Tuesday, March 29, 2011

State and Local tax revenue increases in 2010

by Calculated Risk on 3/29/2011 08:34:00 PM

The Census Bureau released the State and Local tax revenue data for Q4 2010 today. Here is the page.

From Conor Dougherty at the WSJ: Tax Revenue Snaps Back

State and local tax revenue has nearly snapped back to the peak hit several years ago—a gain attributed to a reviving economy and tax increases implemented during the recession.

But the improvement masks deeper problems for state and local governments that are likely to linger for years. To weather the recession, state governments relied on now-depleted federal stimulus funds ...

Total tax receipts for state and local governments hit $1.29 trillion in 2010, just 2.3% shy of the $1.32 trillion taken in during 2008, not adjusted for inflation, according to Census Bureau data.
Local governments are mostly funded by property taxes, and it usually takes some time for falling prices to show up in property taxes. Local property tax revenue is just starting to decline in the Census data.

State revenue is mostly from individual income taxes and sales taxes (see tables at the Census Bureau) and this revenue is still well below the pre-recession levels.

Even with improving revenue, there will be more state and local fiscal tightening this year - and that will remain a drag on economic growth.