40 States Bank on Rising Tax Revenue In 2011

According to a new study 40 out of 50 states in the U.S. are anticipating a rise in tax revenue next year. Corina L. Eckl, author of the report and director of the fiscal affairs program at the NCSL, claims that 2011 will be the turning point for many local economies.

The Associated Press reports:

The vast majority of state governments are anticipating a rise in tax revenues this year after two years of sharp drops. Analysts caution that most states will face large budget gaps in the next few years.

Forty states forecast having an increase in tax receipts in the current fiscal year, according to a forthcoming report by the National Conference of State Legislatures. Slow economic growth is boosting proceeds from income and sales taxes.

That could reduce the impact of states' budget struggles on the economy. State budget shortfalls have led to widespread layoffs, tax increases, spending cuts and other measures that have restrained economic growth.

"We do think 2010 is the bottom and we are at a turning point," said Corina L. Eckl, director of the fiscal affairs program at the NCSL and author of the report.

Still, state officials aren't without enormous challenges. States will lose federal stimulus money in coming years and will struggle to close large budget gaps. Tax revenues are well below pre-recession level. High unemployment puts heavy demand on state-run social service programs.

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Jobs Picture gets Worse in 27 States

Although the recession may have officially come to an end, 27 states saw higher unemployment rates in August. This is almost double the number of states that saw jobless rates increase in July. According to CNN Money, the unemployment rate remained at 9.6% for the country and states such as Nevada, Michigan, and California are seeing rates above 12%.

Nevada had the worst rate for the fourth month in a row, at a record high of 14.4%, up from 14.3% in July. Michigan followed with 13.1% unemployment, unchanged from the prior rate, and California was third with a 12.4% rate, an increase from 12.3% in July.

Where does your state rank?

After Kentucky and Georgia joined the list, 13 states had unemployment rates above 10% in August, as opposed to 11 the previous month.

The jobless rates fell in 13 states, as opposed to 18 that saw decreases in July. Ten states and the District of Columbia had no rate change.

North Dakota remained the state with the lowest unemployment, posting a 3.7% rate, followed by South Dakota with 4.5% and Nebraska with 4.6%

Where the Jobs Are

Although many taxpayers across the county are having trouble finding employment, there are a few communities with thriving job markets. CNNMoney.com posted an interesting story on the 25 counties that have experienced the most job growth. I have included two of the cities that made the list below, but you can see the full slideshow here.

1. Lincoln County, SD

Towns include: Sioux Falls

Job growth (2000-2009): 67.0%

Even though it's almost 1,200 miles away, Lincoln County wasn't immune to the financial crisis that rocked Wall Street.

Too-big-to-fail banking giants Citibank and Wells Fargo call this area home -- but Lincoln county isn't all dollars and wide open spaces. A strong retail and healthcare presence helped keep the county going strong when banks were on the brink.

Sanford Health and Avera Health are currently the county's largest employers, and they're expanding. Both are building regional clinics and treatment facilities in the area. A major cancer treatment facility is scheduled to be completed by late 2010.

2. Williamson County, TX

Towns include: Cedar Park, Round Rock

Job growth (2000-2009): 58.9%

Dude, they got Dell! With the computer manufacturer as the county's largest employer, Williamson County has a tech-savvy workforce that helps draw other businesses to the area.

Continue reading at CNN.com…

Signs of the Stimulus

We have all seen those signs at road construction sites letting us know that are tax dollars are being put to use. Some of these signs are for your local taxes, and others promote the American Recovery and Reinvestment Act. What you may not realize is how much money is being spent on these signs, and who is really paying for it. Check out the following article from ABC News on the topic below.

As the midterm election season approaches, new road signs are popping up everywhere – millions of dollars worth of signs touting "The American Reinvestment and Recovery Act" and reminding passers-by that the program is "Putting America Back to Work."

On the road leading to Dulles Airport outside Washington, DC there's a 10' x 11' road sign touting a runway improvement project funded by the federal stimulus. The project cost nearly $15 million and has created 17 jobs, according to recovery.gov.

However, there's another number that caught the eye of ABC News: $10,000. That's how much money the Washington Airports Authority tells ABC News it spent to make and install the sign – a single sign – announcing that the project is "Funded by The American Reinvestment and Recovery Act" and is "Putting America Back to Work." The money for the sign was taken out of the budget for the runway improvement project.

ABC News has reached out to a number of states about spending on stimulus signs and learned the state of Illinois has spent $650,000 on about 950 signs and Pennsylvania has spent $157,000 on 70 signs. Other states, like Virginia, Vermont, and Arizona do not sanction any signs.

