According to the Center on Budget and Policy Priorities, states across the country are beginning to report their revenue data for the July through September quarter and things are not looking good. In addition to large revenue drops the following problems are also developing.
Of 15 mostly large and mid-sized states that have published complete data for this period, the majority collected less total tax revenue in July-September 2008 than was collected in the same period in 2007. (See Table 1.) After adjustment for inflation, total revenue collections are below 2007 levels in 14 of the 15 states. (See Table 2.)
Although state revenue collections have been slowing for at least a year, the new figures are the first to show steep declines in revenue across a variety of types of taxes across a range of states from all regions of the country. Of the 15 states surveyed here, the median state experienced a 5.5 percent decline in total tax revenue after adjustment for inflation. Only Michigan, which enacted a major tax increase, experienced revenue growth; revenues in all others declined.
Sales tax revenue has been particularly hard hit. Revenues are down in every one of those 15 states, with a median decline of 7.3 percent after adjustment for inflation. Although many states have been experiencing declining or flat sales tax revenues for some time, these figures are worse than in previous quarters.