Iowa’s fiscal foundation remains strong—thanks to the conservative policies implemented by Governor Reynolds and the Iowa Legislature.
This article was published in the Des Moines Register, The Gazette, and the Waterloo-Cedar Falls Courier.
Here’s the real question Iowans need to ask—do we want a government-driven economy that takes more of our hard-earned money, or do we want to grow the private sector that allows us to keep more of those dollars?
Critics are currently pointing to Iowa’s 1.7 percent GDP growth as evidence that Governor Kim Reynolds’ fiscal policies aren’t working. These critics often highlight progressive states as examples, claiming that greater government “investment” made possible by higher levels of spending and taxation leads to stronger economic growth. This is the modern liberal philosophy: centralization and higher levels of government spending yield better outcomes.
GDP is an important metric, but it doesn’t tell the full story. In 2024, Iowa’s growth was hindered by national economic uncertainty and significant headwinds in the agricultural sector, which in turn affected manufacturing jobs. Rural states like Iowa face unique economic challenges that they often have no control over. Despite this, Iowa’s fiscal foundation remains strong—thanks to the conservative policies implemented by Governor Reynolds and the Iowa Legislature.
As Iowa’s economy continues to fight through the aftermath of the Biden economy, Iowa progressives have showcased the profligate spending of Minnesota Governor Tim Walz as an example of the kind of leadership they want. Do progressives in Iowa expect the rest of our state to ignore how Governor Walz’s policies are working in Minnesota? The North Star state, which previously had an $18.5 billion surplus, is now confronted with a $6 billion deficit after massive spending increases and $10 billion in tax and fee increases.
Other states are suffering similar consequences for their devotion to the tax and spend policy agenda. Colorado ($1.2 billion), Maryland ($3 billion), Illinois ($3.2 billion),Washington ($16 billion), and California ($68 billion), are all confronted with budget deficits as a result of their policy choices. Many of these states are also looking to increase taxes as a way put a bandage on these fiscal disasters.
Governor Reynolds and the legislature, on the other hand, have enacted generational tax reform built on sound, conservative budgeting. While big spenders cry wolf about Iowa’s revenue, the truth is that Iowa’s fiscal house is built to last. The Taxpayer Relief Fund was specifically created to provide income tax relief, and the coming years’ budget projections demonstrate exactly how this plan will benefit taxpayers. The balance of the Taxpayer Relief Fund will be deployed to provide budget stability, with long-term projections still showing Iowa with enough revenue to meet the priority needs of Iowans.
Looking into the future, the March Revenue Estimating Conference (REC) predictions do not support Democratic claims either. Even with tax cuts in effect, Iowa is still projecting a $1.7 billion surplus in FY 2026. Iowa’s reserve accounts—the Cash Reserve Fund and the Economic Emergency Fund—also remain at their statutory maximums, and are estimated to hold $850 million in FY 2026.
Unlike Minnesota, Iowa’s fiscal house is in order. Despite tax cuts reducing revenue as planned, the state can meet its obligations. These tax cuts were financed by prior surpluses—caused in part by overcollection of income and sales taxes—not by reducing government services. This is what conservative budgeting looks like.
It’s critical that the Taxpayer Relief Fund remains true to its intended purpose: delivering income tax relief and not becoming a piggy bank for new spending that would block future tax rate reductions. Conservative budgeting has kept Iowa prepared for whatever it faces—whether it’s national economic shocks like the COVID pandemic and Biden-era inflation, or increased funding needs for Medicaid and education.
As President Ronald Reagan once said, “Well, the trouble with our liberal friends is not that they’re ignorant; it’s just that they know so much that isn’t so.” Thankfully, most Iowans reject the tax-and-spend mindset and understand that fiscal conservatism is the foundation of a stable, prosperous economy.
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