Every year the most important task of the Legislature is putting together the state’s annual budget. Sustainability is a word that is often used to describe these budgets (sometimes accurately, sometimes not). To me, a sustainable budget is balanced, of course, but also does not over-promise in future years. In other words, have we passed a bunch of new programs without a plan for how to fund them and do we have a large enough surplus or reserve in place in case revenues come in at lower levels than expected?
Every year the Legislative Fiscal Bureau (LFB) provides the Legislature with a report called “the Built-in and Anticipated Expenditures,” which totals the spending that is already law, which has no funding source. Towards the end of Gov. Culver’s administration, the report showed a total of nearly one billion dollars, or just a little under 20 percent of the budget. This year, the LFB did not include the report in their budget packet, because the total was close to zero. In addition, our reserves (sometimes called the rainy day funds) are full at 10 percent of the budget and we will have a large surplus on top of that.
A little over a year ago, Republicans in the Legislature were criticized for passing a tax reform package that critics said would cut revenues and decimate the budget. The tax plan started going into effect this past January, and the numbers are very encouraging.
May was another strong month for state revenue, as tax collections were 28.1 percent higher than what was collected in May 2018. The $145 million increase in monthly collections raised the year-to-date growth in state revenue to 7.8 percent in Fiscal Year 2019, putting the state well ahead of the Revenue Estimating Conference’s projection of 4.8 percent growth.
Personal income tax collections rose by $46.2 million in May, which is a 12 percent increase over May 2018. For the year, personal income tax is up 4.4 percent through May.
Sales and use tax revenue rose for the month as well, increasing by 3.7 percent over May 2018. For the year, sales and use collections are up 3.8 percent over FY 2018.
Corporate income tax again had a very strong month, increasing collections by $23.9 million – a 94.1 percent increase over May 2018. For the year, corporate tax has grown by 33.1 percent over FY 2018.
There is still one month to go in the fiscal year, so these figures can change a bit. But state revenue is likely to finish Fiscal Year 2019 in a pretty strong position.
If you have any questions or concerns, please contact Representative Dave Deyoe. Home phone: 515-382-2352; E-mail: Dave.Deyoe@legis.iowa.gov.