State government tax collections dropped $14.3 billion in the last budget year, the U.S. Census said Wednesday in another sign state revenues have yet to recover from their recent collapse.
Total tax collections were $704.6 billion in fiscal 2010, which ended last June, a slim decrease of 2 percent from fiscal 2009, the U.S. Census said.
The decrease was not as sharp as fiscal 2009, when tax collections tumbled $65.8 billion.
The housing bust, financial crisis and recession created an unprecedented collapse in states’ revenues, forcing them to cut spending heavily, hike taxes and turn to the federal government for help.
Even though the recession ended in 2009, states’ budgets have yet to bounce back and investors and traders in the $2.9 trillion municipal bond market are carefully studying tax collections to see how long they will need to recover.
The last of the extraordinary assistance sent to states through the $821 billion federal stimulus plan will be trickling out over the next few months, and many states are worried they will not have the revenues to make up for the end of those funds.
Tax collections dropped more than 10 percent or greater over the year in four states — Montana, Oklahoma, Louisiana and Wyoming.
“Prior to 2009, no state had year-to-year tax revenue declines of this magnitude since 2002,” according to the report, which said the drops were mainly in sales and gross receipts and individual income taxes.
In 2010, 11 states’ collections increased over the year, compared with only five the previous year. The Census said there was no single reason for the increases.
Total individual income tax receipts, the single largest source of government tax revenues, was $236.4 billion in fiscal 2010, down 4.5 percent from 2009. Sales and gross receipts decreased 1.9 percent. Corporation net income tax was down 6.6 percent, after plummeting 21 percent the previous year.
The April 15 tax filing deadline is less than a month away, and more indicators of states’ revenues will soon roll in. Of late, collections have been slightly weaker than expected, with many states recently missing their forecasts on withholding and sales tax collections in surveys conducted by the economic newsletter the Liscio Report.
