Iowa state tax collections finish below expected level

DES MOINES - State tax collections ended fiscal 2014 with somewhat of a rough landing, finishing the 12-month period this week about $185 million below what state revenue estimators expected.

'We had less revenue than budgeted,” said Jeff Robinson, a tax analyst for the Legislative Service Agency, which tracks state tax receipts and issues a monthly report. For June, state revenue was down by 1 percent, pushing the overall net receipts to 5.4 percent below fiscal 2013.

The drop was not unexpected, given that federal tax policies caused last year's tax collections to come in artificially high as taxpayers made decisions based on an expectation of unfavorable tax policy changes that for the most part did not materialize.

However, a tough farm economy and other factors had a negative impact on state tax collections that experts already had expected would come in at least 2.6 percent below the $6.655 billion in net state taxes collected in fiscal 2013. When the dust settled Tuesday, preliminary figures indicated state receipts totaled $6.294 billion for the 2014 fiscal year, although some adjustments will occur until the state's financial books officially close for the year by September.

'It definitely missed the estimate on the low side, but I think it will get better by the time the books finally close,” Robinson said, noting '2013 was better than it should have been and, therefore, all that money got pulled forward and it was not a small amount of money. We just had to pay it back this year by having what would have normally been 2014 revenue in 2013.”

State tax withholding and sales/use tax receipts for fiscal 2014 were good but not great, Robinson said, an indication Iowa's economy continues to grow.

For the fiscal year that began this week, the state Revenue Estimating Conference expects overall net tax receipts to top $6.8 billion, which would require growth exceeding 5 percent.