State tax receipts take double-digit plunge in April

DES MOINES - A deeper-than-expected dip in April's state revenue has raised worries for budget managers. But concerns may be allayed once they see how an Iowa income tax filing deadline that was extended to May 1 may have affected tax collections.

Last month's $335.1 million in tax receipts was down 18.9 percent, or $78.3 million, when compared with April 2015. The showing pulled year-to-date growth in collections down to six-tenths of 1 percent over the same 10-month period one year ago.

It also fell below the 2.2 percent growth estimate for this fiscal year set by the state Revenue Estimating Conference that lawmakers and Gov. Terry Branstad used for budgeting.

It's a concern,” said David Roederer, Branstad's budget manager and director of the Iowa Department of Management.

The big hit, according to the latest monthly revenue report issued by the Legislative Services Agency, came in personal income tax collections, where receipts plunged $73.5 million - or 17.4 percent - compared with April 2015.

Also, state corporate income tax receipts were down 14.5 percent in April and state sales/use tax collections were off 5.3 percent compared with one year ago, according the LSA.

Jeff Robinson, an LSA tax analyst, noted that $30 million or so of last month's decline could be attributed to the state's April 30 income-tax filing deadline falling on Sunday, so individual income tax payments with returns were not due until midnight Monday. That means some receipts won't show up until the May report, he said.

Iowa will need a banner May to post growth given that last May was the second-largest month for collections in state history with gross receipts totaling $969.7 million with a net gain of $874.6 million once refunds and other deductions were taken into account. State tax refunds for the current fiscal year totaled $914.7 million through April, which was up 5.5 percent and was running close to the REC expectation.

In March, the three-member Revenue Estimating Conference expressed concern that Iowa's slow, 'lackluster” economic growth was a cautionary signal and Branstad warned that Iowa's bird flu epidemic and depressed commodity prices were having a negative impact on revenue growth.

'It's primarily in personal income and there is some softening in the sales tax,” Roederer said Tuesday.

During the 2016 legislative session, which adjourned last Friday, the split-control General Assembly adjusted current-year net receipts downward by $97.6 million to allow 'coupling” with federal tax-law changes, adjusted spending upward by $72.4 million with supplemental appropriations and projected the state would end fiscal 2016 with a $75.3 million surplus on top of the $718.7 million in cash and emergency reserves at the required 10 percent level, according to LSA projections