With the fiscal year almost over, the state is continuing to outperform last year.
Iowa’s revenue report for April has been released and the data revealed net General Fund revenue for the month was $157.3 million (-18.1%) below the April 2022 net revenue level. When broken down by the three largest sources (personal income tax, sales/use tax, and corporate income tax), revenue compared to April 2022 is detailed below (directly from the LSA Revenue Memo):
Since month-to-month comparisons can be volatile, it may be even more important to consider year-to-date information, as well. Total net receipts YTD are 2.4% more than 2022, with growth in personal income tax, sales/use tax, and corporate income tax. One of the taxes to see the largest decrease compared to last year is the inheritance tax, which is expected given its phase out.
With multiple pieces of tax-related legislation passed during the 2022 legislative session, some revenue categories are predicted to bring in fewer dollars than last year. The State Revenue Estimating Conference (REC) met on April 10, 2023, to update their projections for the current (FY23) and next (FY24) fiscal years.
The REC’s most recent projection forecasts a revenue decrease of only -0.5% from last year, which translates to more revenue when compared to the -1.9% decrease predicted in the December REC meeting. The year-to-date figures with only two months left of this fiscal year are below (directly from the LSA Revenue Memo), along with the REC forecast:
The FY 2023 REC personal income tax estimate represents a projected decrease of -2.5% compared to actual FY 2022. When looking at actual collections through April 2023, personal income tax receipts have increased 0.6%.
The REC estimate for FY 2023 sales/use tax receipts is a projected decrease of -3.5% compared to actual FY 2022. The actual collections of sales/use tax receipts through April 2023 have increased 4.2%.
The REC estimate for FY 2023 corporate income tax revenue is a projected increase of 4.6% compared to actual FY 2022. Through April 2023, corporate income tax receipts increased 7.0%.
With the fiscal year almost over, the state is continuing to outperform last year. The personal income tax receipts for April were impacted by the income tax law changes per LSA. This is good news because it shows taxpayers are getting to keep more of their hard-earned money, yet the state is still in a solid financial position to fund its priorities.
The next REC meeting has not been scheduled. The following chart illustrates total General Fund revenues on a month-to-month basis for fiscal year 2023. While total net revenues for the month are below last year’s figures, the state is still performing better than the forecast, which is what the state’s budget is based upon.