Net state tax revenue was up 12 percent from July 1st through October 31st.
“The revenue situation is not near as rosy as there are two significant issues to the growth posted through the end of October,” Jeff Robinson, the senior fiscal analyst for the Legislative Services Agency, said in a video posted on the Iowa Legislature’s website.
First, some of the tax growth in July and August is being recorded as tax payments due before July 1st. That money was used to erase some of the deficit in the last state budgeting year. Second, the Iowa Department of Revenue implemented a tax processing change. A significant amount of taxes came into the state treasury on October 31st rather than sometime in November.
Robinson indicated that when adjusting for those two issues, tax payments to the state were up about 2.3 percent for the past four months.
“The combination of individual income tax, sales tax, use tax and corporate income has produced modest growth through October 27th,” Robinson said in the video.
On October 19, a three-member panel reduced its official prediction of state tax collections. If tax revenue does not grow significantly this November compared to last November, at least $35 million will have to be cut from the current state budget.