The most recent Revenue Estimating Conference prediction is aligning with actual results. January results will provide an even better understanding of revenue trends.
Iowa’s revenue report for November has been released and the data revealed net General Fund revenue for the month was $371.9 million (-38.8%) below the November 2021 net revenue level. When broken down by the three largest sources (personal income tax, sales/use tax, and corporate income tax), revenue compared to November 2021 is detailed below (directly from the LSA Revenue Memo):
Personal income tax receipts totaled $472.0 million, a decrease of $129.1 million (-21.5%) compared to November 2021.
Sales/use tax receipts totaled $278.4 million, an increase of $29.9 million (12.0%) compared to November 2021.
Corporate Income Tax receipts received in November 2022 totaled $11.4 million, a decrease of $13.9 million (-54.9%) compared to November 2021.
Since month-to-month comparisons can be volatile, it is important to consider year to date information, as well. Total net revenue YTD is -1.5% less than 2021, even with personal income tax (+0.4%), sales/use tax (+1.4%), and corporate income tax (+11.6%) collections all growing. Net tax refunds and school infrastructure refunds exceed last year’s levels by approximately $60 million, ultimately reducing Iowa’s total net revenue.
The most recent Revenue Estimating Conference (REC) prediction from October 13, which forecast the current fiscal year to decrease $264.7 million (-2.7%) year-over-year, is aligning with actual results. A big driver of the projected revenue decline is the impact of multiple pieces of legislation passed during the 2022 legislative session, including the historical tax cuts enacted in March.
The following chart further illustrates total General Fund revenues on a month to month basis. Large sums of revenue are historically received in January, which will provide an even better understanding of the state’s revenue trend. The next REC meeting will be held on December 14, 2022 and will provide more information before the opening day of the new legislative session next month.