(Radio Iowa) – Governor Kim Reynolds has presented a state spending plan to legislators that’s about 700-MILLION dollars ABOVE projected state tax revenue. Reynolds says that dip in tax collections is expected due to the big state income tax CUT that took effect January 1st and she’s recommending legislators approve withdrawals from a series of state savings accounts to cover the difference.

“We ran a lot of different scenarios based on different percentages of growth, based on spending,” Reynolds says. “We try to keep (spending) in check and that’s part of being able to sustain the tax cuts that we have in place and hopefully be able to lower them going forward.” Reynolds predicts cutting Iowa’s personal income tax to a single rate under three-point-nine percent this month will spur the Iowa economy.

“With President Trump coming back into office, the mood has completely changed. I’ve talked to businesses. It’s been a game changer. It’s palpable,” Reynolds says. “…We believe by lowering taxes and regulations and just being a partner with businesses, they’ll locate here and expand here and that will help our overall revenue.” House Speaker Pat Grassley says an initial reduction in state tax receipts was expected, so G-O-P lawmakers budgeted cautiously over the past several years to beef up the state’s reserves.

“You have $6 billion in reserve accounts…that we built in there on purpose,” Grassley says, “and put mechanisms in place to start pulling money out.” Grassley made his comments during taping of “Iowa Press” which airs tonight (Friday) on Iowa P-B-S. Senator Janet Petersen, the top Democrat on the Iowa Senate’s budget committee, says Iowans need to be reassured these withdrawals won’t turn out to be a yearly occurrence.

“Just wanting to make sure that we’re not using the savings account for ongoing expenses,” Petersen says. Nearly all of the 700 million dollars would come from the state surplus and cash reserve. About 15 million dollars would be withdrawn from the state’s Economic Emergency Fund – to help Iowa victims of last year’s federally-declared flood and tornado disasters. Reynolds is asking for authority to make similar withdrawals when the legislature isn’t in session, with the approval of other statewide elected officials.

“Give us more flexibility through the Executive Council, so it’s not just me deciding, but I could draw down some additional funds and help get these funds to local governments quicker,” Reynolds says. The state’s Economic Emergency Fund has a current balance of over 230 MILLION dollars.