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ON THE BRIGHT SIDE: Revenues Looking Up

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The House’s decision to cut less in this current budget year may be a reaction to the news that the state's revenues were looking better.  The Iowa Department of Revenue said state tax collections increased by over $133.1 million over last January.   However, a major part of this early revenue growth is from a surge in state tax estimate payments, coming in $109.4 million higher for the months of December and January over the same months last year. State officials believe the increase is due to the federal tax law changes that led several people to making big tax payments before the end of the year.
What does this mean for the FY 2019 budget? And more importantly, the FY 2018 budget and deappropriations?  
Two things are important to remember about Iowa budgets: 1) our state cannot legally overspend (that is, it cannot spend more than it collects in revenues that year); and 2) the Governor can only legally transfer $50 million from the state's savings account to balance the budget at the end of the year.  Even with the budget cuts made in 2017, the state spent more than it took in.  At first predictions were that the state was $100 milion in the hole; it took state officials three months to balance the books and end with a $13 million transfer from our "rainy day fund."  Legislators and the Governor do not want a repeat of that, particularly just 2-3 months before the November election.  
While budgets may look good, legislators will want to hold the line on spending.  We will know more on March 9, when the state's Revenue Estimating Conference is held and new predictions about the state budget are released.