Overview / Major Events
This week marked the arrival of the 2nd funnel and the end of the work of the various policy standing committees. Here forward the only significant work will be in Appropriations and Ways and Means Committees (and this will continue until the end of Session).
With roughly four to five weeks left in the Session, work will now shift to the respective House and Senate floors as they begin to clear the calendar of the remaining policy bills and dig deep into the appropriations process.
What’s Alive or Dead?
Among the big items that have cleared all funnel hurdles and will be eligible for the duration are bills to legalize sports betting in Iowa, a proposed constitutional amendment to embed gun rights in the Iowa Constitution, legislation to require pharmacy benefit managers to share drug discounts with patients, and a proposal to change the nomination process for judges at the Appeals and Supreme Court levels.
On the other hand, a number of bills requiring greater accountability in regards to benefits received by low income Iowans died this week when failing to clear the House Human Services Committee. Also no longer eligible for debate is so called “religious freedom” legislation that had cleared a Senate standing committee, but never received a hearing on the Senate floor. The House also failed to move out of committee a Senate-passed measure to place additional penalties on Iowa businesses that employ unauthorized aliens.
March Revenue Slightly Lower than Estimate
The monthly revenue report for March shows state revenue collections continue to trail budgeted estimates by a small amount, with an expected boost of sales tax revenue from new digital taxes not meeting expectations in the first few months.
Year-to-date revenue collections for FY19 are growing at a rate of 3.5%. The FY19 budget was built on a 4.8% growth rate. If this continues through the three remaining months of the fiscal year the difference is enough to impact the state’s ending balance, but not enough to impact any FY19 budget obligations (as the state has ample cushion built into the current fiscal year budget).
While personal income tax collections are always the largest driver in state revenue collections (and they are growing at 1.5% rather than at the estimated 2.7%), the anticipated jump in state sales tax collections due to new state taxes on digital products has not yet materialized.
The tax on digital downloads, digital storage, and other online purchases went into effect on January 1 of this year. State estimates pegged an increase in overall sales tax collections at 5.8% for the entire fiscal year (beginning July 1, 2018), meaning the final six months would include the new digital tax collections.
However, year-to-date sales tax collections are up 2.7%, but that is more than three whole percentage points lower than the estimate. It is likely too early to read much into these numbers, but they will certainly be closely watched over the next few months.