Double-digit bounce comes after pandemic pause
DES MOINES — Iowa posted double-digit growth in tax collections for fiscal 202,1 which probably will translate into a whopping state budget surplus once the books officially close in September, officials said Thursday.
The state treasury took in more than $8.1 billion for the 12-month period that ended June 30, a 16.3 percent increase that tallied nearly $1.14 billion more than fiscal 2020, according to a report from the nonpartisan Legislative Services Agency.
Because Iowa again delayed its income tax deadline and made other adjustments due to the COVID-19 pandemic, agency senior tax analyst Jeff Robinson said that total likely will be adjusted downward by several hundred million dollars by Sept. 30, but still will finish in double-digit growth in the range of $800 to $900 million compared with the prior fiscal year hard hit for months by the pandemic’s economic consequences.
“Revenue is better than estimated by hundreds of millions. Now we’ve just got to find out how many hundreds of millions,” Robinson said. “All of this looks really good right now, but if you go back to growth from two years ago it’s not. Our two-year growth rate is nothing to brag about.”
One reason for that, the analyst said, is that April, May and June of this year were really strong months compared with a year ago as Iowa’s economy rebounds from a public health disaster emergency that shuttered much of the state for 11 weeks beginning in March 2020 when the first COVID-19 cases were confirmed in the state.
“Last (fiscal) year’s last three months were awful, due to COVID, so beating them is easy as long as the economy is starting to run again,” Robinson said, “and that appears to have happened.”
The numbers in Thursday’s report were eye-popping, with June receipts coming in $80.8 million, or 11.7 percent, over the same month last year. Cash year-to-date receipts were $1.4 billion, or 8.6 percent, over last fiscal year, with gross tax collections topping the state’s estimate for the fiscal year by $600 million after refunds and other factors were taken into account, he said.
The major categories of personal and corporate income taxes and state sales/use tax collections all were up by double digits year over year, and net receipts on a cash basis came in slightly more than $1 billion over what the state’s Revenue Estimating Conference set in its 1.6 percent yearly growth estimate.
“In spite of all that has happened over the past 12 months, fiscal year 2021 will go down as one of the strongest revenue years on record,” according to the Capitol Report issued by the Iowa Legislature’s majority House Republican caucus.
After a period of economic shutdown intended to slow the spread of a novel coronavirus that has claimed at least 6,140 Iowa lives, state revenues are growing at an unprecedented pace as people spend federal stimulus checks and engage in more activities as Iowa reopens for business, travel and events, according to the Legislative Services Agency.
Those depressed spring 2020 months now are being compared with periods of economic growth spurred by COVID-19 vaccinations and pent-up spending capacity that drove up state sales tax collections by $336.2 million this past fiscal year.
After the Legislature ended its 2021 session, the agency issued revised numbers estimating the state’s ending balance surplus at about $487.6 million, and the projection for the 2022 fiscal year that began Thursday at $377 million next June 30. However, Thursday’s state tax collections data likely will cause the fiscal 2021 surplus estimate to be revised upward significantly by the time the official figure is calculated when all accruals and other adjustments are finalized by Sept. 30.
"The state of Iowa's revenue growth in fiscal year 2021 reinforces that Iowa is on the right track. Our state is coming back strong and is well on its way to the full return to normal Iowans deserve,” said Rep. Gary Mohr, R-Bettendorf, chairman of the Iowa House Appropriations Committee. “Our state's financial position is strong and future is bright as we begin FY 2022."
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