Report: State tax revenues reach pre-recession levels
After seven straight quarters of growth, state tax revenues have returned to pre-recession levels, according to a report released Thursday by The Nelson A. Rockefeller Institute of Government.
For the quarter from July to September 2011, total tax collections in 48 states rose by 7.3 percent when compared with the same period in 2010 (the institute’s data does not include information from Hawaii and New Mexico). Still, state tax collections have yet to return to return to their peak levels, which actually “came several months into the Great Recession” because of a lag between the arrival of the downturn and its effect on tax revenues, the institute reported. The study did not disclose a dollar amount for total tax revenues collected by the 48 states in the third quarter.
Furthermore, the percentage increase during the third quarter represents “a noticeable slowdown from the 10.8 percent year-over-year growth reported in the second quarter of 2011,” the institute added. Lisa Lambert of Reuters described the slowing growth as “a worrisome trend for states concerned that economic clouds are gathering as they begin drafting their budgets for next year.”
“The European debt crisis, stock market declines and other economic troubles on the national level have states worried recent revenue improvements will not last,” Lambert added. “During the recession, their revenues fell sharply for five straight quarters, many to the lowest levels in 20 years.”
Of the 48 states included in the Rockefeller Institute’s survey, only three — Delaware, Iowa and Missouri — did not experience an increase in tax revenues during the third quarter. Meanwhile, 11 states showed double-digit percentage growth in tax collections, the institute said.
Revenues from personal income taxes jumped by 9.2 percent in the 48 states in the third quarter, and sales-tax revenues grew by 3.9 percent, according to the study.