Last week the Revenue Estimating Conference released its projection for state revenue for this fiscal year and next year. Revenue growth is expected to continue to be slow in the coming months. Senate Republicans passed a smaller budget this year than the budget passed in 2016. This achievement is rarely seen in state government. Exhibiting fiscal restraint is always a priority, but it is only part of the solution to the challenges facing Iowa’s budget.
The other solution to slow revenue growth is stronger economic growth. Sustainable, long term economic growth is achieved by reforming taxes. Iowa’s current tax code is laden with high rates, complexity, and a number of exemptions and credits. The proliferation of tax credits are a symptom of an uncompetitive tax code. Rather than implementing tax credit after tax credit for politically favored industries, the goal of tax reform is to lower rates and complexity for all. Lowering rates and reducing the amount and cost of credits creates a fairer, flatter tax structure allowing the free market to most efficiently drive investment.
As I have noted several times over the last year, Iowa needs stronger economic growth. A strong economy has many advantages: better career opportunities for Iowans, increased tax revenue for education, public safety and infrastructure, and careers and quality of life amenities for younger Iowans to remain in or return to Iowa.
Let’s make it happen!