State tax receipts are down about 6.5 percent for the first eight months of the state fiscal year.
A Legislative Services Agency report shows personal income tax withholding payments to the state were down more than 7 percent in February compared to the same month a year ago. And sales taxes were off nearly 10 percent. Jeff Robinson, a senior analyst for the Legislative Services Agency, says since the last two days of February fell on a weekend, some $30 million worth of taxes weren’t paid to the state that might otherwise have been deposited on a weekday. Still, the report indicates Iowa’s economy is in the doldrums.
“The U.S. is not bouncing back. Neither is Iowa bouncing back. Withholding was going to be down even without the deposit issue. Sales tax was going to be not very good at all, even without the deposit issue,” Robinson says. “Those two things are big drivers, but they aren’t terrible.”
State officials have begun discussing setting aside more money than last year to pay Iowans’ income tax refunds this spring, as personal income seems to be on the decline. “We should expect with unemployment as high as it is, with job growth being as bad as it was in 2009, dividend income down, interest income down — you would expect your (personal income tax) returns to not look good,” Robinson says.
A three-member panel of financial experts will meet March 11 to discuss their prediction of state tax revenue. This latest report of state tax collections for the first eight months of the fiscal year will influence their decision. The last time the “Revenue Estimating Conference” met, the panel predicted state tax collections would be down 8.5 percent this year compared to last. Actual tax receipts for the first eight months of the year are running about two percent above that. Robinson, the Legislative Services Agency analyst, says there are “some signs” the economy is “nearing” the bottom.
“If you look at the data, it’s not real obvious that this actually is the bottom,” Robinson says. “It’s just a slowing of the drop.”
Sales taxes can sometimes be considered a measure of consumer confidence. Iowans paid over $271 million in sales taxes last month. That’s nearly $30 million less than was paid in sales taxes in February of 2009.