The Revenue Estimating Conference (REC) held their quarterly meeting today and lowered their revenue estimate for FY 2009 from -0.5% to -1.9%. This represents a $81.7 million drop from the previous estimate, and brings the current estimate below FY 2008 levels by $114.2 million.

The REC also lowered their estimate for FY 2010 from -0.4% to -3.6%, below the new FY 2009 revenue estimate. This means a continued erosion of Iowa’s tax receipts by $269.9 million in FY 2010. The Governor and the Legislature will be building the FY 2010 budget assuming net revenues start at $5.756 billion. The Governor and the Legislature are required to use the lower revenue estimate in building the FY 2010 budget.

Here is the joint statement released by House & Senate Leaders earlier today:

This news is further evidence that middle-class Iowa families, employers and state revenues are continuing to feel the pinch of the deepening national recession.

As legislative leaders, we anticipated an additional decline in revenue. That’s why we instructed the chairs of our budget committees to cut Governor Culver’s already reduced state budget by an additional $133 million (which is more than 2 percent of the state budget).

Next, we will take the steps necessary to keep the current year’s budget balanced.

Second, we will adjust our budget targets for the next fiscal year to reflect the updated projections and make the necessary reductions to keep the state’s fiscal house in order.

Finally, we remain committed to a fiscally responsible state budget that focuses on the priorities of the middle class families without raising taxes. While difficult decisions are ahead, we will make good on our promises to make sure every kid in Iowa has health care by 2011 and create good-paying jobs in key industries like renewable energy.