Out of Control Policy Blog

State Tax Receipts Tumble

Michael Cooper at The New York Times reports on a new study from SUNY's Rockefeller Institute finding that state tax collections have declined at a greater rate than any period over the last several decades. Cooper writes:

Total state tax collections from April through June dropped by a record 16.6 percent compared with the same period a year earlier, according to a report released today by the Nelson A. Rockefeller Institute of Government, the public policy research arm of the State University of New York. The report found that total state tax collections were down by $63 billion for the year ended in June, which is roughly twice the amount of money that the states had received in fiscal relief through the stimulus program up to that point.

The stark numbers in the report tell the story of the recession. People were out of work or earning less, and income tax collections were down 27.5 percent in the quarter. They spent less, and sales tax collections were off by 9.5 percent.

The dismal data highlighted a hard truth: there can be a long delay between the time the economy begins to improve, as some economists believe is happening now, and the time that the change is reflected in state finances. [...]

Some state officials fear that by the time tax collections rebound, the stimulus money will have run out, continuing a cycle of budget gaps that will have to be filled with cuts or tax increases or expensive borrowing.

...or how about streamlining government? Louisiana's extensive government streamlining efforts are driving some fundamental rethinking in service delivery and just earned the state a credit rating upgrade. Other states should give it a try before resorting to pouring more money into the same government bureaucracy, expecting different results. It's time to do more with less, not the other way around.

» Reason Foundation's Annual Privatization Report 2009
» Reason Foundation's Privatization Research and Commentary

Leonard Gilroy is Director of Government Reform


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