States’ tax collections were up for the ninth consecutive quarter in the first three months of 2012 and are now above pre-recession levels, according to the Rockefeller Institute of Government analysis using U.S. Census Bureau data. Based on initial figures, the group projects the second quarter of the year will make it 10 straight quarters.
In the first quarter of 2012, total state-tax revenues were 4.8 percent higher than in the same quarter four years ago, the Rockefeller Institute found. Forty-five states that report early showed a growth of 5.8 percent in April and May compared to the same period in 2011. States went through five straight quarters of declining tax revenues beginning at the end of 2008, the report said.
But when inflation is factored in, state tax revenues are 1.6 percent lower than the same quarter in 2008. States in New England and the Southeast reported declines of 3 percent and 1.6 percent, respectively, during the first quarter of the year, the study said.
“The Great Recession led to a growing divergence between state and local government tax performance. State tax revenues collapsed steeply from 2008 to 2010 while local tax revenues continued to grow,” said Lucy Dadayan, senior policy analyst for the group, which is part of the State University of New York. “Such trends have reversed since 2010, and state tax revenues started trending upward while local tax revenues have been mostly heading downward. Fiscal pressures are continuously mounting for local governments, and depressed housing prices are now causing declines in local property taxes.”
While the growth in state tax revenue hasn’t been uniform or rapid across the country, states’ fiscal conditions overall have recovered faster than the overall economy, the report said.