State tax revenue down 26% in 2009

It’s not just California.  Tax revenue is falling everywheret.gif.

State income-tax revenue fell 26% in the first four months of 2009 compared to the same period last year, according to a survey of states by the nonprofit Nelson A. Rockefeller Institute of Government.

The report, conducted by the public-policy research arm of the State University of New York, is one of the most up-to-date measures of how deep the recession is digging into Americans’ wallets and, consequently, state coffers.

States are required by law to balance the budget, so lower tax revenues will translate in service cuts, rather than red ink. Already states such as Kansas are slowing the payment of income-tax refunds and delaying payments to local school districts, according to the report.

This is a point I have highlighted in the past: when state taxes fall, services get cut.  And the fact that states are constrained unlike the U.S. government because they have no printing presses is one reason I said in January that the President’s stimulus package was not going to get it done. Time will tell whether U.S. government largesse is countered by state and local government cutbacks. And it is local government services you probably care most about: schools, police, garbage collection, swimming pools, libraries.

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Originally published at Credit Writedowns and reproduced here with the author’s permission.

4 Responses to "State tax revenue down 26% in 2009"

  1. Guest   June 18, 2009 at 1:40 pm

    They always lie about the level of revenue in California. California revenues are down about 60% more than the reported figure. California is in a depression and its economy is deteriorating rapidly. Anyone who tells you differently is simply lying.

    • Sonny   June 19, 2009 at 9:14 am

      That’s right, and that is why Sen.’s Feinstein and Boxer are ready to concede all rights that California may have, to become part of the Federal Govt. Then, they will be able to print their own money and spend that of the taxpayers from other states. This seems to be the trend from large states that cannot control their budgets.

  2. Anonymous   June 18, 2009 at 5:32 pm

    The combination of the balanced budget amendment and Governor Schwartzenegger’s promise not to raise taxes will ensure massive cuts of public services and the probable sale of various public assets to private investors, as suggested in Harrison’s previous article. The situation plays directly into the right’s “starve-the-beast” strategy to systematically reduce the size and scope of the public sector (especially the funding of government regulatory agencies) by “starving” it of tax revenue. Raising taxes could help alleviate the problems, but Schwartzenegger is steadfastly refusing to do so, claiming that the public won’t permit it.

  3. Guest   June 18, 2009 at 6:45 pm

    So many unnecessary services are major contributors to continued unemployment. I see more than a trivial number of help wanted signs around but these roles go unfilled for months at a time. Is this because they don’t pay a so-called “living wage”? No. It is because the people who might otherwise fill these positions can “earn” the same amount on welfare whilst also collecting food stamps and taking advantage of state funded childcare and living in state subsidized housing. These are able-bodies people who opt simply not to work. Cut the services and these people will return to work. Our government still will not tax these people’s earnings, but at least we’ll get them off of the public trough.And as far as increased taxation…I would much prefer to be “taxed” by having to pay an extra couple of dollars for a head of lettuce or a bunch of tomatoes because they’re being picked by a citizen (preferably a former welfare recipient) than I would pay additional income tax.This can work, but someone has to have the guts to put it in motion. Unfortunately we are caught in a death spiral in which there are some many suckling at the government teat that anyone running on a “get to work” platform will surely fail. If “starving the beast” is the only way to get is started, then so be it.