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Iowa posts record month for net state tax collections

Rod Boshart, CR Gazette –

Net state tax receipts collected in May were the most of any month in Iowa history.

The $794.5 million deposited in the state treasury after refunds broke a previous record of $791.1 million in net receipts that were reported in May 2007, according to the Legislative Services Agency. The monthly growth was just 1.6 percent because it came on the heels of May 2011’s $782 million, which was the second-largest tax collection month ever until last month’s total was tallied and reported by LSA officials on Friday.

“It’s good news. I can’t spin it in a bad way,” said Jeff Robinson, a tax analyst in the LSA’s fiscal division. “All these numbers look good.”

The record May figures could have been even higher but they came after an exceptionally strong April that saw tax collections grow by 34.6 percent due to some processing factors that skewed the month-to-month numbers.

Through 11 months of the current fiscal year that ends June 30, state tax revenues are running 4.1 percent ahead of the same period in fiscal 2011 and should end well above the 2.6 percent yearly growth projection set by the state Revenue Estimating Conference, Robinson said. Net state receipts through May totaled nearly $5.531 billion, up $218.4 million compared to last fiscal year.

The 4.1 percent growth rate doesn’t reflect the state’s true fiscal picture because a legislative change redirected the first $106 million in cigarette tax receipts into a health care trust fund this fiscal year. Without the shift, state tax collections this year would be up by 6.1 percent – a yearly growth rate that Robinson said is above average and reflective of a good economic recovery.

“Everything still looks pretty good,” he said. “It’s holding up despite bad news to the contrary today at the national level.”

Iowa has had at least 12 months of good revenue growth, Robinson said, with surprising strength in sales tax receipts the past five months – which were up 7.9 percent in May and are holding nearly 2 percent above the REC’s yearly growth estimate.

“Maybe people had pent-up demand for stuff after not spending for awhile,” he said.

Other strong growth occurred in personal income tax receipts, with were running $147.9 million ahead of last fiscal year after the April 30 deadline for filing state returns. That represented a 4.6 percent year-to-date increase. Corporate income tax collections rose by $106.3 million over the previous fiscal year – a 31.9 percent surge, according to the LSA monthly report.

Robinson said Iowa continues to see strength in its agricultural and manufacturing sectors, but financial concerns looming Europe and dogging the U.S. economy continue to raise concerns that could dampen Iowa’s recovery, he noted. At the same time, declining energy prices could offset those concerns with some positive economic effects, he added.

“At this moment there are not signs of downturn. There are more signs of acceleration,” he said.

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