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Uncertainty surrounds state budget as COVID-19 continues to do financial damage

The state budget is expected to take a substantial hit from two months of business closings and unemployment, but it's tough to know just how big the hit will be.

DES MOINES, Iowa — As the state slowly reopens and moves into a recovery phase, the Iowa legislature is going to have to completely redo the budget to accommodate for the fallout from two months unemployment and business closings.

Iowa Congress will reconvene in June.  Holding off was good for legislators to ensure safety, but also to figure out how they're going to weather the economic storm the pandemic has put us through.

The state has an annual budget of $8.2 billion, but the Legislative Services Agency doesn't have sufficient data right now to determine just how bad of a hit that's going to take.  

Gov. Reynolds has asked the Revenue Estimating Conference to meet at some point before the legislature reconvenes on June 3 to help them determine their official projection.

In short, there are a lot of unknowns right now.  But here's what we do know:

  • The state has gotten over $2.5 billion in federal aid due to the COVID-19 pandemic (from four rounds of emergency stimulus).
  • The total tax revenue into the general fund is down by 36 percent - or $400 million - from March 19 to May 5.
  • Casinos have lost about $6 million per week since the pandemic went into full force, with about $39 million in total lost so far.

State income and sales tax make up the majority of money that goes into the general fund, and Gov. Kim Reynolds says the state is unsure what kind of hit that will cause because of April tax payments being deferred to July.

Some good news: the state does have around $800 million in cash reserves.

All in all, it's tough to tell at this point what the budget will look like for the remainder of the fiscal year.  We'll keep you updated as information comes in, and things become clearer.

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