Revenue Estimating Conference Moves FY 2017, 2018 Revenue Down Again
December 12th meeting of the Revenue Estimating Conference was one of the more lengthy meetings of this body in recent memory. There was good reason for additional time and discussion as the three members agreed to significantly lower their projection for the current fiscal year and to again lower their forecast for Fiscal Year 2018.
All three members acknowledged the difficulty of finding confidence in the revenue number for FY 2017 due to several unsettled factors. The agriculture sector and related manufacturing industries are still feeling the impact of lower commodity prices being compounded by the strength of the dollar. The group believes ag-related income collections are bottoming out in tax year 2016.
In the end, the REC lowered their estimate for FY 2017 to $7.2119 billion. This is $96.2 million lower than the October estimate of $7.3081 billion for the current fiscal year. After the October estimate, the non-partisan Legislative Services Agency calculated that the state needed to find $14.6 million to balance the state budget. With the new figure, the revenue shortfall is projected to be $110.8 million. LSA is also projecting that Medicaid may need an FY 2017 supplemental appropriation of $22 million, which would add to the overall amount. This will more than likely force us to go back in to last year’s budget and do a de-appropriation.
As for FY 2018, all three members of the REC were significantly more confident when compared to FY 2017. It is believed that many businesses are taking losses in tax year 2016, which should help corporate tax collections. Also, any improvement in agricultural income has a substantial impact on state revenue. The continued wage pressure due to a shortage of qualified workers to fill many of the open jobs in the state should also drive up income tax collections.
The REC agreed to a revenue estimate of $7.5563 billion for FY 2018. This amount is $51 million lower than the October estimate of 7.6073 billion. With the official estimate now set, LSA has calculated that the expenditure limitation for Fiscal Year 2018 would be $7.4807 billion. This figure is $268.8 million above the new revenue level for FY 2017, or an increase of 4.2 percent in collections.
NEWS FROM DISTRICT 96
November and December have been filled with meetings both here in the district and in Des Moines. As we prepare to start the session, many issues are being discussed as the agenda is being set.
Once again, I will be chairing the Agriculture Committee and serving on State Government. I have been assigned to the Labor and Veterans Affairs Committees too. These are two committees that I have not served on before but I am looking forward to new challenges.
If you have any issues you think need to be looked at or addressed in the upcoming session please feel free to contact me. My email address is firstname.lastname@example.org Or by phone 319-480-1997.
I wish everyone a Merry Christmas and a very Happy New Year.