Personal income tax payments to the state have been lower for the past seven months compared the same period a year ago. Jeff Robinson, a senior policy analyst with the Legislative Services Agency, says after a “disappointing” drop of more than 17 percent in all state tax collections in December, there was a slight uptick in January.
“Net General Fund revenue eked out a small gain in January when compared to January of 2013,” Robinson says. “Net revenue increased $2 million, or 0.3 percent.”
Personal income tax payments to the state were down 10 percent in December. Now, with January data included, state officials confirm personal income tax collections have declined by $24 million over the past seven months compared to the same seven-month stretch last year. Representative Chuck Soderberg, a Republican from Le Mars who is chairman of the House Appropriations Committee, says it’s another indication legislators need to draw up a conservative budget plan.
“One month doesn’t make a year,” Soderberg says. “We have some ebbs and flows throughout the year, but the bottom line is I think that is one more piece of evidence that we have to be very cautious when we put the budget together.”
Senator Bob Dvorsky, a Democrat from Coralville who is chairman of the Senate Appropriations Committee, says he’s not concerned by the latest report on state tax collections.
“I mean we had sort of a bonanza the last couple of years, so we’re going to get more in the stream of normal,” Dvorsky says. “Although it seems like at least in my areas and other areas of the state three seems to be a lot of hiring going on, so I think at some point that’s got to be reflected in there.”
Both Dvorsky and Soderberg say recent boom years in the agriculture sector seem to be winding down and that’s a drag on the state’s economy.
From July through January, the state has collected more than $3.7 billion in taxes. That’s 1.2 percent less than the same period a year ago, but an accounting move makes the two time periods difficult to compare. Legislators decided “sin” taxes from tobacco and gambling would be deposited in a separate account. If gambling taxes and tobacco taxes were still included in the “General Fund” tally, state tax revenue would be running 0.6 percent ahead of last year.