News Release - Weakening Economy Hammers State Tax Revenues in Fourth Quarter of 2008; Continued Revenue Declines Expected This Year

For Immediate Release –

March 12, 2009

Media contact: Mark Marchand – (518) 443-5283 / marchanm@rockinst.org

Weakening Economy Hammers State Tax Revenues in Fourth Quarter of 2008; Continued Revenue Declines Expected This Year

Data from 47 of 50 States Reveals Declines in Personal Income, Sales, and Corporate Income Taxes, According to New Rockefeller Institute of Government Report; Further Budget Pressures Expected in 2009

Albany, N.Y. — The nation’s weakening economy continued to place new pressure on state budgets during the fourth quarter of 2008, with overall state tax revenues falling by 3.6 percent, according to a new Rockefeller Institute of Government report.

When compared to the same period during 2007, the report showed that three quarters of the 47 early-reporting states experienced declines in tax collections. Weaker sales tax revenues represented the bulk of the tax collection declines, with a 5.9 percent decrease. Personal income taxes fell by 0.4 percent while corporate income tax collections, which represent a smaller proportion of state revenues, fell by 9.3 percent.

The data released today represent the first time since 2002 that revenues from all three sources declined during the same quarter.

“The news is not surprising, but is certainly troubling for states,” said Lucy Dadayan, senior policy analyst at the Institute and study co-author. “We expect revenue collections will deteriorate further in the coming quarters, based on recent developments in the economy and early data for 2009.”

The report noted that the Rocky Mountain region was hit the hardest during the fourth quarter of 2008, suffering an overall decline of 8.7 percent. The Far West states saw a decline of 5.9 percent. The Plains states saw the smallest decline in overall tax collections, at about 0.3 percent.

The Institute will release a more comprehensive report on state tax revenues during the fourth quarter of 2008 in about four to six weeks. The Rockefeller Institute has been studying and tracking the fiscal health of the 50 states since 1990. For a full copy of the report, visit www.rockinst.org.

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About the Rockefeller Institute of Government

The Nelson A. Rockefeller Institute of Government, at the University at Albany, is the public policy research arm of the State University of New York. The Institute conducts fiscal and programmatic research on American state and local governments. Journalists can find useful information on the Newsroom page of the Web site, www.rockinst.org.

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