October was not a good month for businesses in the state of Iowa.

The Legislative Services Agency recently released a memo earlier this week reporting that Iowa's corporate income tax collection has decreased 85.6 percent from October 2007. The decrease is the largest reduction in collections for the month of October.

"The profitability of companies in the United States has decreased considerably in the last 12 months," said Jeff Robinson, a senior legislative analyst for Iowa General Assembly. "We're really starting to see it in tax refunds."

According to Robinson, there are cases when a business, if it operates at a loss, can actually request tax payments be refunded that were made in the previous year.

"The good news is that we're still up 3.2 percent for the year in corporate income tax collections," he added. "It's a bad sign in that that 3.2 percent will go negative pretty soon."

In October 2007, the state collected $26.4 million in corporate income taxes. That dropped to $3.8 million this year. While Robinson does not expect future months to be quite so dramatic, it will likely stay negative.

"It is concerning," said Rep. Mark Smith, D-Marshalltown. "We need to look at policies that will promote economic growth in the state. We've been on the right track with our focus on information technology and renewable energy."

Gov. Chet Culver, noting that times were changing for the state, recently told state department heads they would need to find $40 million to cut from their budgets.

If these latest corporate income tax numbers are any indication, that first $40 million cut will be nothing but a drop in the bucket, according to Annette Sweeney, who will be serving her first term as a legislator in 2009, representing Iowa House District 44.

"It's going to be huge," she said. "People need to take a look at the bottom line. You must have it to spend it."

She said it is only after the election that the true scope of the state's problems are finally starting to be revealed.

Sweeney said the state needs to take a long look at why these companies have failed to maintain profitability and see if there are any actions from the state which may be causing them to be less profitable.

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Contact Ken Black at 641-753-6611 or kblack@timesrepublican.com