Continue reading at ABC News.com…

Rating Cut by Fitch on Wealthiest U.S. State

According to EconomicPolicyJournal.com, the state of Connecticut is expected to borrow nearly a billion dollars to close a budget gap in the fiscal year beginning July 1^st. This move comes after boring money last fiscal year to cover their $947.6 million deficit. As a result, Fitch – a well-regarded international credit rating agency – has downgraded the states credit rating AA+ to AA.

“The downgrade reflects the state’s reduced financial flexibility, illustrated by its reliance on sizable debt issuances during the current biennium to close operating gaps in the context of already high liabilities,” Fitch said.

Connecticut is the wealthiest state on a per capita basis with personal income of $54,397 in 2009, according to Department of Commerce.

Tax Foundation: Tax Revenues Fall in 45 States

According to a recent report from The Tax Foundation, state tax revenues fell by nearly 9% in 2009, compared with 2008. There were 45 states that collected less tax revenue, and only five that saw increased tax revenue. Those five states that saw increases are:

1. South Dakota: 0.9%

2. Iowa: 1.3%

3. Oregon: 1.9%

4. North Dakota: 4.3%

5. Wyoming: 13.9%

As you can see, Wyoming was the only state that saw double-digit increases. On the other hand, here are top 10 states with the largest tax revenue declines:

1. Alaska: 51.9%

2. Arizona: 19.7%

3. South Carolina: 16.8%

4. New Mexico: 15.1%

5. California: 15.0%

6. Idaho: 14.1%

7. Virginia: 12.8%

8. Connecticut: 12.1%

9. New Jersey: 11.9%

10. Utah: 11.9%

Tax Receipts Rebound as 15 Biggest States Foresee Gain

From Bloomberg.com:

The two-year slide in tax collections that opened a $196 billion gap in U.S. state budgets has stopped, easing pressure on credit ratings and giving leeway to lawmakers as they craft spending plans for next year.

The 15 largest states by population forecast a 3.9 percent gain in tax revenue in fiscal 2011, budget documents show. The 50 states on average may increase collections by about 3.5 percent, the first time in two years the figure is expected to grow, said Mark Zandi, chief economist at Moody’s Economy.com,

California took in 3.9 percent more since December than projected in January, Controller John Chiang said this month. New York got $129 million above forecasts in its budget year through February, according to a report from Comptroller Thomas DiNapoli. In New Jersey, the second-wealthiest state per capita, January sales-tax collections were 1.9 percent higher than a year earlier, the first annual increase in 19 months, forecasters said in a report last month.

“This time last year, we were sliding down a mountain,” said David Rosen, chief budget officer for the New Jersey Legislature. “I don’t think we are now; it’s stabilized.”

States collected about $79 billion less in sales, income and corporate taxes in 2009 than in 2008, the U.S. Census Bureau said today in a report, as the economy struggled through its deepest slump since the Great Depression. Emergency spending cuts and tax increases became routine during the recession that began in December 2007.

Muni Threat: Cities Weigh Chapter 9

From the WallStreetJournal.com:

Just days after becoming Controller of financially strapped Harrisburg, Pa., in January, Daniel Miller began uttering an obscure term that baffled most people who had never heard it and chilled those who had: Chapter 9.

The seldom-used part of U.S. bankruptcy law gives municipalities protection from creditors while developing a plan to pay off debts. Created in the wake of the Great Depression, Chapter 9 is widely considered a last resort and filings under it are more taboo than other parts of bankruptcy code because of the resulting uncertainty for everyone from municipal employees to bondholders.

The economic slump, however, is forcing debt-laden cities, towns and smaller taxing districts throughout the U.S. to consider using Chapter 9. As their revenue declines faster than expenses, some public entities are scrambling to keep making payments on municipal bonds. And that is causing experts to worry about the safety of securities that are traditionally considered low risk.

"People believe that municipal debt is safe based on assumptions that are no longer true," says Kenneth Buckfire, managing director and chief executive of Miller Buckfire & Co., an investment bank that has worked with corporations on restructurings and now is advising municipalities. For example, it isn't safe to assume that governments can raise taxes to cover shortfalls, he says.

Even threatening bankruptcy signals that municipalities are willing to compromise the security of bondholders, says Richard Raphael, an analyst at Fitch Ratings. That makes it harder for cities and towns to raise money from investors and will slow the U.S. economic recovery.