Cownie Statehouse Report: Law Requires State to Live Within Means; It Hasn’t

By Rep. Peter Cownie

The Revenue Estimating Conference (REC) met last week to review and revise the state of Iowa’s revenue projections for the upcoming year.

The REC is made up of one member of the public, a representative from the governor’s office, and a representative from the Legislative Services Agency. The group’s findings are typically a solid way to gauge how Iowa’s economy is performing.

The REC is also a critical tool for the Legislature to use in crafting a budget. By law, the Legislature cannot spend more than 99 percent of the available revenue projected by the REC. This is a good law that is designed to force the state to live within its means. I have witnessed past legislatures break this law by raiding reserve funds and using other one-time dollars for ongoing expenses. However, this type of behavior has not occurred over the past two years and Iowa is a better state because of it.

Following the most recent REC, it was reported that the state of Iowa’s economy is doing very well. Revenue coming into the state was greater than what had been projected in December, and the REC revised its estimate by raising expected state revenue an additional $120 million for the current fiscal year. This is obviously quite encouraging for Iowa. In fact, the new total of $6.637 billion for expected state revenue in FY 2013 represents growth of 5.2 percent over last year. This is the result of passing responsible budgets the last two years, as well as a healthy agriculture sector and relatively low unemployment in our state.

The REC mentioned a few additional highlights that have led us to this recent growth: non-farm employment is up, existing home sales are at a three-year high, and demand for newly built homes is higher than what builders had projected. These are all encouraging signs for our economy, as many Iowans experienced a loss in value in their homes during the recent recession and many lost money when being forced to sell. A stronger real estate marketplace is a good sign for most Iowans whose largest asset is the family home.

While the REC does not always garner much attention, it is a very important indicator on how the state of Iowa is performing economically. The state of Iowa is doing well. Still, the state of Iowa must continue to live within its means while making the critical investments necessary to thrive. Our nation’s economy is improving, but we must never lose sight of what caused so many problems and why. While Iowa was not as affected as other states by the recession we are better off today because of our strong resolve, hard work, good land, and solid common sense.