DES MOINES, Iowa — In the past month, Iowa has seen a major decline in the amount of state tax revenue coming in due to the COVID-19 pandemic, according to a legislative document provided by the state. Local municipalities are taking the financial hit as well.
According to state data, the net state tax revenue declined $307.3 million and 48% from March 19 through April 24 for calendar years 2019 and 2020. Much of the decrease in state revenue the state experienced over that time frame was not from the business closures and other impacts of coronavirus, but instead from the tax due-date delays. State taxes won't have to be submitted by residents or businesses until July. Since the payments represent tax year 2019 activity, the revenue reduction is not the result of the recent economic situation, according to the Iowa Legislative Services Agency document.
The state's tax revenue is also impacted by gambling revenue, which was directly hit by the governor's order on March 17, ordering all Iowa state-regulated gambling casinos to close because of the COVID-19 pandemic. The casinos collectively lost more than $26 million in gambling revenue as a direct result of the order.
In the city of Des Moines, the city has seen about an $18 million revenue decrease since the pandemic hit. Parking is down $798,000 for the year. Sales tax revenue losses are over $5.8 million. With major events getting canceled and people not traveling as much, hotels and motels are not operating at capacity, and therefore the revenue from those taxes is down more than $2 million.
"The Finance Department is reviewing many other items that could affect fiscal year 2020 by the coronavirus outbreak. Depending on the timing of property tax payments to Polk County will determine if it will cross fiscal year. Also, we are reviewing the need for financial assistance for non-profit operators on City-owned properties," said the city in a memo given to Local 5.
According to LSA, the tax revenue consequences of the current situation will likely become more severe in the coming weeks and months. The federal government passed the CARES Act that includes $340 billion in funding for states and local governments.
Some portion of the revenue reduction experienced between mid-March and the end of July will be a real reduction in tax collections, while some portion will be the result of tax due date delays initiated by the State. It will not be until the delayed tax.
Gov. Kim Reynolds told reporters on Friday that she would be meeting with state leaders regarding the state budget. The Legislative Council is meeting on Wednesday.
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