Iowa tax analyst: Revenue numbers don't show true picture

The dome of the State Capitol building in Des Moines is shown. (The Gazette file)
The dome of the State Capitol building in Des Moines is shown. (The Gazette file)

DES MOINES — State tax collections are looking good, but looks can be deceiving, according to the experts at the Legislative Services Agency.

According to the LSA’s monthly revenue report, state tax receipts were up $62.6 million last month — a 10 percent spike compared with November 2019.

However, LSA senior tax analyst Jeff Robinson notes that third-quarter tax payments that were due at the end of October were pushed into November because the end of the month fell on a weekend — skewing both months’ numbers. Combined, receipts were actually down $23 million, or 1.8 percent, for the two-month period compared with a year ago.

Likewise, year-to-date receipts from July 1 through Nov. 30 are running 10.5 percent higher than a year ago. But the COVID-19 pandemic delayed 2019 income tax payments due April 30 until July 31, which disrupted fiscal year cash-basis comparisons that are calculated on a July 1 to June 30 basis.

Based on those skewed numbers, fiscal 2021 state tax receipts of $3.686 billion are up 10.5 percent through November, but Robinson said “that’s nowhere close to the real number.” This fiscal year’s revenue growth is roughly 2.9 percent, or $80.7 million.

Given the economic disruption caused by the coronavirus pandemic — the temporary business closures and permanent shutdowns along with job losses it has caused — Iowa’s economy has done surprisingly well and better than most experts expected, he said.

The state Revenue Estimating Conference, which meets later this month to set projections that the Legislature and Gov. Kim Reynolds must use for budgeting purposes next session, expects the state treasury to take in about $10 million less than last fiscal year — a minus 0.1 percent estimate.


Robinson said Iowa’s financial situation has been propped up by “a huge amount” of federal money via the $1.25 billion CARES Act stimulus, PPP assistance to businesses, farm payments and derecho disaster aid.

“It probably would be a lot worse without it,” he noted. “It would probably be Armageddon time, I wouldn’t doubt,” he said.

At the same time, Robinson said the state revenue numbers don’t capture the fact that many of the Iowans who have been hardest hit financially during the COVID-19 pandemic are at the “lower end” of the “income stream.”

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