With the fiscal year now over, the state will continue its accounting of 2023.
In state government finance, July 1 marks the start of a new fiscal year- Happy 2024, everyone! The start of a new year means we can now begin to look back at the full year of 2023 activity. And while Iowa’s books are technically closed on 2023, the accounting is far from finished, with final figures not available until October. Nonetheless, Iowa’s revenue report for June has been released, giving us our first glimpse of 2023’s results: the data revealed Total Net Receipts for the complete fiscal year currently stand at $9,627,800,000 or 0.4% below FY 2022 levels.
Since state accounting is on a fiscal year/accrual basis, there is still activity taking place that will ultimately be associated with the fiscal year that just ended. Under this accrual basis, the state’s revenue appears to have aligned with projections, finishing just slightly ahead of March’s Revenue Estimating Conference (REC) projection of $9,621,000,000. The fact that 2023’s preliminary results were so close to 2022 revenue is impressive, given that major income tax changes, including rate reductions and the elimination of tax on retirement income, went into effect on January 1 of this year.
When broken down by the three largest sources (personal income tax, sales/use tax, and corporate income tax), revenue compared to FY 2022 is detailed below:
In addition to appearing to meet revenue expectations for the year, Iowa’s strong fiscal position includes a Taxpayer Relief Fund with a $2.7 billion balance. 2023’s results should contribute another $800 million to that fund, which is projected to increase in Fiscal Year 2024 to over $3.5 billion. All of this points to Iowa’s lawmakers considering even more income tax reductions.
Below is a graph depicting monthly revenue collections for FY 2022 and 2023.