State Budget

Iowa lawmakers will need to use some of the state’s savings to cover part of the state budget next fiscal year, after revenue forecasters estimated Thursday that Iowa will bring in about $400 million less next year than it spent this year.

Iowa Gov. Kim Reynolds has asked lawmakers to use about $700 million of state savings to cover the gap between her proposed budget and the amount of revenue the state is expecting in the coming fiscal year.

Iowa’s income tax rate dropped to 3.8% Wednesday for all residents who pay income tax, the result of several rounds of tax cuts passed by Republican lawmakers in recent years.

Iowa’s state revenue is expected to decline by about $1 billion over a two-year period because of major tax cuts signed into law by Gov. Kim Reynolds, according to Iowa’s revenue forecasters who met Thursday.

Iowa’s Revenue Estimating Conference predicted Wednesday that state tax revenue will fall by about 1% this fiscal year and next as tax cuts passed in 2022 continue to phase in.

The University of Iowa and the University of Northern Iowa received funding to help address nursing and teaching shortages in the state while cuts were made to a program that tracks water quality and another that provides additional services to Iowa children outside of public schools.

The Iowa Legislature could wrap up the 2023 session as early as this week. But before lawmakers head home, they have to finalize a budget.

A $2.1 billion health and human services budget that would increase funding for nursing homes, mental health and substance use disorder treatment was passed by the Iowa Senate Thursday and advanced by a House committee.

A state panel predicted Iowa will bring in a bit less state revenue this fiscal year compared to last year as sweeping, Republican-backed tax cuts start to take effect in January.

DHS Director Kelly Garcia said state officials ultimately determined the state-run facility could not comply with federal requirements "no matter the financial investment."