(The Center Square) – Iowa Economic Development spokesperson Kanan Kappelman said the state’s tax revenue decline is largely the result of the COVID-19 pandemic.
A Legislative Services Agency report concluded tax revenues were down 48% over a five-week period in March and April compared to a year ago, with tax revenues across the state down in virtually every category, the Quad-City Times reported. The Legislative Services Agency report said factors other than the pandemic caused revenue to decline and that the full extent the pandemic’s impact on revenue wouldn’t be known for several months.
Kappelman said the decline was the result of the new coronavirus.
“Much of the loss can be attributed to the governor moving the tax filing deadline from April to July, giving more time to individuals and businesses to pay their taxes,” Kappelman said. “The deadline to extend is meant to accommodate the fact of the pandemic and to give everyone more time knowing that they are now enduring the stress of a pandemic.”
The Legislative Services Agency added that the combination of reduced economic activity associated with the virus and Gov. Kim Reynolds’ disaster emergency proclamation, which shut down some sections of the economy, won’t be fully known until later this summer.
Still, LSA fiscal analyst Jeff Robinson said things could be worse if the state hadn’t been doing the job it had been doing to keep the state’s finances in order. Pew Charitable Trust estimated that the state ended fiscal 2019 with $289 million in reserves.
“I’ve looked at how much money we have now, and we have a lot,” Robinson told the Quad-City Times, adding that even with all the shortfalls he doesn’t anticipate the state to be financially crippled over the short term.
Kappelman is taking more of a wait-and-see attitude.
“I can’t say for sure if revenues will add up by the end of the year,” she said. “The Revenue Committee is scheduled to meet next week and will be setting new numbers as look toward a budget for next year.”