Growth In State And Local Tax Receipts Remains Very Moderate

Overall state tax revenues grew 2.7% in third quarter 2012 vs. the third quarter the year before, the 11^th consecutive quarter of increases since the depths of the Great Recession, according to data from the Rockefeller Institute of Government, Albany, N.Y. Still, the rate of increase has declined for five consecutive quarters since peaking in the second quarter 2011, and the Institute says overall tax collections are relatively weak by historical standards. After nearly three years of recovery, overall state receipts are only 1.4% higher than in third quarter ’08. And overall income-tax revenues, a major component of state tax receipts, have yet to reach the previous peak of ’08.

State taxes help fund a range of publically funded noncommercial foodservice segments, including schools, colleges, public healthcare, mental-health facilities and corrections. State-funding shortfalls have severely impacted capital programs, including foodservice equipment purchases, for many of these segments since the beginning of the Great Recession.

The growth in local tax receipts improved in the third quarter, with the four-quarter moving average rising to 2.6%. Receipts had been negative for seven consecutive quarters prior to the third quarter gain. The average decline for the four quarters last year was 4.6%.

More than three-quarters of local tax revenues are generated by property taxes. The lag effect of the decline in housing values has severely impacted property tax receipts for more than two years. Local schools districts rely heavily on local property tax receipts.