The three-member Revenue Estimating Conference held its fall meeting this week. The meeting gives the panel the opportunity to revise their estimates for the current fiscal year (FY 23) and release their first detailed estimate for the upcoming fiscal year (FY 24).
Fiscal Year 2022 ended up with revenue much higher than what the panel had forecast in March. For that year, the state took in $9803.4 into the General Fund. This was $1 billion higher than Fiscal Year 2021 revenue and over $600 million higher than March’s projection.
For Fiscal Year 2023, the REC raised its revenue forecast from $9.156.4 billion to $9.5341 billion. This is an increase of $377.8 million over March’s number. When compared to FY 2022’s final revenue number, state revenue would be down 2.7 percent. The reason state revenue would be lower in FY 23 is due to implementation of this year’s tax cuts, which go into effect on January 1, 2023. LSA said the cuts will return $575 million to the taxpayers in FY 2023.
For Fiscal Year 2024, the panel’s estimate is General Fund revenue of $9.5943 billion. This would be an increase of 0.6 percent over the FY 23 estimate. Again, the 2022 tax cuts have been factored into the forecast. They will return an additional $450 million to Iowa taxpayers in FY 2024.
As for the Rebuild Iowa Infrastructure Fund, the REC slightly lowered its forecast for gaming revenue in FY 2023. The panel set the expected revenue at $317.6 million, a reduction of $300,000 from March’s figure. For FY 24, the initial forecast for gaming revenue is $301.7 million. The drop would likely be due to the continued phaseout of the tax on promotional play and the expected impact of casinos opening up in Nebraska.
Governor Reynolds released the following statement in response, “As Washington’s inflationary, tax-and-spend policies weigh down the national economy, Iowa is showing there’s a better way,” said Gov. Reynolds. “Today’s projections confirm once again that Iowa’s competitive tax code is fully compatible with sustainable revenue and a resilient budget. Going forward, we’ll continue to exercise restraint with taxpayer dollars while prioritizing high-return investments in key priorities.”
