Capitol Update

3 26 153 26 15-1REC Drops Estimate

The Revenue Estimating Conference met on March 19 for its required meeting during the legislative session.  The three-member committee reduced the amount of new dollars the General Fund will have to spend in FY 2016.

For FY 2015, the General Fund estimate was lowered by $89.7 million to $6.7671 billion.  The REC made adjustments by lowering their projections for personal income tax collections by $40.3 million and corporate income tax collections by $20.5 million.  The REC also increased their forecast for tax refunds by $33.4 million.  These adjustments are the result of the passage of the IRC update bill, which was projected to reduce revenue by $99 million.  Removing the impact of the IRC update bill, the net impact would be a slight increase in FY 2015 revenue by $9.3 million.

For FY 2016, the REC lowered the General Fund revenue projections to $7.1755 billion.  The group raised their forecast for personal income tax revenue by $56.4 million, but that was nearly offset by a reduction in the corporate income tax projection of $49.6 million.  The REC also increased their projection for tax refunds by $36.4 million.

While IRC update bill had lowered FY 2015 revenue, it was expected to raise FY 16 revenue by $19.2 million to $7.2138 billion.  The REC estimate eliminates the boost from the bill and further lowers the FY 2016 number by an additional $19.1 million to the new level of $7.1755 billion.

The amount of new revenue available to be spent is the difference between the FY 2016 revenue forecast ($7.175 billion) and the FY 2015 budget ($6.9946 billion).  The revised estimate means the state has $180.9 million of new money to spend in FY 2016.  Prior to today’s meeting, we had been working under the assumption that the state would have $200 million of new money in FY 2016.

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All three members of the REC said there had been little change in the economic factors since their last meeting in December.  Economic growth in the US and Iowa remains solid, if at a modest pace.  Iowa’s collections from income tax withholding remain strong.  The average work week is now at 42 hours and wage growth is beginning to pick up in-state, even though is has yet to reach the level seen before the 2008 recession.

There is concern over Iowa’s ag economy.  The state saw a loss of manufacturing and ag machinery jobs in the last few months and the Rural Main Street Index fell below neutral levels.  The strong dollar is having an impact on export markets, which are a key part of Iowa’s ag economy.  Average corn prices are still 43 percent below their 2013 highs with significant supplies still in the bins.

Even with these caution signs, Iowa’s farm economy is not in trouble.   Income tax returns are showing farmers are holding their own or posting small profits from the last year.  Ag debt levels are at a manageable level, since many of the purchases made during the last few years were with cash.  Livestock producers continue to have solid prices.  Input costs should begin to decline if lower oil prices remain during calendar year 2015, and the over-supply of corn should be reduced in the next two to three years.

Update on School Start Date

The House passed the school start day bill stating schools can start on or after August 23rd by amending SF227. The bill passed the House in a bipartisan vote, 71-29. I think it’s a good compromise for an issue that has be debated since long before I was a part of the legislature.

Current law states schools cannot start before September 1st without a waiver. This bill is a compromise between school districts and the tourism industry. On Wednesday, the Senate passed the bill with a bipartisan vote of 28-22, but Senate Majority Leader Gronstal motioned to reconsider. That means the bill will stall in the Senate until it is reconsidered. If not dealt with by the end of session, it will be sent back to the House for the Speaker to sign and then to the Governor’s desk for his signature. This option unfortunately delays the decision until the end of the session and puts schools in limbo.  The bill has passed both Chambers and should be on the Governor’ desk.  This issue should have been solved this week and put it behind us but Senate leadership is only interested in playing politics.

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Matt and Beth McQuillen donated a 139-acre conservation easement along the Maquoketa River in Delaware County to Iowa Natural Heritage Foundation. Mature upland woodlands are interspersed with limestone outcroppings. About 30 acres of former agricultural land has been planted with native prairie species and trees. This reconstructed prairie provides habitat for grassland birds, small mammals, insects, reptiles and amphibians. The protection of this land helps prevent erosion, slow runoff and improves the water quality of the Maquoketa River, which was listed as an impaired waterway in 2012 under the Federal Clean Water Act. I want to thank the McQuillen’s for their generous donation.

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Pastor Darryl Larson and his wife Nancy were at the Statehouse on Tuesday. Pastor Darryl delivered the opening prayer to the House chamber. Afterward we visited and went on a tour of the Statehouse.

I will be at a forum in Monticello at noon on Friday in the City Council Chambers and another on Saturday in Dyersville at 10 am at Golfside Grill. You can contact me by e-mail at or by phone at (515) 281-7330.


Rep. Lee Hein

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