State sales tax revenue for the month of July fell significantly. Jeff Robinson of the Legislative Services Agency said the $101 million drop may be because consumer spending was so high in July of 2021.

“All states experienced a very large increase in sales tax revenue as economies reopened and consumers returned to the market with pent up demand and federal stimulus money to spend,” Robinson said. “Eventually, this situation was going to subside and perhaps this is a sign retail spending is returning to normal.”

Quarterly sales tax and income tax payments to the state were due July 31. Total state tax collections for the month of July declined.

“The slowdown is rooted both to changes in the state accounting process and to the unusual nature of the national economy as retail spending emerged from the pandemic lockdown,” Robinson said.

The Iowa Department of Revenue created a new account last
November that intitially holds all payments to the state — including state fuels taxes that must be separated and deposited in the Road Use Tax Fund. That accounting change makes month-to-month comparisons difficult until taxes are separated into categories.