The state of Iowa has lost $39 million in revenue from its gambling tax since mid-March when casinos were temporarily closed to slow the spread of the novel coronavirus, a new state report shows. 

If the state-regulated casinos remain closed through June 30, the loss in gambling tax revenue could climb to about $87 million.

Revenue from gambling taxes typically only contributes about 3.4% to the tax revenue Iowa collects annually. But the gambling tax losses show the economic toll the mandated closures of retail, gaming, entertainment and other establishments have had on the state.

Between March 19 and May 5, Iowa collected $1.14 billion in tax revenue, a nearly 28% drop from the $1.58 billion collected during the same period in 2019, a new report issued by the Legislative Services Agency shows.

The report said that some of the decline in tax revenue can be attributed to the state delaying the deadline for tax collections to July. Until those deposits are made, the full economic impact of the COVID-19 outbreak won’t be fully known, the report said.

Gov. Kim Reynolds this week said that she’s not yet ready to comment on how the decline in tax collections will affect next year’s state budget. She said she’s talking with legislators about the budget.

Last week, Reynolds and GOP legislative leaders asked the Revenue Estimating Conference — the three-person panel that sets official revenue estimates for the state — to meet before the Legislature reconvenes on June 3 to complete its 2020 session.

On March 12, the Revenue Estimating Conference had estimated the state would receive about $9.4 billion in tax revenue during the next fiscal year. The estimate was made before the state shutdown.

But while the steep decline in tax revenue during the past nine weeks is concerning, the state is financially healthy, Jeff Robinson, senior fiscal legislative analyst for the Legislative Services Agency, told the Business Record. 

Between July 1, 2019, and Monday, revenue from sales and use tax totaled $2.8 billion, 4.7% more than the $2.7 billion collected during the same period in 2018, state data shows. 

In addition, revenue from miscellaneous taxes has more than doubled to $19.9 billion and revenue from the franchise tax is up 7% to $56 billion.

Overall, the daily tracking data shows taxes collected between July 1, 2019, and Monday totaled $7.8 billion, a nearly 3% drop from the $8 billion collected during the same period the previous year.

“The amount of downturn in tax receipts that [Iowa] can weather will depend on how steep and how long the downturn is,” Robinson wrote in an email. “At the moment that is pretty much an unknown.  

“It will also depend on how much the situation increases [Iowa’s] expenditures and for how long, and it depends on how well the new federal funds cover the increased expenditures.”

Iowa expects to receive more than $2.5 billion from federal coronavirus relief legislation. The amount does not include direct stimulus payments to taxpayers or non-grant funds.

Reynolds, in her comments this week, said that the effect the COVID-19 shutdown was having on the state’s budget was one reason restrictions on businesses are being eased.

“It’s why it’s important to, in a very safe and responsible way, start to not only protect the health of Iowans but to look at the health of our economy as well … and start to ease some of the restrictions that we have on businesses so that they can again start to open up the economy,” she said.