A three-member panel is projecting state tax revenues will grow more than previously expected. The group is “cautiously optimistc” according to Iowa Department of Management director Dave Roederer.
“What is encouraging, currently, is that personal income and corporate income tax is growing,” Roederer says. “What’s dampening some of our optimism is that employment is not growing as much as we think it should be.”
Roederer is one of the three people who serve on the committee that sets an official estimate of future state tax revenue. That lingering caution among Iowa businesses when it comes to hiring more workers is one of the reasons the group did not peg state tax revenue to grow more significantly. Roederer says it’s also hard to calculate how rising gas prices may hit the economic recovery.
“Whenever we kind of start feeling comfortable that we’re coming out of this recession, then something like that happens,” Roederer says.
The State Revenue Estimating Conference today increased its estimate of state tax collections in the current year by $51 million — money that will wind up boosting the level of left-over cash when the state fiscal year ends June 30. The group raised its estimate of state tax collections for the following 12 month period by $29 million.
“Keep in mind, the numbers we’re talking about,” Roederer says. “A one percent increase is $60 million, so you can see that we’re still projecting just moderate growth.”
If state tax receipts hit the official estimate, the State of Iowa will collect nearly $6.3 billion in taxes for the next fiscal year.
“We’re doing pretty good,” Roederer says. “But we’re not in the ‘we’re doing great’ category yet.”
The expected growth rate in state tax collections is 3.8 percent for the 2013 fiscal year which begins July 1. Roederer made his comments during a telephone interview with Radio Iowa.