State & Local Taxes Plummet

Via the Rockefeller Institute of Government, an independent research firm focusing on state and local governments, we get some nasty data and fugly charts.

The overview paints a picture of state and local governments in economic distress:

• State tax collections for the second quarter of 2009 showed a record drop of 16.6%, the second consecutive quarter in which revenues fell more sharply than during any previous time on record.

• Forty-nine states saw total tax revenue fall during the quarter,
with 36 states reporting double-digit declines. Both those numbers were up from the first quarter of this year.

• For the year ending in June 2009, the period corresponding to most states’ fiscal years, total state tax collections declined by $63 billion or 8.2% from the previous year. That loss is also a record, and is roughly twice the amount states gained during the year in fiscal relief from the federal stimulus package.

• Preliminary figures for July and August for 36 early-reporting states show continued deterioration, with overall tax collections dropping 8%. Early indications of September income tax payments provide further evidence of more troubling news for states during the third quarter of 2009.

• Local tax revenue declined by 2.8% in nominal terms and 4.2% in real terms, marking the first such decline since 2003.

This data is to be expected in a deep and protracted recession. Job loss and retail sales slowdown directly reduces tax revenue. That is the nasty; Now, for the fugly:

Both Income Tax and Sales Tax Declined Sharply

Income Tax and Sales Tax

State Taxes Are Faring Worse Than Local Taxes

State Taxes Worse Than Local


State Tax Revenues Show Record Drop, For Second Consecutive Quarter
Lucy Dadayan and Donald J. Boyd
The Nelson A. Rockefeller Institute of Government

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