Stateline Story

State Revenue Gains Are Largest in Six Years, Report Concludes

State revenues came bounding back in the second quarter of this year, notching their strongest year-over-year increase since 2005, according to a new analysis by the Nelson A. Rockefeller Institute of Government.

The report, released Wednesday (October 26), finds that overall state tax collection rose 10.8 percent in the second quarter, the best such performance in six years. Every state but New Hampshire reported improved collections from the same period a year ago, and tax collections in 19 states improved by 10 percent or more. The personal income tax led the way, with collections jumping by more than 16 percent.

For states, the revenue increases mark the sixth consecutive quarter of growth, though collections are still below where they were four years ago.

The report's good news is tempered by bad news for local governments, which saw their property tax collections decline by 1 percent - their third consecutive quarterly decrease.

The picture is not entirely positive for states, either. The report's authors warn that continuing uncertainty in the national and global economies is likely to be reflected in weaker revenue growth in the future. " In recent months, growth in tax revenues has been significantly and unsustainably stronger than growth in the economy," the report cautions.

Stateline recently profiled one state that has felt the impact of the slowing national economy. Washington State lawmakers face a gaping new hole in their budget after the state economist downgraded his economic forecast, citing a drop in consumer confidence.