States across the country saw their tax revenues for the first quarter of 2009 drop by a record percentage, according to a new report.

The Nelson A. Rockefeller Institute of Government found that the taxes collected by the 50 states dropped by 11.7 percent overall during the first quarter of 2009, compared to the same period a year earlier, the largest such decline in the 46 years for which quarterly data are available.

Overall state tax revenues fell to the lowest first-quarter level since 2005, according to the institute. The decline in personal income tax was particularly sharp, at an unprecedented 17.5 percent. Sales tax collections were down 8.3 percent and corporate income taxes fell 18.8 percent.

Forty-five of the 50 states experienced revenue drop-offs. All regions of the country saw declines in total state tax collections, with the Far West seeing the largest decline, at 16 percent. Only the Rocky Mountain and Plains regions saw single-digit declines, at 5 percent and 6 percent, respectively.

Early figures for April and May of 2009 show an overall decline of nearly 20 percent for total taxes, a further dramatic worsening of fiscal conditions nationwide. Preliminary figures for the state fiscal year 2009 indicate declines of around 8 percent in total taxes, 13 percent in personal income taxes and 5 percent in sales taxes.

According to the authors of the report, Rockefeller Institute senior fellow Donald J. Boyd and senior policy analyst Lucy Dadayan, local tax collections fared better than state taxes, with overall growth of 3.9 percent in the first quarter.

“Such extraordinary weakness in revenues, along with continued if more moderate growth in expenditures, make widespread budget shortfalls highly likely this year,” Boyd and Dadayan wrote in the report.

For a full copy of the report, visit www.rockinst.org.


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