OUR OPINION: Budget challenges exist, but sky isn’t falling in Iowa

December 16, 2018

Annual December projections from Iowa’s Revenue Estimating Conference issued on Thursday predicted growth for this and the next budget year, although at different levels.

The panel said it expects state revenue will grow by 4.7 percent, or $344.7 million, this fiscal year and the state will end the year with a surplus of some $200 million.

The REC estimate from which state lawmakers will work in crafting a new budget projects revenue growth will slow in the next fiscal year to 1.8 percent.

Our overall view?

This state isn’t without budget challenges, but the sky is far from falling in Iowa.

Simply put, Iowa is in sound fiscal condition. At the end of the last fiscal year, the state’s budget showed a surplus of $127 million, with more than $600 million in reserves. Revenue numbers are moving forward, not backward. Between this year and next, the state’s economy is projected to grow by roughly $545 million.

One big cloud hanging over Iowa, of course, is the continuing U.S.-China trade war.

As we have said before, all farm state officeholders, including those in Iowa, must use whatever clout and influence they possess in maintaining pressure on the Trump administration to end this fight with China. They should be in the ear of President Trump and members of his administration every day.

An encouraging sign for agriculture emerged earlier this month with news of a 90-day truce in the tariff battle between the two countries. Our hope is the three-month cease-fire is the beginning of the end to the trade standoff. If it is, prospects for the next budget year in our state should improve still more.

In the meantime, Iowa lawmakers would be well-advised to embrace a conservative, disciplined approach to budget decisions in the next legislative session to keep the state’s fiscal foundation strong. All departments of state government should proceed in similar fashion in terms of requests for money.

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