Iowa Governor Reynolds promises tax cuts as state announces budget surplus
Iowa ended its 2021 fiscal year with a surplus of more than $ 1.2 billion, Governor Kim Reynolds said on Monday.
Officials from the two main political parties have come up with competing theories for the financial windfall.
Republicans, who control the Iowa legislature and governor’s office, attributed the $ 1.24 billion surplus to conservative budget practices. Democrats countered that the budget looks rosier than it is because Reynolds bolsters the state’s finances with federal pandemic relief dollars she has opposed.
Reynolds touted the surplus on Saturday at her annual crop festival fundraiser and reiterated her pledge to follow through on a sweeping tax cut she enacted this year with further cuts.
âWe will continue to reduce taxes in Iowa,â she said. She previously said Iowa would consider lowering personal income taxes next year.
At the same time, Reynolds has pledged to fund key state programs.
“This surplus proves that we have accomplished exactly what we wanted to do – overcome the financial challenges caused by the global pandemic and invest in education, workforce, health care, agriculture and technology.” , Reynolds said in a statement. “We will continue to invest in these important priorities going forward to meet the needs of our citizens and our state.”
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Democrats criticized Reynolds and legislative Republicans for not using more state money to pay for needs such as housing and health care that have been made more urgent by the COVID-19 pandemic.
Instead, they say she takes credit for a record surplus while using federal stimulus dollars – including cuts passed only by Congressional Democrats – to shore up the state’s finances.
“The truth is, Governor Reynolds has been adamantly opposed to the main budget drivers that have helped Iowa’s economic recovery – new child tax credits for families, lower health insurance premiums and new investments in Iowa’s public schools, âsaid Representative Chris Hall, D-Sioux City, the top Democrat on the House Appropriations Committee, said in a statement.
As an example, Hall referred to an affordable housing initiative that Reynolds announced this month that will use $ 100 million in federal bailout funds in addition to the $ 230 million the legislature of Iowa has allocated over five years.
Reynolds also used federal COVID-19 relief funds to pay to expand broadband access, to provide rent relief, to bolster the Iowa Unemployment Trust Fund and more.
âThere are a lot of areas where the governor has funded normal operating expenses using federal dollars,â Hall said in a follow-up interview. âAnd at the same time, some of the global spending has actually cost the state less due to COVID than it normally would be. And so it kind of gives the appearance of an inflated closing balance. “
Joel Anderson, the state’s acting budget manager, who was appointed to the post by Reynolds, said the surplus resulted from Iowa bringing in more sales tax money than expected and corporate and personal income tax.
âIt wasn’t necessarily that it was coming from us using the COVID relief funds on certain things,â he said. “It was the Iowans and the taxpayers (who) generated more tax revenue.”
The state’s fiscal year ended on June 30, but the state releases final budget figures in late September, after paying and receiving all overdue obligations. Iowa ended the previous year with a surplus of $ 305.5 million.
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The State Revenue Estimates Conference, a three-person panel that predicts how much money the state will earn each year, will meet next month to update its revenue projections for the current fiscal year, which started on July 1. These estimates will help lawmakers get a better idea of ââthe state’s financial position heading into next year.
The Republican-controlled Iowa legislature this year passed a sweeping tax reduction program that gradually eliminates Iowa’s estate taxes, cuts income taxes, and cuts county property taxes in shifting mental health funding from counties to the general state fund.
While a few Democrats supported the tax cuts, most voted against.
When she signed the law in June, Reynolds promised further tax cuts were yet to come.
“We haven’t finished yet,” she said at the time. “Next year we will be back and I will propose to reduce our personal income taxes even further.”