Jones: State revenue remains strong

General Fund revenue for the state continued to come in strong, as tax receipts in May were 43.6 percent higher than what the state collected in May 2021. While some of this increase is attributable to a variety of tax filing deadlines falling on a weekend at the end of April, the strong revenue number continues the state on a path to collect more revenue than what the Revenue Estimating Conference (REC) projected.

Leading the revenue growth this month was personal income tax, which generated $939 million in collections for May. This amount is 60.4 percent higher than what came in during last May. While a good portion of the growth can be attributed to income tax filing deadline being on a weekend, there still was significant growth in income tax withholding, which indicates solid economic activity in the state. Through May, personal income tax collections have risen 7.8 percent, while the March REC estimated growth rate is just 0.9 percent. This figure may come down a bit from its current level, as income tax returns in 2021 were not due until the end of May.

Sales and use tax collections also continued on the upward trend, as May collections were up 26.1 percent when compared to May 2021. Part of this increase was due to April 30 filing deadlines falling on a weekend and pushing revenue into May. For the year, sales and use tax receipts are 9.8 percent higher. This is running slightly ahead of the March REC forecast of 9.4 percent growth.

May is a smaller month for corporate income tax collections, but still this category showed revenue growth for the month. The $54.3 million collected was $1 million higher than what was received in May 2021. For the year, corporate income tax collections are down 10.4 percent. This is slightly higher than the REC forecast of a drop of 10.1 percent when compared to Fiscal Year 2021.

Overall, state revenue through May is 7.1 percent higher than what the state collected in the first 11 months of Fiscal Year 2021. The growth rate is almost 3 percent higher than what the REC projected in March (+4.3 percent). Iowa’s strong economy is helping to withstand the impact of the burst of inflation the country is experiencing. That said, while we are in a good position, we need to keep a watchful eye on Iowa’s economy and that of the nation’s.

Rep. Megan Jones, R-Sioux Rapids, serves Clay, Palo Alto and parts of Dickinson counties in Iowa House District 2.