It's no wonder states are having problems balancing their budgets. The decline in state tax collections in early 2009 was the "sharpest on record," according to a new report released July 17.
State tax revenues plunged nearly 12 percent in the first three months of 2009, the worst in the 46 years for which quarterly data are available, the Nelson A. Rockefeller Institute of Government said in its latest state revenue report. The drop exceeds those of recent recessions, the report said.
The report comes as all but a handful of states have finally cobbled together new budgets for the fiscal year that began July 1, but many already are scrambling to fill gaps as revenues projections are off the mark. Unlike the federal government, states must balance their budgets.
The Rockefeller Institute found that total state tax collections from three major sources - sales tax, personal income and corporate income - all fell for the second consecutive quarter. Forty-five states experienced revenue drop-offs, the report said.
All regions saw total state tax collections sink but the Far West saw the largest drop at 16 percent. Personal income tax nose-dived, plummeting an unprecedented 17.5 percent.
Local tax revenue remained stronger than state taxes, with growth of 3.9 percent for the quarter.