State tax collections are growing at a double-digit pace. The State of Iowa collected just over 11 percent more in taxes and fees in the past eight months than during the comparable period last year. That 11.1 percent translates to nearly $425 million.
Iowans are either earning more or more Iowans are employed — or a combination of both — as personal income tax payments to the state are nearly 10 percent ahead of last fiscal year. In addition, the state is collecting more in tobacco taxes as the taxes on cigarettes, cigars and snuff went up about a year ago. That tobacco tax increase accounts for about two percent of total state tax receipts.
State sales tax collections — a measure of consumer confidence — are up, too. Legislative Services Agency director Dennis Prouty says that may be fueled, in part, by farmers buying new combines and tractors. "I’m sure that’s not all of it, but it’s part of it because they’ve had a good year," Prouty says.
According to Prouty, this latest snapshot of state tax collections shows the recession hasn’t materialized in Iowa yet. "Everybody says it’s still coming, so you have to put a little bit of caution there," Prouty says. That means, according to Prouty, that legislators should consider this latest windfall in taxes for one-time spending projects rather than committing to an ongoing spending increase in some program.