State Tax Revenue Plummets in Fourth Quarter
Capping a terrible year for state finances, revenue fell nearly 11 percent during the April through June quarter, the final quarter of the fiscal year for most states, according to a new report from the Rockefeller Institute of Government in Albany, NY.
"It's been a horrible fiscal year for revenue collections in most states," said Nick Jenny, a senior analyst at the Institute. "What really hurt was the huge drop in their largest bread and butter revenue source personal income taxes."
The report finds that personal income tax collections fell 23 percent during the quarter.
The overall tax revenue drop was more severe in some states than others, with high-income states such as California and Connecticut taking the biggest hits. Among the largest drops:
- California: down 24.7 percent
- Oregon: down 24.1 percent
- New York: down 19.4 percent
- Connecticut: down 19.0 percent
During the 1990's, these states profited more handsomely than most from the surging economy and the run-up in the value of the stock market. But now, with the economy lagging and the stock market performing particularly poorly, these states are feeling the ill effects quite acutely.
"Much of it can be traced to the effects of the recession," said Jenny. "The end result was that it both depressed the size of the final tax return payments made in April, while at the same time it pushed up the number of tax refunds paid out."
Despite the dour news, four states did see revenue gains: Florida's revenues were up 1.8 percent, Georgia's up 2.1 percent, West Virginia's up 3.8 percent and Minnesota's up 36.9 percent.
Minnesota's large increase was due mostly to new property taxes and the elimination of a one-time tax rebate enacted last year, Jenny said.