7 Takeaways From Our 2020 Economic Forecast

January 30, 2020

The Business Record held its annual Economic Forecast on the 29th of January. Joe Murphy, Iowa Business Council's Executive Director, was a panelist alongside Greater Des Moines Partnership CEO Jay Byers, Future Ready Iowa's Kathy Leggett, Wells Fargo economist Darrell Cronk and Tom Root from Drake.

Panelists were generally optimistic about the outlook for Iowa’s economy. Part of that is due to the state’s Revenue Estimating Conference in December projecting Iowa would collect more than $8 billion in net general fund tax receipts this fiscal year.

Untapped workforce
Workforce – specifically low unemployment – will continue to have an impact on the economy. However, Future Ready Iowa policy adviser Kathy Leggett said it’s important that employers look to portions of Iowa’s population that have barriers to the workforce. Those include people with disabilities and ex-offenders returning to employment. 

• According to data from the Office of Persons with Disabilities, just over 349,000 Iowans in 2017 reported having a disability – representing 11.3% of the state’s civilian, noninstitutionalized population. The number of Iowans between 18 and 64 with a disability who were employed in 2017 was 77,746, according to the agency.
• Each year between 5,000 and 6,000 inmates are released from Iowa’s nine correctional institutions – and face considerable hurdles to find employment and avoid returning to prison.

Iowa’s economy
Panelists were generally optimistic about the outlook for Iowa’s economy. Part of that is due to the state’s Revenue Estimating Conference in December projecting Iowa would collect more than $8 billion in net general fund tax receipts this fiscal year.  

It’s the first time in Iowa’s history that the Revenue Estimating Conference has estimated receipts over $8 billion, Joe Murphy said.  

“That is significant. That is 2 1/2 percent growth over the course of the next year. … It’s $235 million in new money coming into the state’s budget. Those are all really, really positive things.” 

Contributing to the growth in tax collections are the sales tax receipts Iowa now collects from purchases made online, Murphy said.

While Iowa collected sales taxes from online retailers that had a brick-and-mortar presence in the state, in many instances it didn’t collect sales taxes from online sales to retailers not located in the state. A June 2018 U.S. Supreme Court ruling opened the door for states to collect sales taxes from most online sales. In the fiscal year that ended June 30, 2019, Iowa collected $24.6 million from the remote users sales tax, according to an annual report released by the Iowa Department of Revenue in December. The state began collecting the tax in January 2019. 

“As people continue to do more and more of their shopping online, [the amount collected from the remote tax] will continue to generate growth as well,” Murphy said.

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