Strong economy pumps more tax money into Iowa

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By Dan Gearino | Friday, July 6, 2007 12:30 AM CDT | () comments

DES MOINES — Iowa’s economy hummed along in the fiscal year that just concluded, pumping an extra $367 million in tax receipts into state coffers.

Receipts were $6.1 billion, up 6.4 percent from last year, according to figures from the Legislative Services Agency. The 2006-07 fiscal year ended Saturday.

The revenue increase, one of the largest in recent memory, happened at the time of low unemployment and high corporate profits.

“Right now, we are in a very strong economy,” said Mike Ralston, president of the Iowa Association of Business and Industry.

The receipts are broken down into five main categories:

Personal income tax was up $231.7 million from last year, or 8.1 percent.

Sales and use tax was up $28.9 million from last year, or 1.5 percent.

Corporate income tax was up $76 million, or 21.8 percent.

Other taxes, including the cigarette tax, were up $20.4 million, or 5.9 percent.

Miscellaneous income, including liquor profits and unclaimed property, was up $10.4 million or 3 percent.

Nearly all of the overall increase was because of growth in the economy, not policy changes. The most notable policy change was a $1-per-pack increase in the cigarette tax, passed in March. Receipts from the cigarette tax were up $14.9 million.

The state’s budget forecasting panel, the Revenue Estimating Conference, expects another strong performance in the 2007-08 fiscal year, although not at as strong as the year that just ended.

When the panel met in April, it projected a 4.7 percent growth for the current year, which ends next June.

Ralston, whose organization represents companies across the state, said his members expect continued strong performance for at least the next two quarters, if not longer. He said the biggest concern is that companies can’t find enough qualified workers to fill open positions.

“There was solid growth this last year and people expect that to continue, at least in the near term,” he said.

Dan Gearino can be contacted at

(515) 243-0138 or dan.gearino@lee.net. Comment on this story at qctimes.com