Buoyed by pent-up consumer demand and federal stimulus payments, Iowa tax revenues in June increased 15% compared with the previous June, and state revenue for the most recent 12 months is up 17.4%.
Net tax revenue totaled $928 million in June, according to the Legislative Services Agency’s monthly report. That’s an increase of $121 million over June 2020.
Corporate income tax, gambling tax, fuel tax and sales/use tax all posted large gains for the month, both in terms of dollars and growth percentages.
For the most recent 12 months, net revenue increased $1.541 billion, or 17.4%, the agency reported, noting that there was low-level economic activity through much of that time due to the coronavirus pandemic.
For the year ending June 30, net revenue from all taxes deposited to state funds totaled $10.413 billion, an increase of $1.541 billion compared with the previous 12 months.
During that time, individual income tax revenue increased 18.2%. However, the agency noted that delayed federal and state income tax due dates because of the pandemic “significantly altered the normal flow of individual income tax revenue over the past 14 months.”
That 18.2% growth rate is “unusually high” when compared with individual income net tax growth that averaged far less — 4.2% — over the past two years, the agency added.
Other major contributors to the year-over-year dollar and percentage changes included corporate income tax revenue that increased $367 million, or 68.5%. Sales tax revenue was up $411.1 million, or 13.4%. That included an $85.3 million increase in sales tax proceeds deposited to the Road Use Tax Fund and a $332.1 million (10.4%) increase in sales tax revenue deposited to the state general fund.
However, sales tax revenue transferred to other state funds, primarily the Flood Mitigation Fund, Reinvestment District Fund and two water quality funds, decreased $6.8 million, the Legislative Services Agency said. According to a Legislative Services Agency analyst, the dollar amounts transferred to those funds is limited each year, so the decrease likely has something to do with the timing of transfers.
And decreased refunds of sales/use tax payments increased net revenue $6.2 million and increased sales tax payments to the school infrastructure account, which are recorded as tax refunds, decreased net revenue $5.7 million. The refunds typically involve economic development agreements between businesses and the state. The Legislative Services Agency said there may have been fewer projects or, because the refunds often involve projects that happened some time ago, it might be a timing issue.
Banking tax revenue fell 20.3%, or $14.1 million, and fuel tax revenue was down $35.7 million, or 5.1%. According to Iowa Department of Revenue monthly fuel sales reports, the total gallons subject to fuel tax decreased 3.3% over the most recent 12-month period.
Gambling tax revenue increased by $90.9 million, or 37%, despite Iowa’s 19 state-regulated casinos being closed on March 17, 2020, as a result of the governor’s declaration of the COVID-19 state public health emergency. Most reopened in early June last year.
Cigarette and tobacco tax revenue fell $9.5 million, or 4.5%, the agency reported.