Critics who argue that the Legislature is depriving education or other programs of funding need to consider that the actual budget has not decreased. Iowa policymakers need only look to the fiscal policy of states such as Illinois, New York, California, among others to see how high taxes and spending work. Reynolds understands that government is not the only solution to policy problems. IowaвЂ™s economy has nearly recovered from the pandemic-triggered shutdown and subsequent downturn in large part because of conservative fiscal governance that has helped keep state government from excessively infringing on the hard work of IowaвЂ™s families and businesses.

Regardless, IowaвЂ™s strong financial foundation was built on fiscal conservatism - not federal largess.Д«efore the pandemic, IowaвЂ™s economy and fiscal house were strong. Iowa, like other states, has been flooded with cash from recent COVID-related federal funds, which wasnвЂ™t needed. The current estimate for FY 2023 could result in close to another $1 billion surplus.

This means that Iowa also has more than $1 billion in the Taxpayer Relief Fund, which is dedicated specifically for income tax relief. Because of these surpluses, IowaвЂ™s cash reserves are at their statutory limit of nearly $1 billion. Going into the legislative session, Iowa had a $1.24 billion surplus ,В along with a $305 million surplusВ from the prior year. This tax reform was made possible by prudent budgeting. The results have been the largest tax reform measure in IowaвЂ™s history that creates a flat individual income tax rate of 3.9% by 2026, gradually phasing down the corporate income tax until it reaches a flat 5.5%, and eliminating all state taxes on retirement income. Reynolds and the Legislature renewed their commitment to those emphases. Prior to the latest legislative session, Gov. Kim Reynolds and the Legislature have placed an emphasis on both tax reform and prudent budgeting. Iowa is proving that lowering tax rates and keeping spending growth low is a fiscal policy that places taxpayers first and supports more economic growth and opportunity.

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