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Roberton C. Williams
May 15, 2009

State Revenues Worsen

Last month I posted depressing state revenue data showing that total state tax collections fell in the last quarter of 2008 for the first time since 2002. I predicted that the situation was “going to worsen before it gets better,” a pretty safe bet given the continuing deterioration of state economies.

So how bad is it in the provinces? Pretty bad. A new report from the Nelson A. Rockefeller Institute of Government showed that, compared to 2008, state revenues in the first quarter of this year fell nearly 13 percent—from $154 billion to $135 billion. Personal income taxes accounted for half of the drop, plunging 16 percent. Sales taxes fell nearly 8 percent.

I’m going to go out on a limb here and predict that state tax collections will fall again this quarter. With unemployment still rising and retail sales falling, the limb feels pretty sturdy. Check back in the fall to see what actually happens.

Posts and comments are solely the opinion of the author and not that of the Tax Policy Center, Urban Institute, or Brookings Institution.

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