Iowa budget year off to promising start
Growth in state tax collections deemed strong
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DES MOINES — Growth in state tax collection is off to a strong start in fiscal 2018.
Jeff Robinson, a senior tax analyst for the nonpartisan Legislative Services Agency, says net state tax receipts grew by 6.8 percent in the two months since the new fiscal year began July 1, but officials generally want at least a quarter to establish a reliable trend line.
Net cash receipts for July and August totaled nearly $1.231 billion — an increase of $78.3 million over the same two-month period one year ago. The state Revenue Estimating Conference initially has projected state tax collections will grow by 5.9 percent for the current fiscal year.
“Nearly all revenue sources are up for the year and all tax refunds issued are down,” Robinson said in assessing the latest monthly revenue report issued Friday. “Only income tax payments with tax returns and estimate payments have produced a revenue drag so far this year.”
Increases of $22.9 million in state sales and use tax collections, $14.8 million in corporate income tax receipts and $13 million in personal income taxes helped bolster this year’s strong start following a fiscal 2017 revenue situation that saw growth estimates repeatedly downgraded until they finished the year $75.8 million below budgeted projections, Robinson noted.
State budget officials are in the process of closing the books on the fiscal 2017 ledger and making sure any shortfall is balanced. While tax collections were short by $75.8 million, Robinson said other calculations involving transfers and accruals need to be made this month that may affect the fiscal 2017 outcome.
For instance, Robinson said transfer revenue was projected to be $255.2 million for the past fiscal year but was “running slightly above the projections” at the end of August. “If that situation continues, the transfer line will mitigate some of the current revenue deficit,” he said.
Gov. Kim Reynolds and her staff are tabulating the remaining fiscal 2017 transactions and monitoring the numbers to decide whether it will be necessary to call state lawmakers into special session to address a state budget shortfall or if she can resolve the issues using executive transfers. The governor said she has the authority without legislative approval to transfer up to $50 million from state reserves to cover a shortfall.
Reynolds is slated to leave Wednesday for a trade and investment mission trip to Israel that will run through Sept. 15.
Lawmakers and former Gov. Terry Branstad, who left state government in May to become U.S. ambassador to China, already had to make nearly $118 million in cuts and adjustments to the fiscal 2017 budget as well as borrow $131 million from the state’s reserves before state tax collections finished on a lackluster note in June.
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