Revenue Estimating Conference adopts Legislative Services Agency estimates, approves related transfers

On Dec. 12, 2024, the Revenue Estimating Conference voted to adopt the Legislative Services Agency's (LSA) general fund revenue estimate and to approve related accruals, refunds and transfers, including transferring gambling revenues and interest on reserve funds to the Rebuild Iowa Infrastructure Fund.

The actions formalize the revenue outlook that will be used to set the state's statutory expenditure limitation and guide budgeting for fiscal years 2025 and 2026. Conference staff and executive-branch representatives said the state's fiscal position remains strong despite recently enacted tax reductions.

Jennifer Hrechtin, director of the fiscal services division, opened the substantive presentation. "The U. S. economy remains strong overall. Inflation continues to moderate, and the Federal Reserve began reducing interest rates in September 2024, with ongoing cuts possible through 2025," Hrechtin said. She summarized national indicators cited in the conference: headline consumer price inflation near 2.7 percent, core CPI (excluding food and energy) at about 3.3 percent, declining gas prices (reported at about $3.05 nationally as of Dec. 2, 2024), and consumer spending growth that has supported aggregate demand.

Hrechtin gave Iowa-specific figures and projections used in the LSA estimate. She said Iowa's unemployment rate was reported at about 3 percent and the labor-force participation rate near 66.2 percent through October 2024. Nonfarm employment was described at roughly 1.6 million jobs through October 2024. Hrechtin also told the conference that state reserve funds are strong; she reported reserve funds of about $961 million, a Taxpayer Relief Fund balance she described as about $3.75 billion and a carryforward from the prior fiscal year reported as about $190 million.

Hrechtin and staff described how recent state tax law changes were incorporated into the LSA estimate. Among the changes cited was a reduction of the top individual income tax rate to a flat 3.8 percent beginning Jan. 2025, reductions to the insurance premium tax and the franchise tax, and elimination of the inheritance tax. Staff also noted that the pass-through entity tax continues to complicate forecasting, because it affects multiple lines (miscellaneous tax, refunds and personal income tax) on the REC worksheets.

Conference participants noted that the October 2024 REC estimate and the LSA estimate were close overall. An executive-branch representative said the administration saw "no strong evidence to stray far from the Oct. REC projection," and that the executive recommendation was modestly adjusted for items such as expected federal policy effects (the presentation said the Tax Cuts and Jobs Act was factored into projections where relevant).

Votes at a glance: - Adopt LSA recommendation for the general fund revenue estimate for FY 2025 and FY 2026: motion offered and seconded; adopted by voice vote. - Adopt LSA numbers for general fund estimates, accruals, refunds, school infrastructure transfer, and lottery/other transfers: motion offered and seconded; adopted by voice vote. - Approve gambling revenues transferred to other funds and interest on reserve funds transferred to the Rebuild Iowa Infrastructure Fund for FY 2025 and FY 2026: motion offered and seconded; adopted by voice vote.

All three motions were decided by voice vote during the meeting record; no roll-call tallies were provided in the transcript. The conference concluded with no further business and adjourned.

Notes on scope and limits: presenters and members repeatedly described the actions as confirmations of estimates and allocations rather than changes to statutory spending limits. The conference record emphasizes that the expenditure limitation that caps maximum general fund appropriations is set by statute; the conference's estimates inform, but do not by themselves change, that statutory limit.

The Revenue Estimating Conference adjourned after the approvals and with no additional business on the agenda.