Capital Clicks

State revenue down $577M during pandemic; delayed tax returns a major factor

By: - July 7, 2020 2:57 pm

(Photo by Scalinger/iStock Getty Images)

State tax revenues have declined more than $577 million since Gov. Kim Reynolds issued the first orders for business closures due to COVID-19, according to the Legislature’s non-partisan fiscal experts.

Revenue dropped more than 21% between March 19 and July 2, compared to the same period in 2019, according to report issued Tuesday by the Legislative Services Agency.

“Much of the significant decrease experienced over the period resulted not from the business closures, job losses, and other impacts of COVID-19, but instead from the tax due date delays,” the report states.

One of Reynolds’ emergency orders delayed tax collections. Revenues that normally would have come into the state in April or May are now not due until July 31.

Individual income tax declined $308.5 million and corporate income taxes fell more than $106 million over the period.  In both cases, because people or businesses are paying taxes on their 2019 activity, most of the revenue reduction is not related to the COVID-19 pandemic, the report states.

However, sales tax revenue declined $41.4 million over the period, which represents a 6% loss.  And the report says a loss of $64.6 million in gambling revenues was “a direct result” of the governor’s March 17 order to close casinos.

However, since casinos began to reopen on June 1, weekly deposits have totaled $23.2 million. Deposits on similar dates in 2019 totaled $22.4 million.

Meanwhile, federal coronavirus stimulus payments to Iowans through the CARES Act have totaled $2.725 billion, LSA reported.

A total of 1.529 billion Iowans have received the Economic Impact Payments, for an average payment of $1,781.  The payments, which were subject to income limits equaled a maximum of $1,200 per adult and $500 per qualifying child.

 

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