(Radio Iowa) – The governor’s top budget advisor and two other officials agree state tax collections during the NEXT state budgeting year will drop 67 million dollars more than they predicted two months ago. Iowa Department of Management director Kraig Paulsen is also chairman of the state Revenue Estimating Conference.

“Tax cuts are clearly what are driving the reductions in state revenue,” Paulsen says, “so, to be clear, but for the tax cuts, the state would be seeing revenue growth.” Governor Reynolds has signed a series of tax reductions since she became governor in mid-2017 and the state income tax will shrink to a single rate of three-point-85 percent in January. Paulsen says with over six-point-six BILLION dollars of unspent tax money held in a cash reserve and the Taxpayer Relief Fund, there’s room for more cuts.

“We’ll have to wait and see what the full impact is of things at the federal level…so that may limit some options,” Paulsen says, “but we’re in a strong position to leave more money in Iowans’ pockets.” And Paulsen says there are positive signals in the national economy, indicating taxes paid to the State of Iowa won’t fall precipitously.  “Moody’s state level data is projecting wage and salary growth of 4.11% in FY26 and the National Retail Federation is also projecting sales to be above the 2023 levels with total sales up 2.15% year over year and projected sales growth of up to 3.5% for December.”

Democrats in the Iowa House say every week Iowans are experiencing more layoffs, while Republican lawmakers are planing for more tax cuts for corporations and the wealthy. A top Democrat in the Iowa Senate says while state tax revenue is declining, Governor Reynolds is sending hundreds of millions of dollars to private schools and Iowans need more information about how the state money in Education Savings Accounts to cover students’ private school expenses is being spent.