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03-14-2025 |

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March 13, 2025 REC Summary

By: Matthew H. McKinney, R.G. Schwarm & Julie A. Smith

The Revenue Estimating Conference (“REC”) met today (3.13.25) as part of their standard schedule of meetings to estimate future state revenues. REC members Kraig Paulsen (Gov.’s Appointee), Jennifer Acton (LSA), and Jeff Plagge (Public Member) serve on the three-member panel. A summary of the information discussed during the meeting is below, along with the linked spreadsheet distributed at the meeting that contains more granular revenue information. 

Important to Note: Governor Reynolds used the December 2024 estimate to prepare her budget, while the Legislature is required to use the lower of either the December 2024 or March 2025 estimates for its Fiscal Year (“FY”) 26 budgeting. As a result of today’s meeting, the legislature will be required to use today’s estimate as it is $217M lower than the December 2024 estimate.  

Summary:  

FY 2025 (began July 1, 2024): Today's REC estimate for FY25 is lower than the December REC estimate by $19 million. The REC now estimates net receipts for FY25 will be $9,134.6 billion, which is $621.2 million (-6.3%) less than FY24 actual revenues. 

FY 2026 (begins July 1, 2025): Today's REC estimate for FY26 is lower than the December REC estimate by $217.8 million. The REC now estimates net receipts for FY26 will be $8,507.9, which is $626.7 million (-6.8%) less than the REC's FY25 estimated revenues. 

FY 2027 (begins July 1, 2026): Today’s REC was the first time the group estimated revenues for FY27. The REC estimates net receipts for FY27 will be $8,962.4, which is $454.5 million (5.3%) higher than FY26 estimated revenues. 

 3.13.25..

General Comments from the REC Regarding Factors Impacting Estimates: 

  • The national economy is strong, Iowa is resilient. While the current economy is steady, it is showing signs of slowing. 
  • Consumer spending is 2/3 of economic activity. U.S. consumer confidence fell in February to lowest since 2021. 
  • February 2025 consumer price index was 2.8%, in September 2024 it was 2.4%. 
  • Labor market appears to be clearing, with February 2025 jobs better than expected.  
  • National unemployment is 4.1%, Iowa is sitting at 3.2%.  
  • U.S. GDP grew 2.8% in 2024.  
  • There are many variables, and some volatility possible, including: tariffs on agriculture and manufacturing, corn and soybeans pricing, interest rate flections, and stock market volatility.