States in Deep Trouble Over Plunging Income Tax Revenues
http://globaleconomicanalysis.blogspot.com/2009/06/states-in-deep-trouble-over-plunging.html">Mish's Global Economic Trend Analysis
The Nelson A. Rockefeller Institute of Government has issued a
http://online.wsj.com/public/resources/documents/2009-06-18-State_Revenue_Flash.pdf">State Revenue Flash Report (pdf) discussing an across the board enormous drop in personal income tax revenues.
Total personal income tax collections in January-April 2009 were 26 percent, or about $28.8 billion below the level of a year ago in states for which we have data. In April 2009 alone (April being the month when many states receive the bulk of their balance due or final payments), personal income tax receipts fell by 36.5 percent, or $18.2 billion.
Personal income tax receipts in the first four months of calendar year 2009 were greater than in 2008 in only three states — Alabama, North Dakota, and Utah.
In FY 2008, personal income tax revenue made up over 50 percent of total tax collections in six states — Colorado, Connecticut, Massachusetts, New York, Oregon, and Virginia. Personal income tax revenue declined dramatically in all six of these states for the months of January-April of 2009 compared to the same period of 2008. Among all 37 early-reporting states, the largest decline was in Arizona, where collections declined by nearly 55 percent.
In the month of April alone, 37 early reporting states collected about $18.2 billion less in personal income tax revenues compared to the same month of 2008.
This $18.2 billion is close to the $20 billion shortfall that states experienced in overall tax revenue collections in the first quarter of calendar year 2009. This is particularly bad news for the states that rely most heavily on personal income tax.
Given the ominous picture of personal income tax collections, deeper overall revenue shortfalls and further deterioration in states’ fiscal conditions are likely on the way for most states for the April-June quarter of calendar year 2009.
There are numerous tables in the report worth a look. In fact, the entire 9 page PDF is worth reading in entirety.
States most dependent on Personal Income Taxes
68.5% of Oregon's Tax Revenue from PIT. Collections off 27.0%
57.2% of Massachusetts' Tax Revenue from PIT. Collections off 28.5%
55.9% of New York's Tax Revenue from PIT. Collections off 31.8%
47.5% of California's' Tax Revenue from PIT. Collections off 33.8%
52.4% of Connecticut's Tax Revenue from PIT. Collections off 25.9%
52.7% of Colorado's Tax Revenue from PIT. Collections off 25.4%
Arizona's collections were down a whopping 54.9% depending 25.3% on Personal Income Taxes. South Carolina, Michigan, Vermont, Rhode Island, New Jersey, Idaho, and Ohio are also in deep trouble.
20 states depending on personal incomes taxes for > 25% of total taxes were down 20% or more on collections.
This is a very grim report on state finances.