State tax revenues continue to lag. The state collected nearly three percent less in overall taxes in October compared to the same month a year ago.
“General fund revenues were a little bit disappointing in October and that’s kind of been a trend lately,” says Jeff Robinson, an analyst for the Legislative Services Agency.
Individual income tax payments to the state were up five percent last month, but corporate income tax refunds were pretty large.
“That provided quite a drag on revenue,” Robinson says.
Sales and use taxes account for a big chunk of tax collections, but sales and use tax payments to the state were down 1.3 percent in October.
“Sales and use tax has been weak for a number of months now,” Robinson says. “…That is a disappointment, particularly given the price of gasoline.”
According to the AAA, gasoline prices in Iowa are about 70 cents per gallon cheaper today than they were a year ago. Robinson says Iowans don’t appear to be spending the money they may be saving on energy costs, however. Experts had predicted overall state tax revenue would be growing at a four percent clip, but there’s been just a slim, 0.1 percent increase since July 1.
“The trend for the first four months of this cash fiscal year has not been positive other than personal income tax and, unfortunately, what we’re finding so far is that personal income tax can’t hold the revenue stream together if all the rest of them are declining,” Robinson says, “so hopefully what comes in the future months is that what is happening in personal income tax are just transient things that disappear.”
A three-member panel of financial experts will meet in December to review the data and set an official estimate of state tax collections. That estimate must be used by the governor and lawmakers as they draft next year’s state budget.