With three-quarters of the fiscal year behind us, the state is continuing to outperform last year.
Iowa’s revenue report for March has been released and the data revealed net General Fund revenue for the month was $39 million (7.3%) above the March 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 March 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 4.3% more than 2022, with growth in personal income tax, sales/use tax, and corporate income tax.
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 March 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 for the first three-quarters of this fiscal year are below (directly from the LSA Revenue Memo), along with the December 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 March 2023, personal income tax receipts have increased 3.6%.
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 March 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 March 2023, corporate income tax receipts increased 9.9%.
With three-quarters of the fiscal year behind us, the state is continuing to outperform last year. The personal income tax receipts for March 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.
Upcoming revenue memos will include the first quarterly income tax payments and give a clearer picture of how the tax reforms are impacting revenue.
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.