* State Coffers Begin To Fill With Tax Revenues Once more
It would appear that the revenue crisis faced by many US states in recent years is now coming to an end, according to preliminary quarterly data revealed by the Rockefeller Institute of Government. In the Rockefeller Institute study, it is revealed that the money flowing into state coffers rose by 8.1% between January and March 2004 – the fastest rate since the second quarter of 2001. It also marks the fifth consecutive quarter of growth in state tax revenues, and comes on top of the 7.2% increase seen in the last three months of 2003.
When adjusted for the effects of legislation and inflation, this increase was 5.5%, representing the third straight quarter of real, adjusted state tax revenue growth which is now moving into the range seen before the recent economic downturn.
“So far, fiscal year 2004 looks to be a good year for state government revenues,” stated the report.
However, the Institute contends that real tax revenues still “have a way to go” before reaching the levels seen before the recession, despite its official end two years ago, and could take a number of years to recover. This may be bad news for residents and businesses in those states hoping to avoid further tax increases, such as New Jersey.
Nevertheless, the report might be more encouraging for the Governor of California Arnold Schwarzenegger, who is hoping to stick to his recall election pledge of solving the state’s budget crisis through spending cuts rather than tax hikes.
The study showed that the strongest recovery in tax revenues was experienced in the far western states, which saw a 9.1% overall increase.
