Iowa Republican Gov. Kim Reynolds announced a $1.83 billion surplus for the State of Iowa’s fiscal 2023 budget, a slight dip from the $1.91 billion surplus in fiscal 2022.
In addition to the general fund’s surplus, Reynolds also announced a $902 million surplus in reserve funds, a $73 million increase from fiscal 2022, a $2.74 billion surplus in the Taxpayer Relief Fund, and a $1.68 billion increase from fiscal 2022.
“Some see a surplus as government not spending enough, but I view it as an over collection from the hard-working men and women of Iowa,” Reynolds said in the news release.
Kraig Paulsen, director of the state Department of Management, said in a news release that Iowa is now in an “extremely strong financial position” to meet Iowans’ needs.
Iowa state Sen. Janet Petersen, D-Des Moines, said in a statement Wednesday that Reynolds always put rich corporations and special interests first.
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Petersen serves as the ranking member of the Senate Appropriations Committee, which leads the budget-writing process in the Senate.
In the past, Petersen has criticized Reynolds for taking away state funding for special education services and putting more money towards the state voucher program and advocated for a balanced budget.
Drop in corporate tax rate
Reynolds signed House File 2317 in March 2022, reducing corporate income tax rates once their receipts exceed $700 million. With more than $838 million in net corporate income tax receipts in fiscal 2023, the top corporate tax rate dropped 15.5 percent — a 1.3 percentage point increase from its 14.2 percent drop in 2022.
As a result, Iowa’s corporate tax rate will drop to 7.1 percent for tax year 2024. The 1.3 percent drop was not projected to happen until after Tax Year 2027, according to the release.
“From cutting taxes and red tape to expanding economic freedom and opportunity, Iowa is growing and providing businesses and our people the freedom to flourish,” Reynolds said.
Petersen also criticized the corporate tax rates, calling it a “tax scheme” that isn’t working for Iowans.
“While Gov. Reynolds is again slashing corporate taxes and promising more giveaways to come, middle-class families still aren’t getting ahead,” she stated.
