A new report on the state’s finances seems to indicate Governor Kim Reynolds not only will be forced to dip into savings, but she may have to call legislators back this fall to balance the state budget. The last state fiscal year ended Friday, June 30th. A Legislative Services Agency report indicates state tax collections during the past 12 months were BELOW expectations — by more than 104 million dollars. The state budget was based on the higher projections, so steps must be taken to ensure the budget winds up in the black this fall when the books are formally closed on fiscal year 2017.

Jeff Robinson, a senior fiscal analyst with the Legislative Services Agency, says the state DID collect more in taxes in June. “But it wasn’t as positive as needed to keep up with the estimate,” Robinson says. Iowa governors have the authority to transfer up to 50-million dollars from the state’s “Economic Emergency Fund” to cover a deficit. SOME payments due the state during the just-concluded fiscal year have not been made, though, and there’s the possibility some agencies have unspent funds that will boost the bottom line as well. However, if the deficit is larger than 50-million when all calculations are completed in September, the governor will be forced to call the legislature back into special session to withdraw more money from reserve accounts to put the budget in the black.

The state constitution requires a balanced state budget. State tax projections were way off because sales tax payments were significantly lower than expected. Robinson says the state did see growth in corporate income taxes as well as personal income tax payments to the state. “But sales tax was essentially flat year-over-year,” Robinson says. “We got $1.7 million worth of sales tax growth over those 12 months, so that was a surprise and that caused the shortfall this year.” Democrats in the legislature say the Branstad Administration intentionally under-estimated a new sales tax break for manufacturers and that’s what has caused the problem. A spokesperson for Governor Reynolds was not immediately available for comment.

(Radio Iowa)