Hawkeye Reporter

According to one policy analyst, pro-growth fiscal policies are the reason Iowa's economy remains strong after weathering the economic impact of the pandemic.

By following fiscal conservatism, Gov. Kim Reynolds and the legislature have kept spending low, while funding the priorities of government and cutting Iowa's income tax rates, John Hendrickson, policy director of the Iowa Tax Education Foundation, told Hawkeye Reporter.

In a major study by a London-based think tank, Legatum Institute, Iowa ranked high in the prosperity index: 13th in the United States, which is in line with previous years. The top three ranking states were Massachusetts, Minnesota and Connecticut.

The 2021 United States Prosperity Index scores U.S. states across a range of criteria, from salary and job security, to governance, social capital, business environment, the overall economy, health and education.

Iowa scored well on governance and social capital economy, along with other metrics, but fell farther down the ranking for business environment, 29th, and infrastructure, 20th. Under economic quality, it ranked a healthy eighth out of all states.  

Iowa’s scored high in part because of a low unemployment rate and the high percentage of Iowans in the workforce, according to some commentators.

Hendrickson believes the healthy economy and the state's competitiveness is a result of fiscal conservatism.

"Budget reserves are full at a projected $500 million surplus while revenues are strong," Hendrickson told the Hawkeye Reporter, adding that moves to "eliminate excessive regulations" and occupational licensing reform were positive.

"During the COVID-19 pandemic, Gov. Reynolds responded with prudence by protecting the health and safety of Iowans while keeping our economy open as much as possible," he said. "Gov. Reynolds did not follow the draconian lockdown measures as other states, which not only hurt their economies, but also the liberties of their citizens." 

Hendrickson also supports the governor's moved to end the $300 federal unemployment benefit, which he said was "discouraging people from returning back to work."

"Currently, Iowa has a need for more workers and has numerous of open positions. Even before the pandemic, this is one of Iowa's economic challenges," he said.

The policy analyst also highlighted other measures and moves he believes has spurred the economy, including a tax reform measure that eliminated income tax triggers and phases out inheritance tax.

He believes the danger for Iowa comes from Washington, D.C., and spending that is triggering inflation.

"The out-of-control spending by the federal government is dangerous and if the Biden administration is allowed to raise taxes, it will have a devastating impact on the economy," Hendrickson said.