State Tax Revenue Continues to Fall
Tax revenue is among the most lagging of lagging indicators, so it's no surprise that revenues are still in the teeth of the recession.
Today's Journal article about falling tax revenue shows that first quarter tax revenue is down 12.6%, or about $20 billion, from the same period a year ago. Revenue declined in 45 of the 47 states that have reported first-quarter numbers (the exceptions were Iowa and South Dakota). Let's remember that many states consider deficits to be those times when revenues don't grow as fast as they'd hoped, an have no contingency plans for double-digit decreases. "If green shoots are sprouting in the overall economy, it's still weeds and dust for state governments," says Robert Ward, deputy director of the Rockefeller Institute.
It will almost certainly get worse. Unemployment is still rising, real estate prices are still falling and consumer spending isn't about to rebound in a big way. And, as noted in an earlier RTE post, many rich people, who pay the most taxes, are set to get a rare refund.
The steepest revenue falloff was in Alaska where first-quarter revenues were down 74.1%, largely a reflection of falling oil prices. Other hard hit states were those with the big housing problems, including Arizona (down 21%) or fast rising unemployment such as the Carolinas and Oregon. |
