Iowa FY2022 Exceeds Expectations With Large Surplus

Iowa has far exceeded expectations again, as the books are now officially closed on fiscal year 2022. Just over six months ago, Iowa budget experts on the Revenue Estimating Conference (REC) forecast state revenues to be 4.3% more than the previous fiscal year. However, the state ultimately brought in 8% ($717 million) more than last year, resulting in a budget surplus of $1.91 billion.

This is the second year in a row Iowa experienced a billion dollar surplus, as the state ended fiscal year 2021 with a $1.24 billion surplus. While income tax cuts have been phasing in since 2018, these figures provide even more confidence for the coming rounds of rate cuts and the exemption of retirement income scheduled for 2023.

Conservative Budgeting Continues to Pay Off for Iowa

Governor Kim Reynolds announced that Iowa’s budget will end Fiscal Year 2022 with a $1.91 billion surplus, which follows Fiscal Year 2021’s $1.24 billion surplus. Iowa’s financial position is due to prudent budgeting and fiscally conservative policies. Governor Reynolds and the legislature are demonstrating that their fiscal policies work to create a healthy economy and a strong financial foundation.

Kraig Paulsen, who serves as the Director of both the Departments of Management and Revenue, stated that “Iowa’s strong financial status again proves that we continue to over collect from Iowa taxpayers.” As a result, Governor Reynolds and the legislature have made it a priority to return the money back to taxpayers.

State Revenue in August Paints a Positive Picture

Iowa’s revenue report for August has been released and the news for the month was encouraging. Even under the weight of continued inflation and a national recession, the state’s net General Fund revenue was $57 million (6.5%) above the August 2021 net revenue level.

When broken down by the three largest sources of revenue-personal income tax, sales/use tax, and corporate income tax-each category demonstrated monthly growth over 2021 (directly from the LSA Revenue Memo):

A History Lesson for President Joe Biden

A nation emerging from a significant pandemic and an economic downturn awaited President Joe Biden in early 2021. President Warren G. Harding inherited a similar situation after winning the 1920 election in a landslide. But Harding overcame it by getting government out of the way. The economy recovered quickly—whereas Biden enacted bad progressive policies that have resulted in a double-dip recession with 40-year high inflation.

July Revenue Figures Show Strength In Times of Uncertainty

The first month of Iowa’s new fiscal year is now behind us. While looking at a single month is just one small slice of the pie, it might be hinting at some economic trends we are seeing nationwide.  Record low unemployment could be resulting in higher than expected income tax payments, while fast growing inflation and a looming recession might be causing people to spend less of their money.

Make the Tax Cuts and Jobs Act Permanent

No one knows the future direction of the American economy, but several danger signs are ahead. One is continued inflation at 40-year highs or worse — a cruel hidden tax that eats away wages and savings, with more suffering for families struggling to afford groceries and gasoline. Another is a recession triggered by high interest rates designed to fight inflation. This means job losses, lower incomes, smaller nest eggs as stock markets contract, and even tougher times for businesses reeling from supply-chain shortages.

The Impact of the National Recession on Iowa

Politicians, policy makers, and members of the media are scrambling to redefine the term “recession” for the American public.  Sometimes these explanations are counter to the traditional economic classification of a recession which is two consecutive quarters of negative growth, as measured by the nation’s Gross Domestic Product (GDP). For anyone keeping track at home, though, the economy declined by 1.6 percent during the first […]

The Impact of the National Recession on Iowa

Politicians, policy makers, and members of the media are scrambling to redefine the term “recession” for the American public. Sometimes these explanations are counter to the traditional economic classification of a recession which is two consecutive quarters of negative growth, as measured by the nation’s Gross Domestic Product (GDP). For anyone keeping track at home, though, the economy declined by 1.6 percent during the first quarter of 2022, and the first estimate of second quarter activity is scheduled to be released on Thursday, July 28; the next announcement of GDP data could signal the arrival of a recession. That GDP release will likely follow another interest rate hike by the Federal Reserve as the FOMC tries to turn back inflation that’s at a 40-year high.

Unemployment Rate Continues to Fall: Biden Recession Ahead?

Iowa’s economy is in strong condition. Problems remain, such as the need for more workers to fill the thousands of open jobs throughout Iowa. Nevertheless, thanks to sound conservative fiscal policies from Governor Kim Reynolds and the legislature, the state is on a solid foundation. Conservative budgeting and pro-growth tax reforms are creating a stronger economy. However, national economic headwinds are creating problems and it appears more likely that an economic recession is imminent.

