Net state tax receipts dropped by nearly 12.5% last month and it could prompt some last minute shuffling to keep the state budget in balance. Officials say the double-digit decline was fueled not only by the current state of the economy, but by an increase in state tax refunds.
Iowans received about 25% more in refunds than officials had projected because Iowa investors suffered big losses in the stock market last year. There was an 11% drop in state income tax collections as well.
The state fiscal year ends June 30th. The precipitous decline in state tax collections in May could force the governor to dip into the state’s cash reserve to deal with the more than $100-million shortfall. The 12-month budget plan developed by legislators and the governor shows a nearly $45-million ending balance.
Culver has described that as "a cushion" but that would deal with less than half the shortfall. Culver ordered an across-the-board cut in the state budget in December, but similar action with just a few weeks left in the state fiscal year is unlikely.