A new report shows Iowa’s economy has hit the doldrums. The report tracks state tax collections, and shows Iowa’s economy is doing much worse than a three-member panel of financial officials expected. The state’s fiscal year began July 1st, and in the first quarter, tax collections were down one-point-three percent. Legislative Fiscal Bureau director Dennis Prouty is one of the three people who estimates state tax collections so budget plans can be made.That group had predicted state tax receipts would grow four-and-a-half percent this budget year, and Prouty says the group will probably cut that prediction by half when it meets next week. Prouty sees a bit of a bright spot when he looks at the amount of income taxes paid the state. He says there’s a one percent increase from September of last year, which is a positive sign.Sales taxes account for one-quarter of state tax receipts, and aren’t growing as much as expected, which shows consumer spending is flat. And the report shows Iowans either aren’t buying cars, or buying used instead of new because the “use” taxes Iowans pay when buying a car are down.Prouty had thought Iowa’s economy had bottomed out and was starting to rebound, but now he’s not so sure.
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