CONTACT: GEORGE MCCRORY
100 Old Public Library
Iowa City IA 52242
(319) 384-0012; fax (319) 384-0024
Release: March 12,
Iowa Economic Forecast projects 3.7 percent state tax
IOWA CITY, Iowa -- In its latest Iowa Economic Forecast,
the University of Iowa Institute for Economic Research predicts state tax
revenue will grow 3.7 percent for fiscal year 2001, which ends June 30.
The 2001 revenue projection is down from the Institute's
November forecast of a growth rate of 5.9 percent for fiscal year 2001. For
fiscal year 2002, which begins July 1, 2001, the Institute predicts 5.5 percent
revenue growth, down from a 5.9 percent estimate made in November.
This forecast is substantially in accordance with
the current official forecast of 3.5 percent issued in December by the State
Revenue Estimating Conference, said Beth Ingram, Institute director and UI
professor of economics. Actual revenue growth for the state stood at 0.3 percent
through the end of February, which was affected downward by a larger than
normal local options tax payout to local governments.
Ingram said the Institute's forecast was made with
the belief that tax revenues will increase over the final months of the fiscal
year. Tax collections also depend on income, and Ingram said the forecast
is based on the expectation that income levels will not be lower than normal.
Each quarter, the Institute publishes the Iowa Economic
Forecast, which contains quantitative forecasts of economic conditions and
tax revenues for the State of Iowa. The Institute released its report Friday
at the Iowa Economic Forecasting Council meeting in Des Moines. The report
is also given to the Revenue Estimating Conference, which meets March 14 to
advise the Iowa legislature on the state revenue situation.
There was a slight decline in the forecast for Iowa
real personal income growth, falling from 3.3 percent in the November forecast
to 3 percent in the most recent forecast.
"These figures do not shout recession," commented
Ingram. "The level of real income in Iowa was actually higher than we anticipated
in the third quarter of 2000."
However, she added that state income data for the
fourth quarter of 2000 has not been reported yet, and could have an impact
on the next forecast.
The Iowa employment growth forecast remained steady
at 0.6 percent for 2001, with some growth seen in the retail and service sectors
and a decrease in the manufacturing sector.