Schneider Senate Update: Rosy Revenue Estimates Not a Green Light to Grow Government

By Sen. Charles Schneider

The Revenue Estimating Conference (REC) met last week to discuss the state’s financial situation. The REC estimates that tax receipts will increase to $6.87 billion for FY 2014, an increase of 3.5 percent over FY 2013 receipts. Even with the rosy forecast, the REC members urged fiscal restraint and cautioned against irresponsibly spending the excess revenue. They noted that the economy is growing modestly and still faces significant head winds.

The Revenue Estimating Conference (REC) meets at least three times a year and is tasked with agreeing upon revenue estimates for the upcoming fiscal year. Iowa law directs the Governor to use the December REC revenue estimate when establishing the budget for the next fiscal year. If the March REC revenue estimate is less than the December revenue estimate, the Governor and Legislature are required to use the lower revenue estimate in their budgets. However, if the March revenue estimate is higher or the same as the December revenue estimate, the law requires the Governor and General Assembly to use the December revenue estimate.

Since the March estimate was higher than the December estimate, some legislators may be tempted to "notwithstand" Iowa law and use the March revenue estimate for the FY 2014 budget. This has happened in the past. Doing it again is something I would oppose. I don't believe it would be fiscally responsible for us to circumvent current law in this manner. It’s bad policy because we would be setting ourselves up for budget hardships if the economy ends up growing more slowly than forecast.

A healthy ending balance allows Iowa to fulfill its commitment to fund the education system, provide health care for the most vulnerable, provide for public safety, and enable job creation. We need to make sure that we budget conservatively and maintain sound budgeting practices. I’m focused on passing a budget that spends less than we take in on an ongoing basis, does not rely on one-time funding for ongoing programs, and does not purposefully underfund state programs.

Upcoming Legislative Forum

April 6, 9:30-11 a.m., Waukee City Council Chambers

(Sen. Charles Schneider represents Senate District 22, which includes Waukee, Clive, Windsor Heights and part of West Des Moines Contact him at Charles.Schneider@legis.iowa.gov or at 515-281-3371.)