Iowa state revenue collections grow

DES MOINES - State revenue is approaching the 5.5 percent growth estimate heading into the biggest tax collection month of the year.

The monthly report issued by the Legislative Services Agency indicated state tax receipts grew by 4.6 percent, or $18 million, last month, bringing the overall tax collections to $5.19 billion with two months remaining in the fiscal year.

However, LSA senior tax analyst Jeff Robinson said a delayed individual income tax accounting transaction last year 'made April 2014 and year-to-date fiscal 2014 receipts through April appear $31.1 million higher. As a result, April 2015 and FY 2015 year-to-date growth dollar amounts and percentages appear lower.”

So, rather than 4.6 percent growth last month it was more like 12 percent if the $31 million discrepancy is factored into the numbers, and the year-to-date growth is more like 5.3 percent. That growth rate is likely to increase in May - the state's largest tax-collecting month after the April 30 deadline for state income tax returns to be filed. Last May proved to be 'an awful month” due to the cyclical issue caused by Iowa's federal deductibility law and the way it affects state tax liabilities.

The latest monthly revenue report showed personal income tax collections running more than $135 million ahead of last fiscal year and sales/use tax receipts growing by more than $96 million over the previous year. Compared with fiscal 2014 overall, state tax receipts are up at least $231.8 million through April 30 of this fiscal year.

Also Friday, the state Department of Revenue issued its monthly Iowa Leading Indicators Index report, which decreased 0.2 percent in March with only three of the eight components experiencing positive changes.

March marked the fourth consecutive month of negative value with the index nearing the negative 2 percent change that signals a contraction in Iowa's economy, the agency reported. The six-month diffusion index also dipped to 37.5, a level seen in only two previous months during the 64-month stretch since the last recession, analysts said.

March declines were reported in agricultural futures profits index, new orders index and yield spread components. The fall reflects that two additional components - average weekly manufacturing hours and residential building permits - experienced a decrease of greater than 0.05 percent over the last six months even though building permits contributed positively for the month.

According to the department's monthly report, the negative signals in March are pointing toward the impact Iowa's agricultural sector has on the overall economy.

'The agricultural futures profits index was a significant driving force for the (index's) positive change during 2014,” according to the revenue department report. 'Expected livestock profits boosted the (agricultural futures profits), reflecting the swine epidemic pushing up hog prices and low cattle supplies leading to record cattle prices, while dropping grain prices reduced production costs.

'During the first quarter of 2015, slipping livestock prices are no longer offsetting the weaker crop prices,” the report said. 'As these key farm commodity prices fall, farm income decreases and investment in farm equipment stalls. The declining demand in farm equipment is a drag on Iowa's manufacturing sector. Thus, the new orders index showed signals of weakness in manufacturing over the last six months and is an ongoing concern. Furthermore, Iowa's agricultural stocks, which account for 34.5 percent of the Iowa stock market index's value, experienced losses in March,” according to the report.”

Although employment continued in its fifth year of growth in March with the third consecutive month of relatively strong or higher growth, the recent moves in the Iowa index suggest that employment growth will slow into summer.

The two largest positive contributors in March were diesel fuel consumption and average weekly unemployment claims.