State Fiscal Briefs
Iowa’s budget basics
According to the National Association of State Budget Officers (NASBO), Iowa’s total expenditures in fiscal year (FY) 2022 were $29.4 billion, including general funds, other state funds, bonds, and federal funds. NASBO reported that total expenditures across all states in FY 2022 were $2.9 trillion, ranging from $5.6 billion in Wyoming to $510.0 billion in California.
Each state allocates spending and taxes differently among different levels of governments, and local governments often administer programs with state funds, so combined state and local government data show a more complete picture of individual benefits and contributions when comparing states.
Per the US Census Bureau, Iowa’s combined state and local direct general expenditures were $35.3 billion in FY 2020 (the most recent year census data were available), or $11,065 per capita. (Census data exclude “business-like” activities such as utilities and transfers between state and local governments.) National per capita direct general expenditures were $10,540.
Iowa’s largest spending areas per capita were elementary and secondary education ($2,314) and public welfare ($2,275). The Census Bureau includes most Medicaid spending in public welfare but also allocates some of it to public hospitals. Per capita spending is useful for state comparisons but is an incomplete metric because it doesn’t provide any information about a state’s demographics, policy decisions, administrative procedures, or residents’ choices.
Iowa’s combined state and local general revenues were $40.5 billion in FY 2020, or $12,691 per capita. National per capita general revenues were $10,933. Iowa uses all major state and local taxes. After federal transfers, Iowa’s largest sources of per capita revenue were charges ($2,584), such as state university tuition and highway tolls, and property taxes ($1,806).
Governor Kim Reynolds, a Republican, was elected in 2022 with 56 percent of the vote. The next gubernatorial election is in 2026.
Republicans control both the House of Representatives (64 Republicans to 36 Democrats) and Senate (34 Republicans to 16 Democrats). Control of the governor’s mansion and each house of the legislature gives Republicans a trifecta in Iowa. All Iowa House seats are on the ballot in 2024 because representatives serve two-year terms. Senators serve four-year terms; roughly half the senatorial seats are on the ballot in 2024, and the other half will be up for election in 2026.
Iowa’s budget institutions, rules, and constraints
Iowa uses an annual budget. The legislature is not required to pass a balanced budget, but the governor is required to sign one. Deficits may be carried over into the following year. Iowa also has an appropriations formula that limits spending growth, but the limit may be overridden by a simple legislative majority. There are also limits on total authorized debt incurred by the state but not debt service.
(Note: Some states have informal budget institutions that constrain overall spending growth or a specific expenditure’s growth.)
Iowa’s current budget
Governor Reynolds released her FY 2024 budget proposal and gave her state of the state address in January 2023.
Iowa enacted its FY 2023 budget in June 2022. The enacted budget included $8.21 billion in general fund spending. Iowa also passed major tax cuts in both calendar year 2021 and 2022. Among other changes, the bills (together) lowered the state’s now flat individual income tax rate from 8.53 percent to 3.9 percent (over multiple years) and reduced the state’s top corporate income tax rate from 9.8 percent to 5.5 percent (also over multiple years).
Under the American Rescue Plan, Iowa will receive $1.5 billion in direct state fiscal aid and $952 million in local government aid from the federal government. As of January 2022, Iowa had spent part of its ARP funds on refilling its unemployment insurance trust fund, capital construction, and economic development.
According to NASBO, Iowa’s recent expenditure totals (general fund spending/total spending, including federal transfers) were:
- FY 2022: $8.1 billion/$29.4 billion
- FY 2021: $7.8 billion/$28.5 billion
- FY 2020: $7.8 billion/$26.0 billion
- FY 2019: $7.6 billion/$23.4 billion
For more on Iowa’s budget, see
Iowa’s economic trends
Iowa’s per capita income (per the Bureau of Economic Analysis) was $56,973 in 2021, ranking 30th among the states. It was below both the national average of $63,444 and the Plains regional average of $60,113. The state’s median household income (five-year estimate) was $65,429 in 2021, ranking 28th among the states and below the national average of $69,021. Iowa’s poverty rate was 11 percent in 2021 (five-year estimate), below the national rate of 12.6 percent.
Although Iowa’s averages tell a story about the entire state, Iowa is composed of diverse localities. For example, the city of Burlington’s median household income was $48,013, and its poverty rate was 18 percent; the city of Waukee’s median household income was $101,138, and its poverty rate was 4.8 percent.
Iowa’s unemployment rate has historically been below the national average, particularly following the Great Recession, and in recent years it has been among the lowest in the country.
Unemployment rates (like other economic indicators) often vary significantly by race and ethnicity. However, Iowa does not currently have enough information available for the Bureau of Labor Statistics to break down its unemployment rate by race.