taxes and the budget. We have yet to see any budget bills from the House or Senate for FY 19, and the two chambers haven’t reconciled their differences on the deappropriations bill (SF 2117), which would make cuts in the current fiscal year (FY 18) ending June 30.

Good news is that the March 9 report from the Revenue Estimating Conference projects revenues for this fiscal year to be about $33 million higher than previously predicted, which lessens the need for those mid-year cuts that would restrict critical services immediately.

Unfortunately, the main reason for relief for this isn’t a growing state economy—it’s the federal tax bill, which included significant tax cuts for higher-income taxpayers. As a result, those taxpayers will have less to deduct from their Iowa taxable income, and will pay more in state taxes. 

How state lawmakers proceed with their tax legislation will affect the outlook for the next fiscal year. General fund revenue is now projected to grow 6.4 percent in FY 19, again largely because of federal tax changes (previously, 4 percent growth was expected). But new tax cuts would hinder our ability to fund essential services, as that new revenue would be held down by tax cuts.

We do hope to see budget targets for the various budget subcommittees next week. Stay tuned. 

03/16/2018 1:30 PM |Add a comment
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