August is here and the 2016 Iowa State Fair has officially kicked off. As always, this year’s fair is packed full of top notch entertainment, food, and opportunities to participate.
The fair showcases the best of what our state has to offer; from agriculture and industry to music and culinary arts, and everything in between. I hope you take the opportunity to get out and enjoy the best state fair in the country.
With the arrival of August also comes the end of the first month of our new state fiscal year which began on July 1, 2016. Compared to July of last year, General Fund revenue for is down 3.8 percent, or $15.6 million. While that number does not necessarily paint an encouraging picture, much of the concern was due to the drop in sales tax revenue, which already bounced back the first few days of August. Many of Iowa’s businesses have a July 31 due date to pay sales tax to the state. Since July 31 fell on a weekend this year, businesses had until the next working day to pay that tax, which accounted for much of the drop.
Another area of concern was corporate tax collections, which were down $4.2 million, or 21.3 percent, from last year. While July is traditionally a slow month for corporate tax collections, this does cause some concern as the state Revenue Estimating Conference had previously projected a 3 percent growth for this category in FY 2017. On a more positive note, personal income tax collections grew 6.3 percent over last July, which is good considering May and June numbers were not nearly as strong.
While July’s revenue numbers show some mixed signals, more time is needed to get an accurate picture of what the year’s revenue growth will be. In previous years, July has not proven to be a very accurate predictor of what the fiscal year’s growth actually ends up looking like. Over the next few months, several economic factors both locally and on a larger scale will make an impact on the direction of the state’s revenue.
Thankfully, there is no need to panic. Situations like this remind us of the importance in responsible budgeting and ensuring our state government lives within its means. Had we not shown that discipline, there would be much more cause for concern. This is why House Republicans will continue our commitment to spending less than we take in and not using one-time money for ongoing needs.
The state is in a strong fiscal position, and our economy continues to grow. Enjoy these last few days of summer, enjoying everything that is great about Iowa.