DES MOINES — What a difference a month makes.
In July, Iowa officials were celebrating the close of a fiscal year that saw state tax collections jump by 16.3% and top pandemic-ridden fiscal 2020 receipts by more than $1.1 billion.
Fast forward to Tuesday, when the Legislative Services Agency issued a monthly revenue memo that showed a pendulum swing to the negative with tax collections last month down by 33% — a $308.8 million drop caused by shifting tax filing due dates and complicating calendar issues.
“It’s murky,” said Jeff Robinson, a senior LSA tax analyst. He said it likely would take at least a three-month quarter for a trend line to start to develop regarding how Iowa’s economy and state tax collections are faring as effects of the pandemic on employment numbers and other factors play out.
In July 2020, the state collected a whopping $932.5 million after the April 30 deadline to file personal and corporate income tax returns was delayed to July 31 as Iowans struggled to deal with the economic effects of a COVID-19 pandemic that arrived in the state in March 2020.
By contrast, Tuesday’s LSA memo indicated state tax receipts last month totaled $623.7 million — a number muffled by the fact that July 31 fell on a weekend so some tax revenue that was collected did not get counted until Monday, Robinson said.
“Last year, $169 million was deposited on July 31 and this year it was zero because it was a weekend, so you can picture how that would swing things a lot,” he said.
The result was personal income tax collections in July were down by 50.7% and corporate income tax collections were off by 92.7%, according to the LSA report.
By contrast, state sales tax receipts last month jumped by 22% (nearly $70 million) as consumers had pent-up demand and federal stimulus money to spend compared with July 2020, when COVID-19 mitigation protocols put a damper on Iowans’ purchases.
“Looking at one month on a cash basis, particularly the month of July, has never really been a very good idea,” Robinson said. “You can’t garner any trend from this. But you’ve got to put out a monthly revenue memo, otherwise it’s not monthly. But we really should skip July and August and wait until September.”
Currently, the state Revenue Estimating Conference’s projection for fiscal 2022 expects the state to collect more than $8.184 billion — a 4.4 percent decline that was made last March before Iowa saw the late-arriving spike in fiscal 2021 tax collections.
Robinson expects that negative 4.4 percent yearly projection will be revised when the three-member state panel convenes in October to revisit its fiscal 2022 estimates.