State Tax Revenue Growth Slowed In Fourth Quarter

As expected, the growth of state tax revenues slowed in the fourth quarter of 2013, according to preliminary data from the Rockefeller Institute of Government, based at the State University of New York-Albany. The research group has expected the slowdown, as the front-loading effects of new federal tax laws in January 2013 wind down.

With 49 states reporting early data, overall state revenues from all sources rose 3% in the fourth quarter, down from a preliminary gain of 6.1% in the third quarter and gains of 8.6% and 9% respectively in the first and second quarters of last year. Personal-income tax revenues rose only 1% in the quarter, compared to peaks of 18.4% in both the first and second quarters of ’13. Despite the generally positive revenue news, the group noted revenues actually declined in the quarter for 12 of the 49 reporting states.

One bright note in the report is that sales tax revenues continued above 5%, with a preliminary reading of 5.5% growth in the fourth quarter, down only slightly from 5.6% in the third quarter. Those numbers can be expected to plummet in the first quarter this year, as the impact of the harsh winter certainly cut into retail sales.

State and local tax revenues are important to publicly funded foodservice segments such as schools, colleges and corrections. The complete preliminary report, including state-by-state data, is available at rockinst.org.”””