State tax collections increased just one percent over the past three months, far short of the more than seven percent revenue growth that was projected. Legislative Services Bureau analyst Jeff Robinson says it’s too early to detect a big trend, though.
“Yes, the fiscal year is behind estimates at the moment, but that often happens and the year turns out differently than those first three months look,” Robinson says.
The state fiscal year started July 1, 2016. During July, August and September, Iowans have paid about four percent more in income taxes to the state.
“But it’s growing kind of at a muted level compared to normal non-recession years,” Robinson says. “Part of that is refund issues.”
The State of Iowa has paid a higher-than-normal amount of income tax refunds in the past three months.
State sales tax collections have grown more than three percent in the past three months, but Robinson cautions some of that growth came from accounting transactions that aren’t related to actual retail sales. The three-member panel of financial experts who set the official prediction for state tax collections will meet October 13.
“It’ll be interesting,” Robinson says. “I think people should pay attention to what happens.”
The total amount of state spending is based on the predictions from the three-member Revenue Estimating Conference. In the fall of 2009, former Governor Chet Culver enacted a 10 percent across-the-board cut in the state budget based on the group’s decision to dramatically lower its estimate of future state tax collections.
Current Governor Terry Branstad has said if state spending plans have to be changed, he will call legislators back into special session to make selected budget cuts.