Capitol Update: Week 4

State Revenue Growth Stays at 1.2 Percent Through January

State revenue showed some improvement over last January.  But that improvement was not enough to raise the year to date revenue growth above December’s level.  The non-partisan Legislative Services Agency released the January 2017 revenue report on Wednesday afternoon.  For the month, state revenue grew by 0.8 percent over January 2016.  For the fiscal year, revenue growth remained at 1.2 percent growth level.

Personal income tax suffered a rare negative month in January.  State tax collections in this category fell by 24.1 percent, or 5.8 percent.  But that reduction is not entirely correct, as January 2016’s personal income tax collections were $23 million higher than what they should have been, as a taxpayer mistakenly sent in $23 million of withholding tax in January 2016.  Without that abnormality, January 2017 personal income tax revenue would have been down $1.1 million.

For the fiscal year, personal income tax revenue is up 1.5 percent.  For the year, growth in this category is projected to be 5.8 percent.  So while this may be a cautionary sign, it is important to note that a significant part of the year’s collections will come in during the spring.

As for sales tax revenue, the state had a very strong January.  But just like personal income tax collections, this too is a bit deceptive.  January sales tax was up $34.5 million, or 22.5 percent, over last January.  The significant increase is due to a major return date being on a Sunday, and thus artificially lowering January 2016’s figure.  For the year, sales tax is up 2.7 percent.  This is higher than the REC’s projection of 1.9 percent growth.

Corporate income tax collections in January rose by 7.7 percent over January 2016.  For the year, corporate returns are a negative 0.5 percent.  The REC projection is for 2.1 percent growth in this category.  January was also a strong month in inheritance tax collections, coming in 40.5 percent higher than last January.  Even with this strong month, inheritance tax is still running 13.3 percent behind for the fiscal year.  Tax refunds also were significantly higher this January.

News from District 96

Monday night we addressed the FY16 budget shortfall.  There was a large amount of debate and we had to make tough choices.  However, we made K12 education funding a priority and left it off the cutting block.  I am confident that the decisions we made uphold our state’s budget in a strong fiscal manner.

This week Major Genera Orr gave the annual condition of the National Guard address. He stated in his speech that the 178 year old Iowa National Guard continues to be “mission focused and warrior ready.” Orr outlined how the 9,000 members of the Iowa National Guard play an integral part of national security by supporting the U.S. Army and Airforce. He stated that Iowa currently has 425 soldiers and airmen mobilized in combat operations around the world because the Iowa National Guard is no longer just called upon for natural disasters in Iowa.  I was honored to have the opportunity to escort the Governor to the House Chamber as part of this event and I appreciate the service of our Iowa Guardsmen.

The rest of the week I was able to speak with various groups about important issues.  Tuesday afternoon the Anamosa FFA talked about Agriculture Education and issues affecting their program.  I am excited to see what these students for agriculture and for our state in the future.  Tuesday evening I visited with the state patrol and had a chance to participate in an active shooter simulation.  These simulated scenarios are part of what officers go through in training on when and when not to use deadly force.  This unique experience gave me a greater appreciation for our law enforcement community.

Wednesday I had the chance to visit with the Farm Machinery Dealers Association.  I visited with Jim Johnson from the Anamosa Eureka at the Newspaper Association Reception that night as well.

Three of the superintendents from District 96 came to visit about State Supplemental Aid for our schools.  Dr. Rickey from West Delaware, Doug Tuetken from Maquoketa Valley, and Lisa Beams from Anamosa also shared their thoughts about upcoming issues this legislative session.

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