Iowa’s Unemployment Rate Continues to Decline

Iowa’s unemployment rate declined to 3 percent in April, which is down from 3.3 percent in March. “The number of unemployed Iowans decreased to 50,900 in April from 55,600 in March. The total number of working Iowans increased to 1,646,800 in April — a figure that is 10,000 higher than March and 45,100 higher than one year ago,” reported Iowa Workforce Development. Unemployment insurance claims are at their lowest level since 1973.

Iowa Poised to Make a Move

For fifteen years the American Legislative Exchange Council (ALEC) has produced Rich States, Poor States: ALEC-Laffer State Economic Competitiveness Index. This broad index measures 15 policy variables that ALEC has deemed important to economic growth, with a particular focus on tax and spending policies.

What Would Hamilton Say About China?

A few recent headlines have passed without much attention. The first story is our national debt has reached $30 trillion, while the second is the trade deficit for 2021 hit a record  $859.1 billion. Both stories were virtually ignored because the American people have just become numb to the topics, though they may be missing some wider ramifications, especially when it comes to trade.

A Very Short Primer on What Causes Inflation

By Patrick Barron What almost everyone calls “inflation” is really a rise in the general price level. OK. But the real definition of “inflation” is inflation of the money supply. A rise in the general price level is a consequence of inflation of the money supply. Technically, the price level is determined by supply and demand, one of economic science’s […]

Budget Growth & Tax Cuts: A Win-Win for Iowa

Let’s make something clear right away: Iowa’s state budget is going to continue to grow in the coming years. The only reason that point may be in question is Iowa’s Revenue Estimating Conference (REC), which has the difficult responsibility of estimating revenue for the state, recently released updated projections. The REC increased the current fiscal year (2022) estimate by 4.2 […]

Governor Reynolds Proposes 4% Flat Income Tax

Governor Kim Reynolds, in her Condition of the State address this week, delivered a Reagan-esque take on the finer points of governing.  “Under these ceilings, next to this marble, among these columns and portraits, it’s tempting to believe that nothing good happens unless we legislate it, regulate it, or fund it.  But in the small towns, around kitchen tables, in […]

Growing Iowa’s Economy – A Blueprint for Free-Market Solutions

Some of our country’s fastest growing states have spent the past decade crafting policies that lower taxes, reduce the regulatory burden, and rely on the choices of their citizens instead of government mandates and control.  The free-market solutions presented in this report are a blueprint for growth and a reliable roadmap for Iowa’s future. Click to download the report

Growing Iowa’s Economy Through Economic Freedom

By John Hendrickson, Policy Director for ITR Foundation, and Dean Stansel, Ph.D., Economist at the Bridwell Institute in the Cox School of Business at Southern Methodist University   A major trend from the Census is the growing number of individuals who are voting with their feet against bad economic policies. States with high tax and regulatory burdens such as California, […]

Ask the Economist

  ITR Foundation Deputy Director Walt Rogers recently interviewed Dr. Ernie Goss, a professor of economics at Creighton University Heider College of Business. They covered many topics facing our economy today. Among them were: Supply chain: We do a monthly survey at Creighton University of supply managers and manufacturers, and we’ve been doing it for 25 years. This is the […]

Disappointment for the Tax and Spend Crowd

Nothing from the local elections here in Iowa, nor races across the country, will have changed the perception that this political environment is toxic for those who want to push a tax and spend agenda.   Tuesday’s elections in Iowa and across the country are now in the books.  Iowa voters went to the polls to elect candidates to school […]

America’s Supply Chain Crisis

Senator Josh Hawley (R-MO) is a leading conservative who is fighting for the America First agenda. Recently, Senator Hawley introduced the “Make in America to sell in America Act,” in an effort to address the supply chain crisis and the troubling dependency upon foreign countries for necessities. Americans are being confronted with increasing prices due to inflation and a clogged […]

Squeeze Until the Taxpayer Cries Uncle

Before President Biden left for a trip to Europe on Thursday, which will include climate talks and a meeting with Pope Francis, he was negotiating a new tax and spend plan with members of his own party in Washington.  Apparently, Iowans weren’t the only ones opposed to his $3.5 trillion Build Back Better plan, as the President was trying to […]

Biden’s Spending Will Hurt Iowans

Our friends in Texas have published a new report entitled Reversing the Recovery, that details how the proposed Build Back Better spending plan could affect our national economy, including how it would impact each individual state. Their conclusion? Iowa would be responsible for shouldering $43 Billion in new debt and lose 51,000 jobs. From the report: “This plan includes heavy […]