State Spending Up, But Austerity May Loom: Report

On the heels of strong tax revenue gains, state spending during the past fiscal year rose 8.6 percent over the year-ago period, but concerns over tighter budgets and more modest spending levels may be in the near future, according to the National Governors Association and the National Association of State Budget Officers. According to the 2006 Sales Tax Rate Report from tax technology products provider Vertex Inc., the average U.S. sales tax rate hit an historical high in 2006 at 8.579 percent -- up from 8.549 percent in 2005. Vertex also said that the number of tax rate changes in the U.S. grew by 28 percent since the late 1990s. "As the economy was flush with money in the late 90s, there is a recognized decrease in the number of tax rate changes from 1995-2000," said John Minassian, Vertex vice president of Tax Content Development. "However, ever since predictions of an economic bubble burst came to fruition in 2000, we have seen a severe increase in the number of rate changes, likely the result of local, city, county and state needs to increase revenue and balance budgets."