Iowa is staring at a fiscal cliff, the state is spending more money than the revenue that is being collected each year, with the difference being made up in reserves. At some point, the reserve accounts will be drained.
Jon Muller recently wrote an excellent article about this issue on Bleeding Heartland. ("Flying the state budget on one engine", Bleeding Heartland, December 18, 2025). Muller previously worked as a tax analyst and revenue forecaster for the Revenue Estimating Conference, a state agency in the Department of Management.
The state has been facing declining revenues over the last few years.
In fiscal year 2026 (July 1, 2025, to June 30, 2026), the state revenues are expected to be $8.16 billion, while the budgeted expenditures are $9.42 billion, with the difference being taken from the reserves.
Current projections, from the Revenue Estimating Conference, are for the state revenues for fiscal year 2027 to be $8.5 billion (for July 1, 2026, to June 30, 2027), a slight increase over last year. The governor will be building a budget using the fiscal year 2027 projection.
Obviously, this will have long-term implications for all areas of state government.
Protecting the environment requires adequate financial resources; the legislature has not being fiscally responsible in doing that. It shows up in the lack of funding for water sensors, reduced levels of maintenance in the parks and huge backlogs in deferred maintenance of park structures, and inadequate levels of enforcement in environmental laws.