DES MOINES (AP) — A panel of Iowa budget experts said Thursday that the state economy is slowly improving, but lower corn and soybean prices and other factors could be a drag on the farm sector. Their advice to lawmakers working on the state budget was to be cautious.
The Revenue Estimating Conference left its estimate of net state revenue — made up of taxes and other sources — at $6.68 billion for the current fiscal year, which ends June 30. For the 2015 fiscal year, which starts July 1, the group estimates revenue of $6.98 billion, a 4.5 percent increase over the current year.
“Iowa’s economy continues to move forward at what I would call a steady pace, not a rapid pace but not an anemic pace, either,” said David Roederer, director of the Iowa Department of Management. “Employers are reluctant to expand and hire people and until that sentiment changes we’re wise to be cautious as to what’s going to happen with the economy.”
Roederer represents Iowa Gov. Terry Branstad on the three-member REC and comes up with the governor’s budget estimates.
The other two panel members are Holly Lyons, the fiscal division director of the Legislative Services Agency, and David Underwood, a retired chief financial officer for a metal door manufacturing company in Mason City.
Lyons said Iowa farm income is down 16 percent this year due to a drop in corn and soybean prices. The price of a bushel of corn is 40 percent lower than in February of last year and soybeans are down 7 percent, Roederer said.
Employment is up and corporate tax revenue is rising, but consumers and business owners remain cautious about the economy.
The group concluded it should leave the revenue estimates at the levels released in December.
Iowa law requires the governor and Legislature to use December’s estimates in drafting next year’s budget unless the REC concludes in March that state revenue will be less than the December estimate. If that’s the case, the budget must be adjusted accordingly.