State tax revenues for all 50 states totaled $146.6 billion in the first quarter of 2006, up 6.8 percent from the same period in 2005, according to t he Nelson A. Rockefeller Institute of Government.

However, after adjusting for inflation and legislative tax changes, growth was only 0.3 percent. The institute, whose goal is to make data about state and local government finances more accessible, said that result is misleading.

"Nominal growth was greatly affected by last year's corporate tax amnesty in California," said deputy director Brian Stenson, in a statement. "After adjusting for the sharp falloff in California's corporate income tax collections because of this amnesty, tax revenue actually showed strong growth of 8.9 percent this quarter."

Revenue growth was strongest in the far west (13 percent, after the amnesty adjustment) and weakest in the Great Lakes region (5 percent).

After adjustments, all three major tax sources -- personal income, sales tax and corporate incomes taxes saw strong revenue gains. Stenson said that employment growth continues to be concentrated in the southwest, Rocky Mountain, and far west regions. "They accounted for 50 percent of the job growth in the first quarter, while having about 30 percent of the total jobs," he said.

"State tax collections have been buoyed by an economy that has picked up steam after the fourth-quarter pause, and with many states reporting surpluses in their current fiscal years, state budgets for 2006-07 are likely to include tax cuts and new spending," said Stenson.

A copy of the full report, "State Revenue Report No. 64," is available on the institute's Web site, http://rfs.rockinst.org.

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