Iowa tax revenue down; net receipts down 9.1%

UPDATE: Here’s the Radio Iowa story, headlined “State tax receipts down 19.2 % in September” (the headline above on this blog post refers to July, August AND September receipts).

The Legislative Services Agency has released its report on September, 2009 tax receipts, as well as analysis of FY 2010 compared to FY 2009 data (what’s available after July, August & September — the first three months of the 2010 fiscal year).   I’ve copied the opening conclusion of the report below, but you can read the entire report for yourself here (and see all the nice graphs).

FY 2010 Compared to FY 2009
Year-to-date FY 2010 total net receipts (excluding transfers) decreased $141.1 million (- 9.1%) compared to FY 2009.

Major sources and their contribution to the FY 2010 change include:
• Personal income tax (negative $34.0 million, – 4.6%)
• Sales/use tax (negative $1.2 million, – 0.2%)
• Corporate tax (negative $26.5 million, – 27.5%)
• Other taxes (negative $17.3 million, – 11.7%)
• Other receipts (negative $12.2 million, – 9.4%)
• Tax refunds not including school infrastructure refunds (negative $12.2 million)
• School infrastructure sales/use tax refunds (negative $37.3 million)

UPDATE: House Republican Leader Kraig Paulsen (R-Hiawatha issued the following statement today in regards to the nonpartisan Legislative Services Agency’s report that revenue was down $141 million or 9.1 percent compared to the first quarter of FY 09.

“Based on the numbers released today and the recent record unemployment numbers, it’s clear that the governor’s $1.7 billion borrowing plan is simply not working.

“We continue to be in this fiscal mess because Gov. Culver signed the largest budget in the history of Iowa.  I have very serious concerns that Gov. Culver will use this as an excuse to raise taxes on hard-working Iowans.  The problem has now carried in to the 2010 budget, which is clearly out of balance.

“House Republicans offered over $337 million in budget savings during the last legislative session and we will continue to offer ideas and create a plan that brings Iowa’s checkbook back into balance without shifting more burden to the taxpayers.”

UPDATE: Republican gubernatorial candidate Chris Rants of Sioux City, a state legislator, quickly issued a statement early this afternoon.

Rants: First Quarter Tax Report Pegs Budget Deficit at $300M

“With the end of the first quarter, Iowans now have a clear picture on the size of Culver’s budget deficit.  Revenues for the quarter are negative -9%.  Half of that is due to Culver’s budgetary slight of hand, and half is a real decline in tax receipts. If you extrapolate that out over the rest of the fiscal year, Culver has a $300 million shortfall, and he’s already a quarter of the way through the year,” said Rep. Chris Rants, candidate for Governor from Sioux City.

“I would expect to see the Governor issue a 5% to 6% across the board cut in the next few weeks.  A smarter move would have been to reconvene the legislature to make selected cuts and whole eliminations.”

UPDATE: Steve Kettering, a banker from Lake View who is a Republican member of the Iowa Senate, issued a statement via Senate Republican staff.

DES MOINES – The nonpartisan Legislative Services Agency released new numbers today stating that yearly revenues were down 9.1% or $141.1 million compared to the same period last year.

Senate Republican Whip Steve Kettering (R-Lake View) released the following statement:

“While the new Iowa revenue numbers are low they are not unexpected.  Iowans know that there is less money in their pockets yet all they hear from the Governor is that everything is OK.  It’s time for the Governor to take a proactive approach to this deepening crisis.

“During the past legislative session, Republicans offered hundreds of millions of dollars in cuts while warning the Democrats of their overspending.  Now the chickens have come home to roost in the taxpayer barnyard.  Unfortunately Governor Culver and Legislative Democrats once again chose partisanship and party politics over the health of Iowa’s budget.  Governor Culver is again choosing not to lead by taking yet another wait and see approach to Iowa’s budget.

“Most Iowans have recognized and reacted to the changing economy while the Governor continues to wait for the REC to meet on October 7th.  Most experts believe the revenue estimates for the state’s tax receipts to be decreased or downgraded at that meeting.  That will leave the Governor no choice but to call for a special session or, more likely, issue a massive across the board reduction.  A reduction that could have been avoided had the Governor acted earlier in a more decisive manner by reducing state expenditures in his FY 2010 budget.

“Senate Republicans will continue to provide leadership by offering budget solutions that would reign in our state’s out of control spending.  Senate Republicans stand ready to work with the Governor in bringing fiscal responsibility back to the Capitol.”

UPDATE: The chairman of the Republican Party of Iowa issued a statement, via email.

Des Moines, IA – Republican Party of Iowa State Chairman Matt Strawn today challenged Governor Culver to finally take responsibility for the budget crisis facing Iowa and come clean with Iowans about our budget deficit.  Strawn said, “The days of hiding your budget mess are over, Governor.  Your failure to act earlier this summer means any coming spending cuts will have to be harsher and deeper than if you had been honest with Iowans from the beginning.”

This last July Governor Culver suggested a one-time accounting adjustment in gross sales tax receipts was evidence of economic recovery in Iowa and he credited, at least partially, his billion-dollar I-JOBS debt scheme for the beginnings of a turn around.  Most observers scoffed at the suggestion and pointed to a drop in net receipts of 6.1% as a clear warning that state spending would grossly exceed revenue in the coming year if no quick action were taken.

Now, two months later, the slide in state revenue continues.  According to the Legislative Services Agency (LSA), net receipts to state government for the first three months of fiscal year 2010 have declined by 9.1% as compared to one year ago.  Accounting for the fiscal shuffle Culver danced last week to “balance” the FY2009 state books, it appears Iowa state government is on course to run at least $300 million short this year.  This is in addition to the nearly one billion dollar hole projected for the next budget year.

“This year Governor Culver and his majority Democrats in the Iowa Legislature passed the single biggest budget in Iowa’s history–despite overwhelming evidence state revenue was still in a steep decline.  Well Governor, you can’t fool Iowans any longer and you can’t hide behind your phony budget tricks.  You spent too much, borrowed too much, and your refusal to aggressively act on the obvious warning signs is going to cost all Iowans dearly.

“Whether it will be deeper than necessary cuts in state services, higher property taxes that result from massive across the board cuts, or tax increases that the Governor and majority Democrats pass to close this gaping hole, no one will be spared the pain caused by Governor Culver’s continued mismanagement of our great state,” concluded Strawn.

The LSA report on Monthly General Fund Receipts through September 30, 2009 show revenue has declined in virtually every major category (personal income tax, -4.6%; sales/use tax, -0.2%; and corporate income tax, -27.5%) for the first three months of FY 2010.  Total net state receipts declined by 9.1%, or $141 million, for the first quarter compared to the same time period last year.