Down, down, down: state tax revenue estimate drastically reduced

The Revenue Estimating Conference just met and the three-member panel has voted to reduce its estimate of state tax revenues for the current state budgeting year by $129.7 million. Their guess for next year has been reduced by $269.9 million.  It will mean layoffs in state government according to the governor's chief of staff (who is one of the members of the Revenue Estimating Conference).  UPDATE: Here's the Radio Iowa story. (There's an audio file at the bottom of that story if you wish to listen to the opening comments from the three members of the Revenue Estimating Conferernce.  The mp3 runs about 12 minutes.)

Within 14 days the governor must resubmit to legislators his budget recommendations for fiscal year 2010 (next year — the budgeting year which begins on July 1, 2009). 

UPDATE II:  Governor Culver issued the following statement via email, as did Democratic legislative leaders.  Read them below.

GOVERNOR CULVER RESPONDS TO REVENUE ESTIMATES
 
DES MOINES – Following today’s revised projections from the Revenue Estimating Conference, Governor Chet Culver issued the following statement on next steps to maintain a balanced budget for the current fiscal year and approve a balanced budget for fiscal year 2010. The REC estimated that net General Fund revenues would be $129.7 million less in FY2009 and $269.9 million less in FY2010 than the Governor’s budgets.

Governor Culver’s Statement
 
Given the dramatic impact of the national recession on our economy, it is no surprise that the Revenue Estimating Conference has lowered state revenue projections. Clearly the national economic downturn continues to be severe. But I am confident that Iowans will work our way out of this recession. That’s what we do when faced with challenges.
 
In fact, Iowa is better positioned than nearly every state in the nation to work our way out of this recession and come out stronger than before. Iowa is one of only eleven states with a AAA bond rating; after recently funding disaster relief, we still have cash reserves of $564 million; and our unemployment rate is more than three percentage points below the national average.

On top of that, we are offering Iowans hope with our efforts to create and retain jobs and strengthen the economy. First, Iowa is quickly putting President Obama’s economic recovery plan to work, already investing more than $100 million in transportation projects. Second, we are stimulating the economy with hundreds of millions of dollars being spent to rebuild communities hit hard by last summer’s natural disasters. And third, the legislature and I are working to create I-JOBS in order to make use of Iowa’s financial strengths by investing in infrastructure and supporting jobs throughout the state.

My Administration has stayed ahead of the changing economic conditions by taking effective steps to ensure a balanced budget and maintain strong fiscal management. For example, I ordered across-the-board cuts of $89.1 million, directed state agencies to reduce expenses, and last week signed legislation making $30.3 million in additional cuts which I recommended for this year. The legislature has been a key partner throughout this process.
 
With today’s new projections, Iowa law requires me to release my revised budget recommendations for FY 2009 and FY 2010 within two weeks. Starting next week, I will discuss recommendations with legislative leaders so we can move forward quickly to reach agreement on balanced budgets in light of these new revenue projections.

One important recommendation I will propose is making use of funds authorized by the American Reinvestment and Recovery Act. I believe funds from the federal economic recovery plan can maintain our priorities in key areas, such as education and health care, and should help us maintain services to Iowans by avoiding layoffs of public employees. 

While important decisions have to be made, I am optimistic that we will come together and develop solutions to meet these economic challenges. From balancing the budget to investing in new jobs, we will do what’s necessary to provide a better, brighter future for all Iowans.

Joint Statement from Senate Majority Leader Mike Gronstal, Senate President Jack Kibbie, House Speaker Pat Murphy, and House Majority Leader Kevin McCarthy

Regarding updated projection from Revenue Estimating Conference

"This news is further evidence that middle-class Iowa families, employers and state revenues are continuing to feel the pinch of the deepening national recession.

“As legislative leaders, we anticipated an additional decline in revenue.  That’s why we instructed the chairs of our budget committees to cut Governor Culver’s already reduced state budget by an additional $133 million (which is more than 2 percent of the state budget).

“Next, we will take the steps necessary to keep the current year’s budget balanced.

“Second, we will adjust our budget targets for the next fiscal year to reflect the updated projections and make the necessary reductions to keep the state’s fiscal house in order.

“Finally, we remain committed to a fiscally responsible state budget that focuses on the priorities of the middle class families without raising taxes.  While difficult decisions are ahead, we will make good on our promises to make sure every kid in Iowa has health care by 2011 and create good-paying jobs in key industries like renewable energy.”

UPDATE III:  McKinley: Statement on Revised Revenue Estimating Conference (REC) Budget Projections for the State of Iowa

New revenue projections show Iowa faces severe spending problem – not revenue problem

DES MOINES, IA  – Senate Republican Leader Paul McKinley (R-Chariton) issued the following statement today regarding the revised Revenue Estimating Conference (REC) projections for the State of Iowa:

“Even though the Revenue Estimating Conference (REC) lowered revenue projections, the revised numbers indicate that revenues are still coming in at near record levels and thus once again underscoring that Iowa does not have a revenue problem – we have a spending problem. Though these numbers indicate the economy is slowing in Iowa, we would be much better situated had Governor Culver and legislative Democrats not grown state government by an unsustainable 21 percent or by nearly a billion dollars during the last two years.”

“Because the governor and legislative Democrats refused to budget with restraint like any Iowa family or employer would and instead spend our state far into debt, additional cuts will need to be made. Though legislative Democrats voted down Republican budget cut suggestions a few weeks ago, Senate Republicans will again offer responsible solutions to the Democrats in order to cut the budget and keep it balanced.”