DES MOINES — Prospects for an even bigger state surplus continue to climb.
State government’s net tax receipts last month surged by 9 percent — a $48.1 million increase compared with January 2012 — and raised the total for the first seven months of the current fiscal year to $313.7 million, according to the Legislative Services Agency. Overall, state tax collections are running 9.1 percent ahead of fiscal 2012 with five months remaining and are well above the projected 3.3 percent yearly growth the state Revenue Estimated Conference set in December.
Jeff Robinson of the Legislative Services Agency said January’s performance was a surprise because December’s tax revenue was skewed by calendar issues that were expected to cause a dip last month. That initially happened, he said, as January opened with a “$50 million hole” but the collections rebounded with an unexpected spike in quarterly personal income tax payments.
Individual income tax receipts — the largest category of state tax collections — increased by $74.5 million over January 2012. That 22.4 percent monthly raise generated $407.7 million.
“I was really surprised,” Robinson said of January’s revenue report. “There’s no bad news in it at all.”
The LSA tax specialist noted that quarterly estimated payments generally are paid by Iowans in the upper-income brackets and are a good economic sign that individuals are paying more tax because they’re making higher incomes. He said there appears to be a “disconnect” between actual state tax receipts and state economic indicators for employment and income, which are lagging behind because the tax collections are outperforming the state index.
Iowa’s January numbers included a $19 million issue that was caused by delays in federal income tax changes related to the “fiscal cliff” compromise, Robinson said. Normally, state tax refund payments begin in the last week of January but refunds and Iowa farm tax returns were affected by the federal delays that could “mess things up” for several months and make state tax receipts better than they actually are as the refund schedule works through this year’s issues, he added.
Currently, state budget experts project the state treasury will end fiscal 2013 on June 30 with an $822 million surplus after cash reserves and emergency accounts are full. That ending balance — an excess amount that legislative Republicans characterize as “an overpayment” that should be returned to taxpayers — likely will grow because the Revenue Estimating Conference projected 3.3 percent yearly growth in state revenues. Robinson said receipts are on pace to finish up by at least 4 percent for the year.
“It’s hard to make a scenario that it all falls apart. It’s hard to see that happen,” he said.
Through January, total net receipts stood at more than $3.754 billion. Last fiscal year, state tax collections totaled $3.44 billion through the first seven months.