Monday, January 03, 2011

State Tax Revenues Increased by More Than 6% in 2010, The Largest Increase in More Than 10 Years

Last week, I featured the recent Census Bureau report showing that state and local tax revenues increased by 5.21% in the third quarter this year compared to 2009, which is the largest quarterly increase since the fourth quarter of 2007 (see chart above).  Dennis Cauchon now reports in today's USA Today that:

"Tax collections are surpassing projections, the clearest sign yet that state and local government finances are on the mend as the economy improves. Sharp rises in tax collections since July, especially in the last three months, have boosted tax revenues to levels not seen since 2008, a review of tax reports shows. Including federal aid, state and local government revenue is running at a record high.

Serious challenges remain: financing long-term pension obligations, rebuilding budget reserves and repaying funds raided for unrelated expenses.  In the short term, though, the outlook is brightening. Nearly every state is reporting tax collections above what it expected and higher than a year ago.

"We're getting revenue growth that you'd see in a reasonable expansion," says Wisconsin Department of Revenue chief economist John Koskinen.  State and local revenue rose more than 6% nationwide in the first nine months of 2010, the biggest increase over inflation since 1999, Bureau of Economic Analysis data show."

12 Comments:

At 1/03/2011 11:53 AM, Blogger Benjamin said...

I think the Obama team, and Bernanke, have engineered a recovery from the economic bust and financial collapse of the Bish years.

Dow up today. I see way over 12,000 for 2011, maybe over 13,000.

 
At 1/03/2011 1:05 PM, Blogger VangelV said...

LOL. Revenues are running well below where they used to be. The fact that they are better than 2009 is not very impressive because given the stimulus we would expect them to be. Let us look at this issue in a year or two and see where the states and municipalities stand. I am betting that we will see some bankruptcies or bailouts. They would not be necessary if you were correct in your optimism.

 
At 1/03/2011 1:06 PM, Blogger juandos said...

"I think the Obama team, and Bernanke, have engineered a recovery from the economic bust and financial collapse of the 'Bish' years...

Yeah and I think I saw a western sunrise this morning too...

pseudo benny you're definitely a hoot!

Property Taxes Keep Rising as Home Values Keep Falling

 
At 1/03/2011 1:34 PM, Blogger morganovich said...

also keep in mind that after the huge tax loss carryforwards generated in 2008, that 2009 taxes would have been much lower.

let those NOL's run off, and you could see a big jump in tax receipts even if incomes were flat or down.

i think this "tax receipts" economic indicator is much too noisy right after a downturn to be telling us anything with any real degree of confidence.

 
At 1/03/2011 1:42 PM, Blogger Benjamin said...

"Bish" is past tense of "Bush"

 
At 1/03/2011 2:27 PM, Blogger juandos said...

'"Bish" is past tense of "Bush"'...

Very good pseudo benny!!

Quite funny really...:-)

 
At 1/03/2011 2:48 PM, Blogger Benjamin said...

Jaundos

Good luck to you in 2011, I hope your investments skyrocket.

 
At 1/03/2011 2:56 PM, Blogger juandos said...

"I hope your investments skyrocket"...

Yeah, right back at you pal and here's hoping you and your's have great year in 2011...

 
At 1/03/2011 4:06 PM, Blogger Benjamin said...

BTW, while the gold bugs and Nipponistas are honking loudly, less noticed is that in 2010, the NAsDAQ was up 17 percent, and the Russell 2000 up 25.3 percent.

And 2011 looks even better....

 
At 1/03/2011 6:02 PM, Blogger PeakTrader said...

Looks like U.S. households recovered the hard way. Now, they have to get government out of the hole.

 
At 1/05/2011 5:57 PM, Blogger Dr. T said...

Increased state tax revenues do not directly correlate with improved economic conditions because some states have increased their sales tax, income tax, and/or corporate tax rates since 2000. For example, Tennessee increased its sales tax rate by 2% since 2000.

The state tax revenues need to be adjusted for the US population increase of 9.7% from 2000 to 2010. An average state tax revenue increase of 6% is actually a tax revenue per person decrease of 3.5%.

The Bureau of Economic Analysis data is NOT corrected for inflation. It takes $127 of today's dollars to buy what would have cost $100 in 2000. When tax revenues are corrected for inflation, they are down by 16.6%. Factor in the population increase, and per person tax revenues are down by over 25% since 2000.

Surely an ethical economist would note the above factors.

 
At 1/05/2011 9:04 PM, Blogger VangelV said...

The Bureau of Economic Analysis data is NOT corrected for inflation. It takes $127 of today's dollars to buy what would have cost $100 in 2000. When tax revenues are corrected for inflation, they are down by 16.6%. Factor in the population increase, and per person tax revenues are down by over 25% since 2000.

Surely an ethical economist would note the above factors.


I think that Mark's optimism sometimes gets in his way and he ignores a few factors that are material to the issue being evaluated. As economists go he is better than most but still has a long way to go.

 

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