On Friday, March 23, the Revenue Estimating Conference (REC) will meet to review and revise the revenue estimates for FY 2012 and FY 2013.
The REC consists of Dave Roederer (Governor’s appointee), Holly Lyons (Legislature’s appointee) and David Underwood (private sector member, appointed by the other two members). By law the REC meets three times a year. It meets in December to set the official estimate for the following fiscal year that must be used for budgeting, again in March (which is only used if the estimate goes down) and then in October after the books close on the previous fiscal year.
Through March 20, revenue for FY 2012 was running at 3.1 percent. This is above the December REC estimate of 1.8 percent. It is likely the REC will increase the estimate of $6.000 billion in net general fund revenue. However, it is expected the REC will be cautious about increasing the estimate too much.
Any increase up to $14 million is deposited into the Taxpayers Trust Fund (TTF), which currently is estimated to have $46 million. If the increase is $14 million or more, the TTF will meet its maximum balance of $60 million. If it is over $14 million, the remainder flows into the general fund and can be spent the following fiscal year. House Republicans have proposed ending this practice and the Standings bill will contain language depositing the entire ending balance into the TTF.
The revenue estimate for FY 2013 is 4.2 percent over estimated FY 2012. This is the figure that the Legislature and Governor must use when crafting the FY 2013 budget. If FY 2012 is increased, it will increase FY 2013 but that additional revenue must go into the ending balance.
It is clear that Iowa’s economy continues be strong due to the high commodity prices. However, with gas prices continuing to rise, that will have an impact on the agriculture sector and that is one reason why it is expected that the REC will remain cautious when it comes to increasing the revenue estimates.
House Republicans continue to advocate for a conservative budget blueprint in order to deal with the potential impact of high gas prices as well as the possibility deep federal budget cuts.