News Release - States Reported Fifth Consecutive Drop in Tax Collections in the Fourth Quarter of 2009

NEWS

For Immediate Release –

February 23, 2010

Media contact: Heather Trela – (518) 443-5831 / communications@rockinst.org

States Reported Fifth Consecutive Drop in Tax Collections in the Fourth Quarter of 2009, New Rockefeller Institute Report Shows

Southwest States Report the Worst Losses; Declines in Revenues Are Starting to Moderate

Albany, N.Y. — State tax revenues declined by 4.1 percent nationwide during the final quarter of calendar 2009, the fifth consecutive quarter of reduced collections, according to a report issued today by the Rockefeller Institute of Government.

The five straight quarters of year-over-year decline in overall tax collections represent a record length of such decreases, the Institute said. Collections from each of the two major revenue sources, income and sales taxes, also fell for a fifth straight quarter.

“States will likely face further revenue weakness in the first quarter of 2010,” said Lucy Dadayan, senior policy analyst at the Rockefeller Institute and author of the report.

Overall, the tax revenues collected by the 46 states fell from $140.2 billion during the fourth quarter of 2008 to $134.5 billion during the same period of 2009. Data were not available for Louisiana, Nevada, New Mexico or North Dakota.

Total tax revenue increased in seven of 46 early reporting states in the fourth quarter of 2009. More states are likely to begin seeing year-over-year growth in various revenue sources in the coming months. “However, even with growth, tax revenue is likely to remain below its prerecession peak for quite some time,” according to the report.

Regional Differences

The Southwest region suffered the worst falloff in tax collections, with revenue down by 18.1 percent overall. New England was the only region reporting growth in overall tax collections at 0.5 percent — mostly due to a growth in Massachusetts, where an increase in collections is attributable to legislated changes.

“Calendar 2009 will be remembered as bringing historically sharp declines in tax revenue to states,” the report says. “Revenue gains toward the end of calendar 2009 were often driven by legislated tax increases rather than growth in the economy and tax base.”

Despite revenue gains in some states during the fourth quarter, the report concludes, “another negative quarter for the nation as a whole would not be unexpected. The troubling fiscal picture for states remains clearly in place.”

The Institute will release a complete report on the fourth quarter of 2009 for all 50 states, and further analysis of the 2010 outlook, when Census Bureau data become available in several weeks.

For a full copy of the report, visit www.rockinst.org.

###

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.

In addition, you can sign up to follow us on Follow us on FacebookFacebook and Follow us on TwitterTwitter.