An analyst who tracks state tax collections says it appears the state’s economy may have bottomed out and consumer confidence could be on the upswing.
Analyst Jeff Robinson of the Legislative Services Agency points to the income taxes which are withheld from workers’ paychecks. “Withholding tax receipts have shown that we probably bottomed somewhere in March and have started to see some decent growth which means growth at least in wages and maybe growth in employment also,” Robinson says. “Sales tax became very flat back about the same period and in the last couple of weeks has shown positive growth, showing that people are willing to spend a little more money on taxable things.”
A Legislative Services Agency report shows state sales tax collections rose 6.5 percent in May. In the past 11 months, state income tax payments are down 3.8 percent. A panel of financial experts had predicted the drop would be two percentage points deeper than that.
“Receipts are better than estimated, for the year, through those 11 months,” Robinson says. “We have the month of June left and then the hold-open period.” Once the books are officially closed on the state’s current budgeting year late this summer, Robinson says it appears there will be nearly $186 million more in the state’s coffers than experts expected. But that’s only if current trends continue in June.
“Generally, the numbers are good,” Robinson says, “not good compared to a normal year, but good compared to projections.”
The three-member Revenue Estimating Conference had predicted the state would collect roughly half-a-billion dollars less in taxes this budgeting year compared to last. Through the end of May, the State of Iowa had collected nearly $5 billion in a variety of taxes. The experts predict Iowans will pay a little over $3 billion in income taxes to the state and sales tax collections will be a little over $2.2 billion for the state fiscal year that ends June 30, 2010.