State Tax Revenues Rise Slightly In First Quarter

For the first time since the third quarter of 2008, overall state tax revenues rose in the first quarter ’10 versus the first quarter year prior, according to the latest data from the Nelson A. Rockefeller Institute of Government, based in Albany, N.Y. But the increase was only 2.5% and almost all the increase was the result of tax increases in New York and California. Compared with the first quarter two years ago, revenues were 9.3% lower.

“After record tax declines in calendar 2009, the fiscal conditions of the state remain quite fragile,” Lucy Dadayan and Donald J. Boyd, the report’s co-authors, wrote. And they also note preliminary data for the first two months of the second quarter show tax collections for 42 reporting states inched up less than 1%.

If California and New York are excluded from the total, revenues in the remaining 48 states fell 1.5% in the first quarter ’10. Also, 33 states reported revenue declines with five states reporting double-digit drops. New England, the Mid-Atlantic and the Far West regions saw increases. All other regions experienced declines.

State taxes are an important source of funding for many noncommercial operators in schools, colleges, healthcare and corrections.

While state tax revenues, more dependent on income and corporate sources, have crashed, local tax revenues have held up fairly well during the past two years That trend reversed itself in the first quarter with local revenues falling 1.1%.

 The complete report, including state breakdowns, can be found at www.rockinst.org.”””