Foodservice Equipment Reports

State Income Tax And Overall Revenues Up Again 2Q

The analysts at the Rockefeller Institute of Government, the Albany, N.Y.-based research group, actually call the third consecutive quarter of strong growth in state revenues a “temporary bubble.” Preliminary data from 46 states has overall state revenues up 11% in the second quarter 2013 vs. the same quarter last year. A big factor in the double-digit increase is a 20.3% jump in personal income tax revenue, the third quarter in which such receipts have seen that kind of increase. But state corporate and property tax revenues also rose, up 7.1% and 5% respectively. Only three of the 46 reporting states had revenue declines in the quarter.

State and local income tax revenues are critical funding sources for publicly funded foodservice segments, particularly when it comes to capital spending. The improved revenues from state and local taxing bodies seem to be leading to a gradual recovery in spending for equipment and supplies by such segments over the past year. Local tax receipts have been positive for four consecutive quarters as both property and sales tax receipts have increased, as employment trends improve and housing values finally recover.

The strong gain in recent state income tax revenues “appear to have been influenced by taxpayer actions to accelerate income into 2012 to avoid federal tax increases, the strong stock market in 2012, slow but continuing improvement in the current economy, and the impact of a large tax increase in California,” wrote Lucy Dadayan and Donald Boyd in the release detailing the preliminary 2Q data. They note they predicted precisely such a blip, given the income front loading that surrounded changes around the so-called “fiscal cliff” tax changes at the beginning of the year.

California, which passed an increase in state and corporate income tax rates last year to help address a massive budget deficit, saw income tax receipts surge 40.7% in the 2Q versus last year. Corporate tax receipts jumped 15.9% and sales tax revenues 9.3% for an overall income gain of 27.7% in the quarter. Given the size of the state’s revenues, the big gains skew overall state receipts upwards.

Further information on state and local tax trends, including state-by-state tax data, can be found at rockinst.org.

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