Some Iowa Towns see Fatter Year-End Checks from the State

A top official in the Iowa Department of Revenue confirms some Iowa communities are getting early holiday gifts from the state in the form of much larger checks than expected from local option sales taxes. State chief economist Robin Anderson says it’ll be a boom to the budgets in quite a few towns and counties.

“Some of the increase does have to do with changes to how we collect sales tax revenue for internet sales,” Anderson says. Estimates are made by the state based on the first three quarters of the previous year, and changes to the economy and our buying habits during this year’s pandemic threw off those estimates. Some counties are now getting what are called “true up” checks in the mail from the state.

“So, if there’s an overshoot or undershoot, we true up those numbers,” Anderson says. “That’s likely what happened with these cities and counties and other local entities that are getting extra paychecks from the state.” Some communities were anticipating state checks of ten-thousand dollars, and they’re instead getting checks of between five and ten times that amount.

“The initial data that we had shows flat growth and then growth comes in better than expected throughout the year,” Anderson says. “So really, we’re limited in the data that we have when we develop the forecast. Sometimes, we’re a little bit off and we have to reconcile those numbers.” The pendulum swings both ways though, as she says some communities are getting less than they originally expected.